Category: consumer protection

The real digital TV transition: Why TV “Advanced Advertising” [aka Project Canoe] Raises Privacy & Consumer Protection Concerns

The cable and telephone industry have Google envy.  These broadband communications giants recognize that online advertising companies such as Google and Yahoo have created an enormous market for themselves through the delivery of online ads.  Comcast, Time Warner, Verizon and others want to use their Bush Administration-given broadband monopoly status to gain a significant share of this market.  Cable giants are also working together to transform television so it can better compete with online, and target viewers with more precision and in-depth ads.  The goal–for cable, phone and online ad companies–is to eventually provide a seamless system that tracks, profiles and targets us across every “screen,” including TV, PC and mobile.

Comcast is heavily investing for such a viewer/user tracking world.  It has plans, according to the trade publication Multichannel News to create a “gigantic database called “TV Warehouse,” able to store a full year of statistics gathered from digital set-tops in more than 16 million households nationwide…TV Warehouse, envisioned as having a massive 500 Terabytes of storage, would then feed up to a database even broader in scope operated by Canoe Ventures, the advanced-advertising venture formed by Comcast and five other large MSOs.  The idea: to give advertisers an enormous set of actual viewing metrics — showing exactly what millions of cable customers watched and when — as opposed to representative samples.”

Not surprisingly, Comcast’s Brian Roberts has said his company should no longer be viewed as merely a provider of television:  “Over the last few years we have successfully transformed Comcast from a cable company into a new products company that utilizes one infrastructure to deliver a growing number of products.”  Advanced Advertising, which is what the cable industry’s technical consortium known as CableLabs calls it, is one of the major products Comcast and others will soon provide.  According to CableLabs, “Advertising is growing in importance for cable operators. CableLabs is currently supporting activity in four areas designed to create new revenue opportunities around advanced advertising technologies. These areas are digital ad insertion, interactive advertising, reporting, and addressability.”   Cable executives are working with advertising companies to “…agree on a valuation metric. What’s a click worth?”

But the core concern with Advanced Advertising is the tracking of viewers, including the use of internal and outside databases for targeting. Comcast Spotlight, for example, offers marketers access to a broad range of databases for more precise targeting. Acxiom offers cable and other providers a host of database segmentation services, including its Personicx VisionScape. “With PersonicX VisionScape, marketers have at your fingertips real-time access to a wealth of information… that can help them understand more about their customers – what type of products they use, their purchasing behaviors, their channel and media preferences.  The PersonicX household-level segmentation system is built with InfoBase-Xâ„¢ data and places almost every U.S. household into one of 70 distinctive segments and 21 life stage groups based on specific consumer behavior and demographic characteristics.”

Cable’s work to create a more powerful viewer data collection and targeting system has been out of public and policymaker view.  Cable engineers have been working  together to perfect the technology that will allow it to merge “content and subscriber metadata for targeting zones (or, in a unicast environment, for targeting individuals) to bring the right ad to the right consumer at the right time.”

The phone and cable companies, knowing that the 1984 Cable Communications Act contains privacy safeguards for interactive TV ads and aware of the current debate on behavioral targeting, claims that such data collection and targeting will be anonymous and could include an “opt-in.”  We don’t believe any cable or phone consumer is being told the extent of the plans underway to track and target them.  For example, Alcatel’s product for IPTV related advanced advertising explains that:
“To capture the full revenue potential of targeted and interactive advertising, IPTV providers need to ensure that the following critical actions are addressed:

  • Capture and measure — The network must be able to collect “opt-in” subscriber information from a broad range of databases, which advertisers will use to reach specific “targeted” markets. This anonymous data includes usage patterns, subscriptions, demographics, location, presence and preferences — including how, when and where advertising messages are delivered, along with the type of device that is used. In addition, accurate measurement capabilities are needed that can verify audience response and track the effectiveness of ad campaigns…
  • Activate and interact — Finally, this data, combined with the right systems and infrastructure must be able to deliver personalized and interactive ads to the right consumer, at the right time.”

Consumers/subscribers should decide whether such an advanced system can target them at all.  Beyond informed consent (and data security), there need to be clear safeguards.  Targeted ads for financial, health, and products aimed to children and adolescents raise consumer protection issues.  I have real concerns about “ethnic” profiling, given how lucrative advertisers realize the Hispanic and African American markets are.  We believe that the cable industry has to engage the public in a serious debate about the scope and goal of its Project Canoe and advanced advertising initiative.  Congress, the FCC, and the FTC must become more proactive to protect our privacy from this new approach.

