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The Dangerous World of Do-Not-Track Legislation

Posted on 3.29.2011

Internet advertising has come a long way since the early days of the simple banner. Today, ads can be targeted with pinpoint accuracy using display, search ads, social ads and more. Advertisers can choose to show their message only to those in certain geographic areas, age ranges or even based on past behavior. If you have searched for a particular product online, chances are good that related products have appeared in advertisements as you continue to browse the Web. This is targeted advertising.

But increasingly, this style of advertising is again coming under fire, and from all angles. So-called “Do Not Track” legislation is being discussed and introduced by the Federal Trade Commission (FTC), Department of Commerce and the Federal Congress. Leading tech companies are adding to the fray, too. In early March, Internet Explorer 9 (IE9) was released with one very significant feature — a do-not-track tool. Mozilla has announced they will soon implement the same function in an upcoming update of their Firefox browser. Although do-not-track legislation was introduced just a few months ago, compliance from Microsoft and Mozilla shows a clear signal of the pressure being placed on these companies.

Simply put, do-not-track legislation aims to stop the collection of information for the purpose of serving targeted ads. Web professionals are concerned, and with good reason.

“Studies have shown that targeted advertisements are 60 percent more effective than non-targeted advertisements,” says Carl Szabo, policy counsel, NetChoice (http://netchoice.org). “Targeted advertisements will generate per website a value of $4.12 per 1,000 views as opposed to non-targeted advertisements which only generate a value of $1.98 per 1,000 views.

“Some proposals for do-not-track ... involve a complete prohibition on the collection of any information. So that would mean it would be very difficult, if not impossible for these websites to use targeted advertisements. Websites would lose half of their revenue and would need to replace that revenue from somewhere else — whether it’s more advertisements on the website or actually beginning to charge users for the free services that they currently enjoy.”

So why would the government want to stifle revenues and block advertising innovation. It comes down to security, mostly. Acting on behalf of consumers, legislators want to champion the privacy cause. But it’s questionable as to whether consumers are calling for this legislation or if legislators are the ones making all the noise.

“As consumers realize the cost of not having their information tracked, they might be less likely to be so abrasive to such collection,” says Szabo. “And that’s a study that really needs to be done. Two of the Federal Trade Commission’s own commissioners have requested that there be more study on this before we do anything too drastic.”

WHAT’S THE SOLUTION?

It seems that do-not-track is going to be a hot-button issue for the foreseeable future. Solutions are needed.

To start, businesses can educate consumers about information collection, including the fact that this information is often innocuous — such as approximate geographic location or past browsing behavior, which can provide an excellent level of targeting. Every website can provide clearly labeled privacy policies and terms of use that can explain exactly what information is being collected from each user to help put them at ease and avoid the website being blocked completely.

But the biggest problem is that proposed solutions are incredibly varied; and those at the forefront of the issues are having problems finding common ground.

In the case of the IE9 tool, it is up to the websites receiving notification that the user does not wish to be tracked to enact the measure. In other words, you can tell the website not to track you but there are currently no guarantees. There are also tools put forth by the Interactive Advertising Bureau (IAB) and National Advertising Initiative (NIA) that rely on the consumer to control what information is collected about them and whether or not that information is accurate. The FTC has proposed a “light switch” of sorts to be installed in Internet browsers, where the user could click a button disabling tracking of any kind. That, of course, eliminates targeted advertising of any kind.

What Szabo and others support is a system of consumer choice and business self-regulation with penalties enforced by the FTC and the Department of Commerce.

“The bad websites, they will do whatever they want — whether [in the presence of] old laws, present laws or future laws. What we need to do is encourage enforcement.” Szabo continues, “If companies self-regulate then you can encourage companies to participate in a system that protects not only consumers but protects innovation.”

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