Category: consumer protection

Innovation, Digital Marketing & Privacy: Debunking the Google, Facebook and online ad lobby myths






As was done during the 1990’s by the online marketing industry to oppose consumer privacy rules at the FTC and eleswhere, once again digital advertising companies disingenuously claim that enacting appropriate privacy safeguards will [as Google puts it]: “thwart the ability of companies to develop new services and tools, and in turn make U.S. Internet companies less competitive globally and make the Internet a less robust medium….an anti-innovation framework would counterproductively choke off the development of new tools and services to protect personal privacy.”  Facebook similarly told the industry-friendly Commerce Department that “imposing burden privacy restrictions could limit Facebook’s ability to innovate, making it harder for Facebook to compete...”  The facts—as Google, Facebook and the other companies undoubtedly know—show this to not be the case. First, online marketers, including Google, did not build-in serious privacy and consumer protection safeguards into their online marketing products.  All the innovation has and is focused on expanding the data collection, profiling and targeting of each user, across multiple platforms and applications.   Google, Yahoo, Microsoft, Facebook, ad agencies and digital marketing companies have significantly invested in creating new forms of digital data collection and new ways to measure it.  That point is something that the industry doesn’t volunteer and that regulators and policymakers should recognize.  It has taken a global public uproar and governmental pressure that has forced Google, Facebook and the entire online ad industry to more seriously acknowledge and respond to concerns on privacy practices.  (In fact, it was only due to the pressure brought by CDD, EPIC and colleagues opposing Google’s acquisition of DoubleClick that forced the FTC to issue new staff proposals for behavioral advertising and privacy.  Pressure from NGOs has been a key factor on industry and policymakers).

The U.S. is the global leader in developing and deploying online advertising applications and data targeting technologies.  It sets the standard in the E.U, Asia Pacific, South America and elsewhere.  Once the FTC establishes its new Framework, and as the EU revises its own to reflect contemporary online commercial data collection techniques, U.S. online marketers can engage in the same spirit of innovation that will make their online products and practices truly privacy friendly.  The FTC, the White House and Congress should not permit Google and other digital marketers to invoke the term “innovation” as it was some magic political talisman that automatically will choke-off reasonable consumer privacy policy safeguards.  Its time to set aside the self-serving claims that privacy safeguards will undermine innovation.  Indeed, it is common sense to also admit that once consumers know that their privacy is respected, there will be greater confidence in e-commerce and online marketing generally.  But many in the online ad lobby are afraid that if a consumer is honestly told about the digital marketing process, including the tactics used to harvest their data, an aware public will be wary of the online system.  They will undoubtedly be concerned–but it’s an excellent reason to work together and enact new serious public policies that ensure consumers are fairly treated in the digital marketplace.

PS:  In Facebook’s privacy filing it cites President Obama’s State of the Union speech where he singled out Facebook and Google as examples of innovation in the U.S.  We doubt the President intended Facebook to use his speech as a political tool arguing against protecting consumers online through privacy regulation.  Everyone should read Facebook’s submission–especially Facebook users.  It is one of the most self-serving and narrow-minded policy screeds I have read recently.  They invoke the concept of the “social web” as if it should automatically permit Facebook to be a consumer protection free- zone.  Note in the document how Facebook urges the FTC (which is likely investigating it as we speak) to “continue to pursue a retrained approach to enforcement.”  How wonder it just hired another lobbyist--a former Bush White House top staffer.

Google & WPP Showcases their Academics–Helping Erode Privacy and Expand Data Mining of Consumers [video]

Take a look at this Google Business Channel YouTube video showcasing some of the academics who received funding and access to proprietary data for work designed to expand interactive marketing. [you may need to subscribe to the Business Channel.  Look for 2010 WPP-Google Marketing Research Awards]  Google and WPP have a “scholars” program designed to help these two online marketing giants and the field better data mine consumers.  One project is even being used to undermine the need for consumer privacy policies.  An academic in the video discusses the funding he received from Google/WPP for “Unpuzzling the Synergy of Display and Search Advertising: insights from Data Mining of Chinese Internet Users.” [Let’s discuss the human rights related issues later!]  Profs. Avi Goldfarb and Catherine Tucker, whose work has been cited by the online ad lobby in their attempts to stave off consumer protection–and who filed their own Comment in the Commerce privacy proceeding suggesting that somehow protecting privacy could undermine the economic vitality of the industry–are also in the video.

