• Consumers Voice Concerns Re Online Marketing
  • May 9, 2008
  • Law Firm: Reed Smith LLP - Office
  • Behavioral marketing—the practice of targeting consumers with relevant content based on their online activities—is a particularly efficient way to advertise, and underwrites much of the free content on the Internet.

    Nonetheless, results from two recent polls underscore just how wary consumers are of technologies used to track their online activities—even if such tracking does not link consumer profiles with personally identifiable information.

    This marketplace dichotomy is particularly relevant now, as the Federal Trade Commission is mulling whether to set standards that govern behavioral advertising—or delegate to the industry the creation of such standards. More than 60 groups and companies commented on the FTC’s proposed principles for self-regulation of behavioral advertising by the April 11 deadline (see related ABR story).

    Skepticism and Solutions

    One hurdle online marketers face is that consumers appear to want to have their cake and eat it too.

    Pollsters from HarrisInteractive explained to respondents that “websites like Google, Yahoo!, and Microsoft (MSN) are able to provide free search engines or free e-mail accounts because of the income they receive from advertisers trying to reach users on their websites.”

    The pollsters then asked, “How comfortable are you when those websites use information about your online activity to tailor advertisements or content to your hobbies and interests?”

    An estimated 59 percent of respondents said they were not comfortable with the use of their online activities for these purposes.

    “Websites pursuing customized or behavioral marketing maintain that the benefits to online users that advertising revenues make possible—such as free emails or free searches and potential lessening of irrelevant ads—should persuade most online users that this is a good tradeoff,” noted Dr. Alan F. Westin, Professor of Public Law and Government Emeritus at Columbia University, who helped design the poll.

    However, “current online users clearly do not accept it,” Dr. Westin said.

    The pollsters then showed survey respondents several proposed privacy and security policies taken from the FTC’s recent proposed self-regulatory principles. These included recommendations that websites:

    • Explain to users how they use information about consumers’ online activities to customize content
    • Offer users choices concerning the content and advertising shown to them
    • Apply reasonable security measures to guard online user information
    • Promise to refrain from sharing personally identifiable information with third parties without consumers’ consent

    Between 45 percent and 55 percent of respondents said that if websites adopted these policies, they would be comfortable with companies using information concerning their online activities to serve ads or content.

    Pollsters expressed surprise that after learning of the FTC’s proposed safeguards, there was not a greater increase in comfort levels with behavioral advertising.

    “The failure of a larger percentage of respondents to express comfort after four privacy policies were specified may have two bases—concerns that web companies would actually follow voluntary guidelines, even if they espoused them, and the absence of any regulatory or enforcement mechanism in the privacy policy steps outlined …,” Dr. Westin stated.

    Perhaps unsurprisingly, younger Internet users reported being more comfortable with the idea of customized content.

    Attitudes and Education

    Added consumer education and increased privacy safeguards are needed to reduce consumer discomfort with behavioral advertising practices, concluded a privacy certification group, following the release of another survey on the topic.

    TRUSTe, which certifies websites that meet certain privacy standards, reported that 71 percent of online consumers recently surveyed said they were aware that their browsing information may be collected by a third party for advertising purposes. Some 57 percent said they were not comfortable with advertisers using their browsing history to serve relevant ads—even when that information could not be tied to their personal information.

    Only 40 percent of respondents were familiar with the term, “behavioral advertising,” TRUSTe reported. The survey was conducted by TNS, a global market research group.

    Most respondents (91 percent) claimed they would be willing to take steps necessary to assure privacy online, if presented with tools to control their Internet tracking and the ads they receive. Nearly two-thirds of respondents (64 percent) said they would choose to view online ads only from retailers and brands that they know and trust.

    Further, 42 percent of respondents said they would sign up for an online registry to ensure that advertisers are not able to track browsing behavior, even if it meant they would receive more ads that are less relevant to their interests, TRUSTe reported.

    “Education … appears to be the key to finding a constructive balance between behavioral targeting and consumer privacy, because no matter how much we assure anonymity, there is still significant discomfort with the idea of tracking,” stated Fran Maier, executive director of TRUSTe.

    Behavioral targeting is “one of the most promising methods” of delivering relevant advertising to consumers, noted Maier. “[B]ut at the very least, it has to be made more transparent, provide choices, and deliver real value,” she said.

    Why This Matters:  Consumers claim they are uncomfortable with online tracking—even if it’s done anonymously. But the efficiencies gained through behavioral targeting enables online providers to deliver free content and services. Online providers are under increased pressure to educate consumers concerning the benefits of behavioral targeting, lest controls be imposed that make the delivery of free and targeted content difficult.