Thanks to acquisitions exceeding $100bn in recent years, the largest internet service providers (ISPs) in the US are set to become some of the most dominant digital ad players.

But while there has been significant concern that the Federal Communications Commission's (FCC) roll-back of consumer broadband privacy rules raises the possibility that ISPs could use their treasure troves of data without customers' permission, the largest ISP in the US appears to be taking a more cautious approach than it might legally have to when it comes to exploiting customer data.

As The Wall Street Journal detailed on Monday, Verizon has launched a new program called Verizon Up that offers users rewards like free music, Uber rides, sports gear, coffee and discounts on new phones. There are also "amazing once-in-a-lifetime experiences and front-row tickets" to concerts, movies and sporting events.

Verizon boasts that "no points or levels [are] required" in its new rewards program. For every $300 spent on a Verizon Wireless monthly bill, customers receive one credit.

Oh, and there's one more thing: to participate in Verizon Up, customers have to opt into Verizon Selects, a program that "uses information about your web browsing, app usage, device location, use of Verizon services and other information about you (such as your postal/email addresses, demographics, and interests) and shares information with Oath (formed by the combination of AOL and Yahoo)" to "personalize your experiences and make advertising you see more useful across the devices and services you use."

In other words, to score rewards, Verizon customers have to allow Verizon to use the data it has about them to deliver targeted ads.

A new kind of truth in advertising?

Naturally, Verizon Up is going to have its critics, but the company believes it is actually being more transparent and honest with its customers than many other digital advertising players are with their users.

Verizon's CMO, Diego Scotti, pointed to Google and Facebook, telling the Wall Street Journal, "Some of our competitors, they have exactly the same thing, it's just buried in the terms and conditions of the service. We are not hiding anything."

It's not a bad point.

Google and Facebook are under increasing scrutiny as their digital ad dominance grows. Both companies track users across the web and across devices. And in most cases, average users don't know when they're being tracked or how to control the data collected even when they have the ability to. In July, a judge in California dismissed a lawsuit against Facebook over its tracking of users even when logged out. Users don't have an expectation of privacy, the judge ruled.

Google and Facebook, of course, offer a lot of value to users and the argument is that users allow these companies to collect data and advertise to them as payment for their otherwise free services. "If you're not paying for it, you're not the customer, you're the product" the saying goes.

For years, some argued that users should be paid for their data as part of a so-called information market. As Vasant Dhar, a professor at New York University's Stern School of Business has argued, Facebook in particular would benefit by being more transparent given the amount and type of data it collects. "If users aren't making a conscious choice about what happens with their data, they end up feeling violated," he stated.

But despite years of this kind of talk, there has been literally no movement on the part of advertising giants to compensate their users for their data. Even though its rewards are tied to dollar spend, Verizon Up is arguably one of the first major programs in which a major company is seeking to get customers to voluntarily give up their data for advertising purposes by giving them something of value in return other than access to a free service.

Will it work? And will Verizon refuse to take and use valuable data from customers who don't sign up for Verizon Up?

How those questions are answered could very well determine if a different future is possible for the digital advertising market.

Patricio Robles

Published 11 September, 2017 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (3)

Pete Austin

Pete Austin, Founder and Author at Fresh Relevance

@Patricio, there's a typo in the "Verizon Up" link. Need to remove the trailing %20 from:

10 months ago

Pete Austin

Pete Austin, Founder and Author at Fresh Relevance

I think this collides with the GDPR, which will be interesting.

Verizon Up affects "postpaid customers in good standing who are residents of the U.S. (excluding the territories of Guam, Puerto Rico and the Virgin Islands) and enrolled in Verizon Selects". The legalese is in a pop-over on this page - read the source to see its text:

And the GDPR affects, " the processing of personal data of data subjects who are in the [European] Union":

At first sight, Verizon may seem to be unaffected, because they only collect data in the USA where they are based and not in the EU. But when e.g. Americans go on holiday to Europe, they are still "residents of the U.S." and they also become "in the [European] Union" for the duration of their holiday.

My reading of the legislation is that they will gain GDPR rights over all their Verizon Up data for this period - regardless of where it was collected - and can invoke the rights of data subjects, such as asking for a copy of the data.

10 months ago

David Moth

David Moth, Managing Editor at Barclaycard

thanks Pete, I've amended that link.

10 months ago

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