Scholars who take industry money to support research and policies must, of course, always significantly acknowledge such a special interest funding relationship (to the press and policymakers, esp).  There are serious conflicts of interests taking such funding, which should raise questions about the objectivity of the research.  Academics should also recognize, and accept personal responsibility, that their research is likely being used to advance an agenda that often places consumers and citizens at a disadvantage and at risk. For example, Google has not played a serious proactive role protecting privacy online and addressing the consumer protection related issues accompanying much of digital marketing.  Instead of scholars who act as public intellectuals, too often we have researchers who become political pawns used by the marketing and media industry lobby.

Here’s a list of the academics who took Google/WPP funds in 2010 to help these two online ad giants better understand “how online media influences consumer behavior, attitudes and decision making.expand the impact of online advertising.”

2010 Google & WPP Award participants:

  1. Michael Smith and Rahul Telang, Carnegie Mellon: Channels and Conflict: Efficient Marketing Strategies for Internet Digital Distribution Channels.
  2. Chrysanthos Dellarocas, Boston University and William Rand, University of Maryland: Media, Aggregators and the Link Economy: An Analytical and Empirical Examination of the Future of Content.
  3. Anita Elberse, Harvard University and Kenneth Wilbur, Duke University: What Is The Right Mix Between Offline And Online Advertising? A Study Of The Entertainment Industry.
  4. Arun Sundararajan, NYU and Gal Oestreicher-Singer, Tel Aviv University: The Breadth Of Contagion Of The Oprah Effect: Measuring The Impact Of Offline Media Events On Online Sales.
  5. Yakov Bart, Miklos Sarvary, Andrew Stephen, INSEAD: Consumer Responses To Mobile Location-Based Advertising.
  6. V Kumar, Vikram Bhaskaran and Rohan Mirchandani, Georgia State University: Measuring the Total Value of a Customer through Own Purchases and Word of Mouth Referrals: A Field Study in India.
  7. Alan Montgomery and Kinshuk Jerath, Carnegie Mellon: Predicting Purchase Conversion From Keyword Search Using Associative Networks.
  8. Shawndra Hill, University of Pennsylvania and Anand Venkataraman, 33Across: Collective Inference For Social Network-Based Online Advertising.
  9. Anindya Ghose, NYU: Modeling The Dynamics Of Consumer Behavior In Mobile Advertising And Mobile Social Networks.
  10. Jane Raymond, Bangor University: The Importance Of Relevance: Cognitive Science Research On Distraction By Advertisement On The Internet.
  11. Koen Pauwels, Dartmouth, Oliver Rutz, Yale, Shuba Srinivasan, Boston University and Randolph Bucklin, UCLA: Are Audience-Based Online Metrics Leading Indicators Of Brand Performance?

Arianna Huffington’s AOL Privacy Problem–Will She Be a “Progressive” and Limit Behavioral Targeting?

Ms. Huffington’s HuffPost used behavioral targeting and other forms of interactive marketing to help make the news site successful.  At HuffPost, the privacy issues involved with such practices were never seriously addressed.  But now Ms. Huffington has a new role as the editorial executive for AOL’s content service.   But AOL is engaged in extensive and manipulative forms of behavioral targeting–including the pervasive online targeting of teens, African Americans, health and medical consumers and patients, for financial service products, etc.  Like other online marketers, AOL claims such online tracking, profiling and targeting isn’t really personally identifiable–which is both inaccurate and deceptive.  We challenge Ms. Huffington to engage in a serious journalistic investigation of AOL’s privacy practices and redress them.  There should be absolutely no targeting of adolescents.  Behavioral targeting of African-Americans, financial and health products should be by prior opt-in consent only.  Ms. Huffington should be held responsible for AOL’s privacy and online marketing practices–and we expect her to address them as she increasingly plays a greater leadership role in the online ad industry.  Meanwhile, here’s what AOL says it does using behavioral targeting focused on African-Americans:

Behavioral. Target consumers based on their interests:

  • Black Voices. People who visit Black Voices for the latest in news, entertainment, sports, lifestyle, careers, money and more.
  • You can target the following subsections of the Black Voices audience:
  • Auto Intenders. In-market car, truck or motorcycle shoppers who are looking for specific makes and models. They read reviews, look at pricing and features, and research financing options.
  • Die Hard Sports Fans. Dedicated fans who follow professional and collegiate sports, stay on top of player rankings, and shop for sports memorabilia.
  • Entertainment Buffs. People who follow the latest news about celebrities, movies, music and soaps. They purchase DVDs, music and video games online and also take an active interest in memorabilia.
  • Money Minders. Affluent, older individuals who are seeking online financial advice, checking the performance of their investments, getting tax advice, planning their retirement and researching insurance options.
  • Moviegoers. Movie buffs who read the latest reviews, follow celebrity gossip and purchase tickets/DVDs online.
  • Travelers. Personal and business travelers who are interested in travel advice and deals. They use the internet to purchase airline tickets, book accommodations, make car reservations and research financing options.

