Thankful for Being ‘Reasonable’ With Data-Driven Marketing
Marketers were given an early Thanksgiving: a recognition by the Federal Trade Commission that “data” is indeed the fuel of the digital economy, and that most consumers are pragmatic toward how data, and data-driven marketing, finances the online content they rely upon and enjoy.
Some might call such a view logical. Some factual. Some realistic. Let’s call it all of these — and “reasonable,” as well.
On Nov. 9, the FTC, in comments to the U.S. Department of Commerce’s National Telecommunications and Information Administration regarding the Administration’s approach to consumer privacy said:
“The FTC supports a balanced approach to privacy that weighs the risks of data misuse with the benefits of data to innovation and competition. Striking this balance correctly is essential to protecting consumers and promoting competition and innovation, both within the U.S. and globally.”
The comments articulate how the FTC has pursued enforcement action in its existing privacy enforcement, a bright line of various consumer harms: financial injury, personal injury, reputational injury and unwanted intrusion, the latter incorporating the sanctity of their homes and intimate lives.
A Succinct Recognition of Responsible Data Usage
The comments call out the benefits of responsible data flows in our economy (note: footnotes are omitted in excerpts):
“In addition to considering the risks identified above, any approach to privacy must also consider how consumer data fuels innovation and competition. The digital economy has benefited consumers in many ways, saving individuals’ time and money, creating new opportunities, and conferring broad social and environmental benefits. For example, recent innovations have enabled:
- Better predictions about and planning for severe weather events, including updated flood warnings, real-time evacuation routes, and improved emergency responses and measures, that can allow people to plan for and avoid dangerous conditions.
- Improved consumer fraud detection in the financial and banking sector, as institutions can obtain insights into consumers’ purchasing and behavior patterns that will allow them to proactively identify and immediately stop fraudulent transactions when they are discovered.
- Free or substantially discounted services, including free communications technologies (email, VoIP, etc.), inexpensive and widely available financial products, and low-cost entertainment.
- Safer, more comfortable homes, as IoT [Internet of Things] devices detect flooding in basements, monitor energy use, identify maintenance issues, and remotely control devices, such as lights and ovens.
- Better health and wellness, as a variety of diagnostics, screening apps and wearables enable richer health inputs, remote diagnosis by medical professionals, and virtual consultations.
- More convenient shopping, as retail stores track both sales and inventory in real-time via shopping data to optimize product inventory in each store.
- More relevant online experiences, as retailers provide customized offers and video services recommend new shows.
- Easier-to-find parking, as cities deploy smart sensors to provide residents with real-time data about available parking spots.
- Increased connectivity, as consumers can get immediate answers to questions by asking their digital voice assistants and can remotely operate devices, such as lights and door locks, with a voice command or single touch on a phone.
“Privacy standards that give short shrift to the benefits of data-driven practices may negatively affect innovation and competition. Moreover, regulation can unreasonably impede market entry or expansion by existing companies; the benefits of privacy regulation should be weighed against these potential costs to competition.”
While we may believe the FTC is stating the obvious here, such matter-of-factness about marketplace observations cannot be taken for granted. An entirely new Internet regulation and regimen emanating from Europe — with its own U.S. fan base among some academics and privacy fundamentalists — would take direct aim at these social and economic outcomes through cumbersome, inflexible, rigid consent schemes. These must be resisted — not because privacy protections are not worth pursuing (they are), and not because consent is important (it is) — but because, as the FTC comments also show, effective privacy enforcement is already soundly in place in America. And where new regulations are enacted, they ought to be flexible, measured and a balanced approach. “Reasonable” is the concept in play here.
A Risk-Based Approach
Thankfully, “a risk-based approach is in the FTC’s institutional DNA,” the FTC reports. For example, in this important area of consumer control, the commission writes (again, footnotes omitted):
“The FTC has long encouraged a balanced approach to control. Giving consumers the ability to exercise meaningful control over the collection and use of data about them is beneficial in some cases. However, certain controls can be costly to implement and may have unintended consequences. For example, if consumers were opted out of online advertisements by default (with the choice of opting in), the likely result would include the loss of advertising-funded online content.”
This is a pivotal moment. In effect, this is a recognition of two decades of responsible data collection and use at work in the Internet economy, and perhaps another 100 years of similar data use in the offline economy. In both cases, advertisers and marketers have implemented effective self-regulation conduct codes (disclosure, my professional relationships supports such codes), that are backed by enforcement and accountability that can refer companies to government agencies. The FTC actually used the NTIA comments to call out enforcement cases where private firms purportedly failed to follow self-regulatory codes of conduct.
As we debate public policy for privacy and security in the next Congress, and state legislatures, too — and among ourselves as citizens and industry participants — it’s wise to understand and appreciate what responsible data collection and use has brought forth in our economy, and how reasonable, risk-based approaches to policy making can best serve us all.
While I say “thank you” to the FTC for recognizing this — I’m also thankful for an industry of practitioners who recognize and understand how and why data stewardship matters.