PS:  This week’s Multichannel News offers insight into the latest developments.  Here’s an excerpt:  “This year, the largest cable operators in the U.S. plan to have upgraded at least 20 million digital set-tops with code to run standardized interactive-TV applications. That will make it possible for viewers to click a button on their remote to, say, ask an advertiser to e-mail them more information…The industry over the last two years has coalesced around a common technical standard, maintained by CableLabs, referred to as Enhanced Binary Interchange Format, or EBIF (pronounced “EE-biff”)…Comcast, for one, claimed it had deployed EBIF user agents on more than 10 million Motorola set-top boxes by the start of 2009. The operator hopes to complete the rollout to its entire Motorola footprint, about 20 million boxes, by midyear…” [Interactive TV Begins to Bloom.  Todd Spangler.  Multichannel News.  March 3, 2009].

Google Lobbyist Attack on a Consumer Group and its Foundation Funding: A Chilling Effect. And a Public Apology is Required

Consumer Watchdog is a public interest group in the muckraking tradition of Ralph Nader and his Nader’s Raiders.  They work on a broad range of issues, including health care, clean energy, affordable insurance, etc.  Recently they launched a project focused on keeping Google more accountable, and have raised a number of concerns about the company’s privacy policy, lobbying efforts, etc.   The Watchdog had been working on the health privacy issues raised in what was called the Stimulus package; it made public claims that Google was lobbying the bill–suggesting they were trying to weaken privacy safeguards.  Google strongly denied it, responding that Consumer Watchdog’s accusation was “100 percent false and unfounded.”  This charge by Watchdog–and likely other Consumer Watchdog’s activities such as its focus on privacy risks raised by the Chrome browser– obviously triggered some kind of reflexive anger from Google executives.

According to Watchdog and press reports, Bob Boorstin, Google’s Director of Corporate and Policy Communications, wrote to one of Consumer Watchdog’s foundation funders that: “I am hoping that as you consider the activities of your grantees and whether to renew your commitments, you will take these kinds of activities into account and consider whether there might be better groups in which to place your trust and resources. I would like permission from you to address a letter to your Board of Trustees or Board of Directors in which we can highlight the activities of this grantee.”

Mr. Boorstin’s use of the phrase “better groups” sent a signal to the foundation world:  don’t fund public interest organizations that work aggressively to make one the world’s most powerful companies accountable.  Google’s work to pressure a foundation to cut off support for a privacy group creates a chilling effect.  At a time when Google is increasingly the focus of concern from privacy and consumer groups, and many policymakers around the world, Mr. Boorstin’s letter can be viewed as a self-serving attempt by the company to stifle debate.  If a group such as Consumer Watchdog intentionally libeled the company, than Google can pursue legal action.

But Boorstin’s letter to a funder appears designed to send a strong signal to the foundation world that they shouldn’t financially support groups that critically question the company.  With Congress taking up privacy legislation this year, Google has a great deal at stake.  This is precisely the time when consumers require as many watchdogs as possible, to ensure that Google and other online marketers protect their privacy.

We read in press reports that Mr. Boortsin has since issued an apology, saying that “…I made a mistake in sending information about the group’s activities to the Rose Foundation for which I apologize.  Google supports the right of anyone or any institution to fund whatever group or project they choose.”  But we don’t see any apology on its official policy blog, where it should be.

Yesterday, the National Journal, which covers Washington DC politics and lobbying, reported that “Google is launching a new effort to counter its critics with stepped-up outreach to analysts, journalists, policymakers and think tanks.” [sub required].

Google has an opportunity here to make a break with how things are done in Washington, politics, with privacy policies, and the online ad business.  Groups such as mine and Consumer Watchdog, in essence, are asking Google to be the prototypical ethical corporation.  Become transparent, disclose, embrace openness, develop policies that inform and empower citizens and consumers.  I firmly believe it can do all that and still make a great deal of money.

