Perhaps the scariest term in business today is "behavioral targeting." It also turns out to be one of the best practices around to assure the combination of consumer choice and marketing effectiveness on the Internet. And in that gap lies a dilemma for the marketing and media industries - and, indeed, for all citizens. For if fear overtakes reality, it could dramatically limit the accessibility and diversity of the Web.
A growing chorus of activists wants to tightly control online behavioral marketing, on the presumption that it compromises Internet users' privacy. Because interactive ads are built, delivered, and measured via a support structure of conjoined specialist organizations, these privacy-protection recommendations seek to regulate "advertising networks" and "third party entities" involved in online media. The New York State and Connecticut legislatures are considering bills that mandate inflexible controls on how Web media collect non-identifying data, regulate third parties involved in the delivery of interactive ads, and allow consumers to modify or remove anonymous information from aggregated databases. The Federal Trade Commission has issued draft guidelines that would prevent media, agencies, and marketers from using non-identifying data to make ads more relevant and products more effective for consumers. In a signed editorial, The New York Times even asked the Federal government to regulate the collection of the types of demographic information marketers have routinely gathered for decades, and recommended that all online data collection, including basic Web traffic measurements, be banned unless users explicitly provide permission.
These proposals are premised on an enormous amount of misinformation, and in some cases disinformation sown by anti-business groups opposed generally to the consumer economy and to consumer choice. University of Pennsylvania Professor Joseph Turow, who laments the passage of "mass marketing and the three-network universe" and who has testified before the FTC in favor of Internet regulation, has written that interactive ads - as well as products, and services tailored to consumers' interests -- "encourage a particularly corrosive form of personal and social tension."
Jeff Chester, the proprietor of an anti-marketing group called the Center for Digital Democracy and another frequent FTC witness, has sought to redefine "personal identity" to include anonymous shopping behavior, and has urged the government to regulate research using such information, arguing that businesses should not be able to take these "living aspects of ourselves" to encourage "individual consumers to behave or act in ways that favor or reflect the marketer's goals."
Aside from consumerism itself, the current object of these activists' ire is behavioral targeting - the tailoring of online content and marketing based on the product, service, entertainment and information preferences expressed through a user's anonymous browsing activities. Also called "online preference marketing," behavioral targeting is the technique used by Amazon.com to tell you about books you might be interested in, based on other books you've perused. In other words, it's the opposite of spam.
Spam is the advertising - and let's be frank, the content - that characterized the entirety of the marketing-media ecosystem for most of the past century. Premised on imprecise survey research, created for the broadest possible demographic segments, designed to run on a limited set of mass media outlets, spam is a one-size-fits-all form of communications that's irrelevant to most of the people most of the time. It's why most television sitcoms through history were alike and unfunny, why most news programs carried the same stories, why most advertising traffics in the same annoying conventions, and why mass emails pitching Viagra drive people nuts.
Behavioral marketing, by contrast, uses consumers' own choices to provide them more choices, in content as well as ads. Among scores of personal examples: I learned about "Djangofest," a jazz festival devoted to the music of the late gypsy guitarist Django Reinhardt, after exhibiting online behaviors (including searches for jazz guitar lessons) that enabled sites to target the festival's ads at me. I now even receive email and snail-mail reminders when the festival returns to New York - but only because I put my name and addresses on a mailing list, for nothing in these behaviorally-targeted ads identified me.
It's that kind of tailored marketing and consumer choice the activists want regulate out of existence. Before state and Federal politicians help them do so, here are some facts they ought to consider:
Behavioral data is not personal. To paraphrase the famous New Yorker magazine cartoon, when you're surfing the Internet, it's still true that nobody knows you're a dog. But providers can learn that you like dog biscuits, and serve you content and ads accordingly. Moreover, virtually all data collected online is behavioral - it derives from actions, not from survey responses. If politicians restrict it unthinkingly, advertising relevance will diminish, and spam will have a renaissance.
The same technologies that customize online advertising also customize content. Here is a cookie that the behavioral targeting network Tacoda uses to serve me ads: CFC-O6I.33A.1,GFC. Here is a cookie that Amazon uses to tailor book recommendations for me: PON1WVVCD3FLV. And here is a cookie that allows me to get personalized news from The New York Times: 459bcf8c-786cd-a262e-4f5b0. None of these cookies name me, but all of them help save me effort, time, or money. The regulatory recommendations circulating that would proscribe "online preference marketing" would affect all of them indiscriminately, and weaken the user-friendliness of the Web. (Oh, here is the cookie that tells Jeff Chester's Center for Digital Democracy that I've visited its site before: 854340a2196d648d1a756cc8e37c4277.)
Every Web site you visit is a product of "third parties." The Web is a web; when you browse, anonymous data is exchanged continuously among service providers, sites, ad-delivery companies, content developers, analytics firms, and many others. Place undue operating burdens on this ecosystem, and it's the ad-supported specialty sites, niche media, independent blogs, minority publications, and Mom & Pop dot-coms (thousands of which depend on third-party representatives to sell and convey their ads) that will suffer the most. Right behind them will be the traditional newspaper and magazine companies that are developing third-party online networks to augment their reach.
"Do-not-track" is synonymous with "do-not-improve." Observation of Americans' consumption behavior has been a staple of marketing research at least since Tocqueville reported on our obsession with "commercial and industrial occupations" nearly 200 years ago. So, too, today: Online behavioral analysis is essential if marketers and media are to enhance their products, services, entertainment, information, and news offerings. Regulatory restrictions on the collection of anonymous preference information will consign us to an economy based on inefficient speculation. How can we advance the way we communicate the virtues of green cars, social investing, or charitable giving? Guesswork, I guess.
Everything consumers need to regulate interactive advertising is available with a mouseclick. Don't want Web site operators, ISP's, marketers, third parties, or ad networks tracking your online behavior? Simple: Erase your cookies. You can even set your browser to eliminate them automatically at the end of each session. It's a bad idea - many of your customization features also will evaporate - but it is consumer choice, and it's preferable to a government mandate.
There certainly are legitimate areas of privacy concern involving the Internet. Spyware that secretly records keystroke entries, malware that damages hard drives, Constitutionally questionable intrusions by government agencies into citizens' telephone and email records, and lax security policies that allow personal information to leak from direct-marketing databases are - or ought to be - subject to severe civil or criminal penalties. Our politicians should be focusing on the real dangers, instead of following anti-advertising advocates' specious calls to restrict "online preference marketing." For those are your preferences they seek to restrict - and the infinite width of the World Wide Web.