Accurate. Pinpoint your customers with other powerful targeting solutions:

  • Develop a custom audience segment modeled after visitors to your site (Look-Alike Modeling).
  • Find African American households that have the greatest propensity to purchase specific products or brands (MRI Lifestyle Clusters).
  • If you’re sponsoring an AOL page, retarget consumers who have visited it (Sponsorship LeadBack).
  • Find your ideal African American audiences on the sites they are most likely to visit (Subnet Targeting).
  • Find AOL members who have selected the AOL Black Voices Welcome Screen as their homepage option, or who have indicated (through third party data) that someone in their household is of African American ethnicity (Audience Rosters).

and its behavioral targeting of consumers looking for mortgages and other financial products:

Behavioral. Target consumers based on their interests:

  • Business Decision Maker. Individuals with an active interest in business news and strategy.
  • Money Minders. Affluent, older individuals who are seeking online financial advice, checking the performance of their investments, getting tax advice, planning their retirement and researching insurance options.
  • Real Estate Intender. In-market individuals looking to buy, sell or rent property.
  • Small Business Owner. Small business professionals shopping for real estate, health care and office and computer equipment.
  • Investors. Affluent individuals who read business news, evaluate stocks, seek financial advice and conduct trades online.
  • Insurance Intender. Individuals seeking information about life, auto, home or health insurance.
  • Mortgage Intender. Individuals seeking information about mortgage rates and/or home loans.

and AOL’s adolescent targeting [for shame!]:
Behavioral. Target consumers based on their interests:

  • Active Gamers. Teens and adults looking for online and console game strategies, tracking game release dates and purchasing video games.
  • Television Watchers. Individuals who keep up with their favorite television shows via TV network sites and online communities.
  • Style Mavens. Trend-focused women interested in the latest fashion, jewelry, and health and beauty items. They like to feel as good as they look by also paying attention to diet and fitness. 
  • AIM Audience. Individuals who have visited AIM properties.

Neuromarketing Research–Sponsors include Miller Coors, American Express, Hershey’s

excerpt on the Advertising Research Foundation’s “Inaugural NeuroStandards Retreat”–

On January 12-14, 2011 at Campbell Soup Headquarters in Camden, New Jersey, 40 senior review panel members, research vendors, gold brand sponsors, gold media sponsors, silver sponsors and ARF personnel gathered to discuss significant insights and key findings from the unprecedented Engagement 3: NeuroStandards Collaboration. This groundbreaking ARF research project,… will provide much-needed transparency about biometric and neurological research methods.
In advance of the retreat, each of the research vendors involved (Gallup & Robinson, Innerscope, MSW Research/LAB, Mindlab International, NeuroCompass, Neuro-Insight, Sands Research, and Sensory Logic) were asked to analyze eight commercials—one from each gold brand sponsor (American Express, Campbell Soup, Clorox, Colgate-Palmolive, General Motors, Hershey’s, Miller Coors and JP Morgan Chase).

The research vendors presented their reports to each sponsor prior to the retreat. The reports were also reviewed by a number of subject matter experts (for example, Electroencephalography (EEG) experts looked at EEG reports, Functional Magnetic Resonance Imaging (fMRI) experts looked at fMRI reports). Subject matter expert reports were then distributed to a panel of expert reviewers who provided their assessment at the retreat…

The expert reviews, discussions and key findings from the ARF NeuroStandards Retreat will be presented in March at Re:think 2011 – The ARF 75th Anniversary Annual Convention. Some of the major topics that will be explored include:

How neuromarketing research can produce new insights for advertising, branding, and other marketing research projects;
Which biometric and neurological methods are best suited for specific research objectives and what are the advantages and disadvantages of these methods compared to traditional research methodologies…

