Reducing the fear factor in behavioral targeting

Publishers and advertisers need to work more closely with consumer privacy advocates and regulators to reduce the “fear” that is hampering the growth of online advertising, according to privacy expert Mike Spinney.

Spinney is senior privacy analyst with Ponemon Institute, a research and consulting organization that focuses on privacy, data protection and information security policy. Last week, Ponemon released a report titled, “Economic impact of privacy on online behavioral advertising,” which concludes that advertisers have curtailed spending on behavioral advertising because of consumer privacy concerns – despite their conclusions that behavioral advertising delivers a “substantially” better return than untargeted online advertising.

Of the 90 companies surveyed for the report, 98 percent said they had restricted spending on online behavioral advertising – to the tune of nearly $605 million in unspent campaign dollars.

“There’s enough concern about how consumers are treated because [advertisers] do realize that being overly aggressive may have implications,” said Spinney.

Signs of self-regulation? 

The study offers some support for proponents of self-regulation, since these advertisers say they are voluntarily holding back on spending on behavioral targeting.

“There is support [in the report] for the idea that self-regulation works,” said Spinney. “Advertisers aren’t engaged as rigorously as they like because they believe the consumer fears are legitimate.”

The Ponemon report came out shortly before last week’s release of a "staff discussion draft" (PDF) on data collection from U.S. Rep. Rick Boucher. The draft legislation was quickly and widely panned by both sides of the consumer privacy debate, with pro-consumer groups and advertising associations both picking apart various aspects of the bill. (Google News search.)

Spinney said he had yet to closely study Boucher’s draft legislation, but he believes the answer to the consumer privacy conundrum lies with some combination of industry self-policing and state and local oversight.

“There’s a place for regulation, but too much can be harmful,” he said. He cited the various state statutes that are becoming increasingly strident in the protections that consumers should be afforded and the actions that companies are expected to take to secure the personally identifiable information they’re collecting.

“There’s value in addressing these concerns,” said Spinney. “But to be overly regulatory may prevent the kind of innovation that needs to take place.”
Innovation requires everyone’s participation, Spinney noted. “Consumer privacy advocates, advertisers, content providers and regulators all should be involved in the discussion,” he said. “And it needs to take place in a measured and thoughtful manner, as opposed to knee-jerk reactions that are motivated by fear.”

Digital publishers have a lot to gain by being part of the conversation.

“Content creators will collect revenue if they can demonstrate they have a product that’s worth advertising on,” said Spinney. “So they should be part of the conversation that helps arrive at the issue of allaying consumer fears.”

Geotargeting raises the stakes

The emergence of geolocation and geotargeting services raises the stakes even further.

“Geo-services add a level of detail that some if not most people would not be comfortable with,” Spinney said. “You’re getting into a realm where you really need to understand your subscribers and respect that some might love this and others might be freaked out by it. And you need to be even more open about disclosure and opt-ins.”

While Facebook has taken a lot of heat for its privacy policies, Spinney sees the company as a model for others to learn from regarding disclosure.

“Facebook is under the microscope because it’s made some bad decisions,” he said. “But when they make these [privacy policy] changes, they usually are very transparent about what they’re doing. If more online enterprises would do that, we’d learn a lot more, and a lot more quickly, about what works.”

Spinney said raising awareness about online privacy with consumers is akin to talking with your child about the facts of life. “It’s an important, perhaps an uncomfortable conversation,” he said. “But if you’re not having that conversation with them, where else are they going to find the information? From someone else who they trust, or from an unreliable source? An open dialogue about all the issues related to privacy is vital.”

Increasing consumer trust

More disclosure by content creators, Spinney said, will go a long way toward increasing consumers’ willingness to share personal information or opt into personalized content and advertising.

“If I appreciate the way the site respects my privacy, and the service I get because of the information I’ve given them, I may be willing to disclose more information,” he said. “It’s the process of proving yourself worthy of trust. And trust is not something that happens instantaneously.”