As policymakers debate whether to regulate targeted advertising, analysts say service providers – Internet and mobile – must implement controls that give consumers options. Let users choose which kind of advertising is acceptable to them – aggregated, targeted or none – and chances are, they’ll work with you. That way, excessive rules won’t be needed and won’t threaten to crush the ad-supported business model, a framework that has helped the Internet to flourish.
“Advertising in and of itself is not an invasion of privacy,” said Stratecast OSS/BSS analyst Susan McNeice. But concern has mounted in recent months over technology that tracks Internet users’ buying habits and online activity. Some politicians want to restrict advertising and data collection. Other federal bodies want to address matters from the sidelines. Indeed, the Federal Trade Commission not long ago published a new version of its tract, “Self-Regulatory Principles for Online Behavioral Advertising.” In it, the agency seeks to minimize “potential misuses of data” without interfering too much with the private sector.
Achieving that aim takes user education and operator cooperation, wrote Berin Szoka and Adam Thierer of the Progress & Freedom Foundation in a June 2009 study. Otherwise, they warn, regulators will step in, stifling the evolution of the online ad marketplace and leading to “fewer free online services and less content, less high-quality online services and content, or some combination of both.”
No one wants that outcome. So what must operators do to prevent it? Give consumers a reason to take part in advertising campaigns, experts say. At the same time, carry out the TeleManagement Forum’s newly established “three Ps”: Privacy, Preferences and Permissions. Combined, these efforts should stave off heavy-handed interference and encourage the growth of advertising revenue.
First and foremost, let subscribers choose their level of involvement, said McNeice. Customers know phone and Internet service providers have their data. The question becomes how operators use that information to make money. If users start getting targeted ads and didn’t agree to operators watching their activities and buying habits, reactions will be emotional, not logical, McNeice said. That can manifest as an angry phone call or cancellation of service.
“That’s why you have to give the consumer some level of choice about whether or not they will accept those ads,” said McNeice. For example, she said, “pop-ups were a huge violation of the social contract and they went belly-up. The advertisers overplayed their hand.”