My group is also funded by the Rose Foundation, as are many other privacy groups. That’s the foundation Mr. Boorstin pressured (they resisted, of course–but the message was sent to the funder world as intended).  Google knows well that philanthropic sources of funding to support privacy work are slim.  Google gives money to certain privacy groups–which in our mind raise conflicts of interests for them.  What’s needed are a growing global array of independent consumer organizations focused on the nature of the emerging digital economy–and which means Google will likely be the subject of serious scrutiny and debate.  Google should be welcoming such civil society activity–instead of trying to smother it.

This incident suggests that Google leaders need to seriously examine how best to address their critics–and also work harder to resolve conflicts within its corporate culture about its long-term ethical goals.

PS:  On the specific issues of digital health marketing and privacy, there’s more work to be done here.  Google, Microsoft and many others see a gold mine in online health marketing.  Google is interested in the health market.  Here’s an excerpt for a job they had open last year to be based in New York:

Senior Account Executive, Healthcare Vertical

As a Google Healthcare Account Executive, you’ll work with those who provide advertising solutions for companies that produce and sell consumables and health care products/services. The primary responsibility of the GMS Account Executive is to drive and grow new business revenue with Fortune 1000 advertisers in the healthcare Account Executive industry. You’ll manage business relationships to ensure that your clients’ needs and requirements are met. This will require you to serve as their advocate within Google while collaborating with other Google teams to provide them with a comprehensive portfolio of solutions and options. This is a high-adrenaline, client-facing sales role requiring deep industry expertise, proven sales ability with a particular penchant for closing deals, and a broad base of industry contacts. You understand and anticipate how decisions are made, and you’ll persistently explore and uncover the business needs of your key clients.

Responsibilities:

* Work collaboratively with the GMS team to drive revenue growth with new and existing customers in the Pharmaceutical Account Executive industry.

* Develop high-level relationships to serve as a trusted consultant with major customers to optimize their advertising expenditures.

* Generate business plans to define your selling strategies and tactics.

* Understand and adapt to Google’s ongoing product and technology developments.

* Manage multiple cross-product opportunities and projects.

Microsoft to Advertisers: We can “track visitors throughout the course of their online journey”

So-called behavioral re-targeting is one of the most troubling online ad techniques.  No one knows they are being digitally shadowed in cyberspace.  But many companies provide such a profiling/tracking/targeting service.  Here’s what Microsoft tells advertisers in the UK/EU it can do [our emphasis]:

“With Re-messaging we can narrow our audience by finding the people who have already visited you. It means we can ensure they always stay in touch and help create continual engagement with your brand.

Re-messaging is effective on its own, but works at its best when combined with other forms of targeting and campaign performance. By placing action tags on your website, we can track visitors throughout the course of their online journey and re-message them on our network. For example the consumer may have previously searched for a hotel but not booked, compared credit cards but not applied, or visited a promotional website. Whatever it may be, if they’ve gone part way to making a purchase or performing an action, we can help you continue the conversation and ensure that the relevant message is seen by the people it matters most to.”

MySpace Exec on its ad hypertargeting system: We have “massive amounts of data” on our users (and an example using Pepsi)

Excerpt.  on MySpace CEO Chris DeWolfe presentation.  via paidcontent.org:  “MySpace has 76 million unique online users in the US, and 139 million users worldwide; 40 percent of all Americans based in the US are on mySpace…MySpace has been working on its monetization technology currently used online called Hypertarget, which is five algorithms that basically segments the “massive amounts of data” on mySpace users into “enthusiast buckets.” Currently, they have their audience divided into over 1,000 of these segments, and for example, if Pepsi wants to target alternative music users they can serve them up an ad. Said DeWolfe, “It’s incredibly effective, and increases our yields.” This will be moving onto mobile.”

Center for Democracy & Technology Goes for the “Gold” as it Raises $ for its “Gala” from AT&T, eBay, Microsoft, Google (and many other corporations)

CDT is having a “Gala Celebration” next month, supported by “Gold, Silver, and Bronze” sponsors.  AT&T, eBay, Microsoft and Google are listed at the $15,000 “Gold” level [“Two tables in Premium Location-Two tickets to the VIP Reception”]; Among the “Silver” sponsors [“One table-One ticket to the VIP Reception”] at the $7,500 tab include Time Warner (AOL), Dow Lohnes, Qorvis Communications (repping Sun, Cisco, etc), American Express, Verizon, Intel, US Chamber of Commerce, ID Analytics, Yahoo!, Arnold & Porter, IAC/Interactive Corp, Thompson LexisNexis, Hogan & Hartson (reps News Corp’s MySpace, among others), Comcast, and Sonnenschein Nath  & Rosenthal, LLP.   There are also a number of “Bronze” sponsor at the $1000 level [“One seat at a table”]. (CDT has a Facebook page on the event.)

