There’s a freight train in Congress heading toward the Web that isn’t getting a lot of attention in newsrooms, though it could have a huge effect on their ability to support themselves online.
U.S. Rep. Rick Boucher (a Democrat from Virginia) is proposing legislation that could be introduced in the House next month to protect privacy on the Web. If enacted, the new law could drastically change the way information can be collected through browsers’ cookies, and it could have a serious impact on the billions of dollars spent every year on display advertising on the Web. It could even change how we use the Web itself.
“How many consumers want to pay $1,000 a month to have access to the Internet?” Matthew Wise, president and CEO of Q Interactive asked Wednesday during a debate on privacy at The Economist‘s Media Convergence Forum in New York. “The reason they don’t have to is because of advertising.”
The crux of Boucher’s bill for the advertising industry is a plan to prevent Web sites from sharing information with “unrelated third parties.” It is just this type of third-party data collection that allows large-scale ad targeting and accounts for billions of dollars in ad sales today. When users visit a Web site and view content or click on certain ads, that data is recorded and the users can then be targeted and “re-targeted” multiple times as they travel throughout the Web.
If Boucher’s bill becomes law, publishers, from the massive Yahoo down to solo bloggers, could lose the ability to serve ads that collect and share information without a consumer’s permission up front.
“Congress’ position is that consumers are not appropriately aware of what is being done on their machines, and the use of cookies delivered by a third party is something consumers have not been appropriately informed of,” Simulmedia CEO Dave Morgan, who heads the Interactive Advertising Bureau’s privacy committee, said in June after meeting with Congressional staffers.
He was on the opposite side of the debate from Wise at the conference, and he pointed out how much data is collected and shared — everything from our bank account and credit card balances to the pharmaceuticals we’ve purchased — without our knowledge.
Industry trade groups have responded to Boucher by banding together and saying consumers should be allowed to opt out, essentially a shored-up version of a practice that’s been in place for years. The proposed steps, Boucher says in a piece he wrote in The Hill, “do not go far enough, and there is no guarantee that every company that collects information from the Internet-using public will abide by them.”
Members of the IAB and other trade groups and companies tell me privately that they’re fearful of the cost and potential fallout from having to rejigger all their processes and forcing consumers to opt in, instead of out. Boucher says his bill would help the industry and add to commerce by adding a new level of trust and verification.
Consumers can, of course, block or delete their cookies, though only a minority are said to do so. In my experience, the percentages are lowest — as low as single digits — on the mass consumer sites. A sizable majority of Americans, however, do bristle at the idea of being tracked online by advertisers, according to survey data released last month.
At the Media Convergence conference, Craigslist founder Craig Newmark told me on a panel I moderated that “trust is the new black” for marketers and journalists in this new, transparent world.
I believe that to get in front of the data collection issue, advertising trade groups must explain more cogently the benefits of cookies — everything from gaining open access to applications to being able to visit Web sites without having to log on repeatedly. They’ll also have to work triple overtime to prove to consumers they are not collecting or storing personally identifiable information but instead are masking and encrypting it.
I’m afraid, though, that many in marketing have a tin ear to the way the public perceives their efforts. Otherwise, why would speakers at the Economist conference and another I attended last month have proudly showed scenes from the movie “Minority Report” in which the Tom Cruise character is eerily tracked by billboard ads that read his irises as he walks through malls and stores?
Many experts in corporate social responsibility will tell you that the best technique to derail an oncoming train like is to go further than is being asked, for example by taking steps that have never been taken before. Fighting to maintain the status quo, on the other hand, could leave the digital advertising industry looking at the caboose.