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.

Image: Boucher.House.gov