CDT’s 2007 Gala, which honored Bill Gates, had “more than 900″ supporters” in attendance.

Facebook, Advertising, Third-Party $Apps, Terms of Service, Data Collection & Privacy

The role that third party developers play accessing user data on social networks such as Facebook has long been a privacy concern for us.  The business practices, including data collection, profiling and targeting that form the basis of social networking “monetization” strategies are hidden from public view.  My CDD and USPIRG, in our various privacy complaints to the FTC, asked the agency to examine this area.  Maybe the new Obama FTC will do so.  But for now, here’s some excerpts from Facebook’s advice “on common business models” to application developers, as well as from its list of “third party developers” involved in social media marketing:

“As you think about building your app on Facebook, we want to help by highlighting some keys ways of thinking about your app as a business… Apps that are meaningful, trustworthy and well designed have real staying – and monetizing – power… we host a Platform with instant access to more than 175 million active users… Once you’ve created a sustainable, engaging social application, there are many different ways to help monetize it… Advertising: We at Facebook have had success serving targeted advertisements to our users based on information we know about them. By leveraging the data we give you access to (as detailed in our Developer Terms of Service) and data users share with you directly as a part of your application experience, you can serve highly relevant ads… Virtual Credits / Virtual Goods:… instead of accepting payments directly from users for subscriptions or virtual goods, some applications instead allow users to complete affiliate offers by filling out surveys or agreeing to try new products. There are a number of providers who consolidate these types of offers…
Third Party Providers to Help You Monetize:
Advertising:
AdParlor:  “Over 500 Million users worldwide are on a social networking site. These users are comfortable sharing their age, gender, and location, and can be reached through targeted advertising.”…
Shopitmedia: “you can target based on:
1. Location
2. Gender
3. Age
4. Application Category”…
Affiliate marketing…
Analytics…

Payments

Two Words on Why the FTC’s Self-Reg Approach is Wrong: Financial Meltdown

It has been deregulation, including forms of self-regulation, which led to the current financial crisis.  Regulators and most policymakers looked the other way, while many from the investment community created a Ponzi scheme bigger than Bernie Madoff’s.  The online marketing of mortgages and loans played a role in the `borrow’ and `buy’ culture which contributed to the economic mess we are in.

It’s now more important than ever that online marketing, including the structure of data collection and privacy, be regulated.  Congress has to act to make sure consumers understand the loans and other financial products they are being offered interactively online.  The financial crisis, noted Google, is actually fostering the growth of online marketing (as consumers look for less expensive ways to shop).   As Google recently explained to advertisers, the “slowdown is actually accelerating the use of consumer online shopping for goods and services.”  The “mass market is now online,” they noted.

Consumers need to completely understand and fully control how data is collected and used when they seek financial services.  The behavioral targeting system involved with mortgage loan sales, we believe, is totally unknown to consumers (and sadly, regulators).  That’s why my group and others criticized last week’s FTC report.  It’s self-regulatory approach is based on a failed policy (from the people on both sides of the aisle who got us into this mess).  We can have both regulation/fair rules and make the commercial market prosper.  It’s time for the online ad industry to support a regulatory policy that will help make our financial future more secure.

Baby Steps for Online Privacy: Why the FTC Self-Regulatory Principles For Online Behavioral Advertising Fails to Protect the Public

Statement of Jeff Chester, Exec. Director, Center for Digital Democracy:

The Federal Trade Commission is supposed to serve as the nation’s leading consumer protection agency.  But for too long it has buried its mandate in the `digital’ sand, as far as ensuring U.S. consumer privacy is protected online.    The commission embraced a narrow intellectual framework as it examined online marketing and data collection for this proceeding.  Since 2001, the Bush FTC has made industry self-regulation for privacy and online marketing the only acceptable approach when considering any policy safeguards (although the Clinton FTC was also inadequate in this regard as well).  Consequently, FTC staff—placed in a sort of intellectual straitjacket—was hampered in their efforts to propose meaningful safeguards.

