Congress is happy to bail out the auto industry, but a new bill in the works could spell trouble for the online ad industry.

According to All Things D:

"Simulmedia founder and CEO Dave Morgan told an industry conference today that Rep. Rick Boucher, the Virginia Democrat who has become the loudest voice in Congress in the advertising/privacy fight, is prepping a bill that will force publishers to let Web surfers “opt in” before they’re served with any third-party tracking cookies."

The details on the bill are not set yet, but an "opt-in" requirement could cripple behavioral targeting - a practice that has been much maligned but a key component to successful advertising online. And while Congress may be trying to protect consumers online, a shoddy bill trying to protect consumers against privacy infringement could make their online surfing experience much worse.

Privacy concerns regarding online targeting are valid. Many consumers have no idea how and when they are being targeted and what is happening with that information.

According to a report by the Consumer Reports National Research Center last week, 57% of Web users mistakenly believe that companies are legally required to identify themselves, spell out why they're collecting data and who they intend to share it with before monitoring their online browsing. Sixty-one percent think what they do online is "private and not shared without their permission," and 43% of users weirdly believe that a court order is required to monitor Web-browsing activities.

But online advertisers are already self-regulating and the FTC is cracking down on companies that don't clearly state their tracking policies or change them without properly informing consumers.

According to FTC Director Charles Harwood: “Where we found that policy is misrepresented in a company’s actual practices, the FTC has filed lawsuits to require the company to post an accurate policy and to implement strict standards to ensure that company adheres to the policy.”

Consumers might not entirely understand their rights online, but most major publishers currently have opt-out models, and increased attention is helping make these policies clearer.

But as it stands, most consumers are not excercising their right to withdraw from targeting.

Asked about how many consumers actually opt-out of online tracking last week at a joint hearing of the House of Representatives' subcommittees on communication and consumer protection, Yahoo!'s head of privacy, Anne Toth, said the number was "certainly far lower than 1%."

The entire market for online advertising is predicated on knowing what people are doing online. And as publishers drill down on the demographics, preferences and habits of consumers, they can sell that data to advertisers - and serve better ads.

Representative Boucher says he is a proponent of behavioral targeting. On his website it states: "I would much prefer to receive Internet advertisements that are relevant to my interests. In fact, I have bought quite a number of items that I otherwise might not have purchased as a result of targeted advertising delivered to me by websites that I frequently visit."

But other consumers don't really consider such things. And a simple shift to an opt-in model could install a barrier to targeted advertising that could severely limit its efficacy. Most consumers don't care enough about their information going to advertisers to opt-out of behavioral targeting, but putting that decision at the forefront could make them abstain by default.

Not to mention the number of pop-ups that could resultingly increase, as publishers try to reassert their right to access some user data.

Collecting anonymous data and selling it to advertisers results in better advertising for consumers. Clearly misapprensions about behavioral targeting should be rectified, but it is in publishers' best interest to self-regulate and keep consumers happy. Given the fact that when they have the choice to opt-out most consumers don't really take it, the solution is likely more transparency and information rather than a blanket resolution to opt-out or in to all behavioral targeting online.


Meghan Keane

Published 24 June, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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Comments (3)


Jeffrey Chester

Consumers have already suffered greatly from the lack of regulation over the financial sector.  Now--as they increasingly depend on the online medium for financial services,  health products, and other sensitive transactions (inc. involving children and adolescents)--they are being asked to forgo reasonable safeguards designed to protect their privacy and interests.  As this site knows better than most others, behavioral advertising has evolved to become a serious threat to privacy.  The profiling, tracking, targeting system now incorporates offline databases and utilizes a host of techniques designed to collect more data.  If some in the online ad industry cannot support a system where privacy can be protected while consumers engage in e-commerce, they reflect the same kind of short-sighted thinking that led to the current financial crisis.  Responsible members of the online ad industry should support consumer control over their data. We can develop a system where everyone can win--consumers and online marketers.

about 9 years ago


Jon Donley

"Most consumers don't care enough about their information going to advertisers to opt-out of behavioral targeting, but putting that decision at the forefront could make them abstain by default."

This statement is disingenuous. Studies clearly show that the majority of internet users don't know that information is being collected about them and how it's being used.  I'm squarely in favor of behavioral targeting for advertising, as my livelihood depends on it. But it's claims like this that motivate federal and state regulators to see red.  The idea that a consumer would click on a site's privacy policy link, read it through . . . and understand and act on it . . . is ridiculous.

If the industry wants to save this vital process, it needs to start by admitting that like all fine print, the opt-out choice is obscured and difficult to understand.  The industry, in fact, operates on the theory that most people won't bother . . . and is fearful that such notices and opt in/out choices were explained more simply and clearly, that more people wouldn't agree.

That's really the bottom line of the article above: "If we make it clear and highlight the choices, consumers won't agree."

about 9 years ago

Meghan Keane

Meghan Keane, US Editor at Econsultancy


No. That wasn't what I was saying. I think it's important to have industry standards because people make snap decisions when dealing with fine print. Presented with an opt-in policy when signing up to use a site, I think that most users would opt-out, mostly because it just seems easier.

But I think that the people who really care about the issue — privacy advocates and publishers — can reach a solution that is both safe for consumers and useful for advertisers. I just don't see a blanket regulation from Congress forcing opt-in policies fixing this. But I'll write more about it when/if the bill comes to fruition.

about 9 years ago

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