Online Data Targeting Companies Say: “The usage of data will penetrate the online ad ecosystem and the next few years should see data impacting the entire media buying process”

 excerpt from a post by a BlueKai exec:   “The usage of data will penetrate the online ad ecosystem and the next few years should see data impacting the entire media buying process – end to end.  Marketers already need to understand their audiences through customer interactions across multiple channels.  The most progressive marketers are maximizing both audience and campaign performance data as a way to drive marketing spend…as more and more agencies  adopt media strategies that deploy audience profiling and data analysis, there will be an increase in demand for the data scientist…Data driven audience targeting moves operation out of the back room black box systems and into the hands of marketers who are planning so they can really do a much better job of identifying your ideal customer, reach them by very specific targeting attributes and get a much better picture of what’s working and what’s not.  It seems like a no-brainer, but much of the online media spend today is not driven by data.  A data-centric approach to marketing is opening up a new world to online marketing which promises to be a world that provides transparency, target specificity, scale, accountability and results…The ability to combine audience and media performance data gives marketers a full picture of how they can get more of their marketing dollars. 2011 promises to be the year marketers take control of their data and look for solutions that can provide a full-service, full-loop solution will become vendors of choice.”

Microsoft on Privacy Regs vs its business model: “to monetize human attention”

As we prepare for a vigorous debate on protecting consumers and citizens, it’s useful to reflect how online marketing companies view the process.  This excerpt from a Politico story last month notes, that:

Representatives from Google and Microsoft agreed it is the companies’ jobs to make sure consumers can trust them with personal information by giving them more control over how that data is shared. But regulation is a slippery slope. “Our business model is to monetize human attention,” said Marc Davis of Microsoft’s Online Services Division. “Regulation does potentially threaten the value of that.” Added Google’s Betsy Masiello: “Those business models also rely entirely on user trust.” They agreed there’s no legal clarity over who owns what data, and whether online information is owned by the person who entered it online or the company who runs the platform that stores it. “We’ve created this new business class without any clarity,” Davis said.

As Google Expands Digital Food Marketing Clout, How Will it Protect Children and Adolescents from Online Junk Food Ads?

Google just announced plans to “to build its advertising and marketing business in the food and beverage industries,” including “establishing a food-and-beverage team in Chicago to link with advertisers and marketers.”   The online ad market leader hired a former Frito Lay and beer marketing executive who explained that the company intended to harness the “untapped potential in the digital world for food and beverage advertisers, and Google’s ability to work with them, based on proprietary analytics that map out consumer behavior.”   The exec–Karen Sauder–said that Google intended to use its clout with online media to generate a deep connection to users, including taking advantage of “some of the new location-based services and mobile technology that’s really untapped at this point.”

As our companion site digitalads.org documents, food and beverage companies, along with online ad companies such as Google, Yahoo and Microsoft, are targeting young people with digital ads for products linked to the youth obesity crisis (they are doing this in the U.S. and globally).  Google should play a leadership role and adopt new safeguards to ensure that no one under 18 is targeted by digital junk food ads–and that it undertakes a thoughtful analysis to address problems raised when targeting vulnerable groups.  We hope Microsoft, Yahoo and others will also do so.  We call on Google to embrace a “healthy” digital diet for its food and beverage marketing. This is an issue that will be on the policy radar in 2011.

Did the Commerce Dep’t Give a Special Deal to the Online Data Collection Lobby?

It sure sounds that way, given what the Interactive Ad Bureau wrote on the new privacy proposal (our emphasis):

“The green paper is another important step in what has been an inclusive, productive process to develop the Administration’s strategy for increasing consumer online privacy, while balancing the realities of our national economy. It provides vital support for industry self regulation. The Department of Commerce’s recognition that these efforts can be an effective means for increasing transparency around data practices and empowering consumers with a comprehensive, easy-to-use opt-out mechanism is key, given other recent reports. Increasing consumer confidence in the Internet is a common goal. We agree that supporting these industry codes in a timely fashion is critical, and our cross-industry coalition looks forward to working with the Administration to ensure our program is both robust and enforceable.”

The Commerce Department met with our coalition of consumer and privacy groups only once–after we had written to the White House asking for a meeting with officials there.  There was no formal briefing for the country’s leading consumer and privacy groups prior to the report’s release. Yet we understand Commerce did one for industry. As the Obama White House proceeds with its plans for the forthcoming “multi-stakeholder” deliberations, they must be structured in a manner that ensures significant consumer and privacy participation (which means that groups funded by the online ad industry have to be dealt with in different fashion).

Digital Ad Lobby Plan for Commerce Privacy Approach: Sideline FTC and Stronger Consumer Protection Rules

The Department of Commerce’s report on privacy has received praise from the Interactive Advertising Bureau lobbying group.  As reported by Politico,  “IAB’s Mike Zaneis [said] the Commerce Department’s new privacy report represents “a really important step in what has been a really inclusive and productive process by commerce and the administration.” Zaneis said he felt Commerce recognized (more than the FTC did) the importance of “economic growth” in recommendations about what to do next with online privacy. On the proposed Privacy Policy Office, the IAB-er further told us he felt it strikes the right balance – it is a “great idea to coordinate various stakeholders,” he said – and it creates a relationship where Commerce coordinates the rulemaking while the FTC handles enforcement. “What this has done is identify the FTC as an enforcement, not as a rulemaking or legislative, body,” he told us.


The IAB and other data collection groups are fearful of the FTC, because that agency has finally caught up to speed on the digital marketing, consumer protection and privacy issue.  Its Chairman Jon Leibowitz supports do not track (something the Commerce paper didn’t really discuss);  the Bureau of Consumer Protection head appointed by Mr. Leibowitz is a serious and skilled attorney who is concerned about consumers.  The IAB would rather have the business-interest friendly Department of Commerce be the broker of a deal that they hope will affirm the data profiling and tracking status quo.

The Obama Administration is going to have to ensure that any new multi-stake holder process provides the consumer and privacy advocates not only parity with industry, but access to resources and information so the process will be fair to consumers.  Discussions will require transparency and accountability.  The FTC should not be sidelined–although we want to see both that agency and the Commerce Department do a better job standing up to protect consumers and their privacy.

Finally, the Obama Administration must put the interests of European and Asian/Pacific consumers and citizens before the commercial concerns of U.S. online marketing companies.  The U.S. shouldn’t be a digital enabler that allows online ad companies to track and target users abroad for financial, drug, junk food and other products without serious safeguards.  A higher global standard of privacy and ethical conduct of the U.S. government is required.

Statement of Jeff Chester on the Department of Commerce’s Internet Policy Task Force Privacy and E-Commerce: a Bill of Behavioral Targeting “Rights” for Online Marketers?

The Obama Administration asks some important questions about protecting the privacy of U.S. consumers.  But given the growth of online data collection that threatens our privacy, including when consumers are engaged in financial, health, and other personal transactions (including involving their families), this new report offers us a digital déjà vu.   The time for questions has long passed.

Instead of real laws protecting consumers, we are offered a vague “multi-stakeholder” process to help develop “enforceable codes of conduct.”  If the Commerce Department really placed the interests of consumers first, it would have been able to better articulate in the report how the current system threatens privacy.    They should have been able to clearly say what practices are right and wrong—such as the extensive system of online behavioral tracking that stealthily shadows consumers—whether on their personal computer or a mobile phone.   The paper should have firmly articulated what the safeguards should be for financial, health and other sensitive data.  The report should have rejected outright any role for self-regulation, given its failures in the online data collection marketplace.  While the report supports a FIPPS framework, these principles can be written in a way that ultimately endorses existing business practices for online data collection and targeting.

This illustrates one of the basic problems with the Administration’s approach to protecting consumer privacy online.  The Commerce Department is focused on promoting the interests of industry and business—not consumers.  It cannot play the role of an independent, honest broker; consequently it should not be empowered to create a new Privacy Policy Office.   Having the Commerce Department play a role in protecting privacy will enable the data collection foxes to run the consumer privacy henhouse.  We call on the Administration and Congress to address this issue.  A new Privacy Policy Office should be independent and operate under the Administrative Procedures Act—ensuring there are safeguards for meaningful public participation and transparency.

The Commerce paper’s real goal is to help U.S. Internet data collection companies operate in the EU, Asia/Pacific and other markets as “privacy-free” zones.  Under the cover of promoting “innovation” and trade, I fear the U.S. will craft a crazy-quilt code of conduct regimes that they will claim should pass muster in the EU (which has a more comprehensive framework to protect privacy).  The Obama Administration appears to be promoting a kind of “separate, but equal” framework, where it will argue that no matter how weak U.S. privacy rules are, other countries should accept them as the equivalent of a stronger approach.  The new paper should have acknowledged the U.S. has to play catch-up with the EU when it comes to protecting consumer privacy.

We have been promised meetings with the new White House subcommittee on privacy, where consumer and privacy groups will raise these and other concerns.