Advertisers and marketers have developed an array of sophisticated and ever-evolving data collection and profiling applications, honed from the latest developments in such fields as semantics, artificial intelligence, auction theory, social network analysis, data-mining, and statistical modeling.  Unknown to many members of the public, a vast commercial surveillance system is at the core of most search engines, online video channels, videogames, mobile services and social networks.  We are being digitally shadowed across the online medium, our actions monitored and analyzed.

Behavioral targeting (BT), the online marketing technique that analyzes how an individual user acts online so they can be sent more precise marketing messages, is just one tool in the interactive advertisers’ arsenal.  Today, we are witnessing a dramatic growth in the capabilities of marketers to track and assess our activities and communication habits on the Internet.  Social media monitoring, so-called “rich-media” immersive marketing, new forms of viral and virtual advertising and product placement, and a renewed interest (and growing investment in) neuromarketing, all contribute to the panoply of approaches that also includes BT.  Behavioral targeting itself has also grown more complex.  That modest little “cookie” data file on our browsers, which created the potential for behavioral ads, now permits a more diverse set of approaches for delivering targeted advertising.

We don’t believe that the FTC has sufficiently analyzed the current state of interactive marketing and data collection.  Otherwise, it would have been able to articulate a better definition of behavioral targeting that would illustrate why legislative safeguards are now required.  It should have not exempted “First Party” sites from the Principles; users need to know and approve what kinds of data collection for targeting are being done at that specific online location.

The commission should have created specific policies for so-called sensitive data, especially in the financial, health, and children/adolescent area.  By urging a conversation between industry and consumer groups to “develop more specific standards,” the commission has effectively and needlessly delayed the enactment of meaningful safeguards.

On the positive side, the FTC has finally recognized that given today’s contemporary marketing practices, the distinction between so-called personally identifiable information (PII) and non-PII is no longer relevant.  The commission is finally catching up with the work of the Article 29 Working Party in the EU (the organization of privacy commissioners from member states), which has made significant advances in this area.

We acknowledge that many on the FTC staff worked diligently to develop these principles.  We personally thank them for their commitment to the public interest.  Both Commissioners Leibowitz and Harbour played especially critical roles by supporting a serious examination of these issues.  We urge everyone to review their separate statements issued today.  Today’s release of the privacy principles continues the conversation.  But meaningful action is required.  We cannot leave the American public—now pressed by all manner of financial and other pressures—to remain vulnerable to the data collection and targeting lures of interactive marketing.

FTC’s Behavioral Ad Principles–the last act of the Bush Administration? Why is the Obama White House Allowing the FTC To Remain Under the Leadership Appointed by Pres. Bush?

In a few hours, approximately between 10-11 am eastern, the FTC is expected to release its final “Online Behavioral Advertising Principles.” Originally released for comment in December 2007, the principles are a sort of Valentine’s Day present to the online ad industry from the (supposedly departed) Bush Administration.  From what we know, the FTC principles support self-regulation.  Online marketers will be told they should behave better–and here are suggestions.  It’s like a teacher telling a misbehaving student–‘behave better, dear,’ or else we will have to tell your parent (in this case, the guardian being potential congressional action).

My CDD urged Commissioners Harbour and Leibowitz to issue separate statements on the principles, and call for tougher requirements—especially in the area of so-called sensitive information.  This would include data connected to our financial and health related online activities (think mortgage and loan applications or queries for prescription drugs).  CDD and a coalition of groups also formally asked the commission to impose serious privacy safeguards for both children and adolescents.

But these principles were crafted within the narrow confines of the Bush Administration philosophy prevailing at the FTC.  Only self-regulation is permitted.  Consequently, such an approach likely means these rules leave the online data collection, profiling and targeted marketing system which comprise behavioral marketing off the privacy protection hook.

But one question looms at the moment.  Why has the new Obama administration allowed the FTC to remain under the leadership of Bush-appointee William E. Kovacic? The principles being issued today, in fact, reflect the “old” FTC, not one run under the philosophy of President Obama.  Why is the Obama White House failing to ensure a change of leadership at the FTC?  The agency is responsible for overseeing a huge portion of the economy, including critical financial issues.  It’s also supposed to be the leading agency on consumer protection issues.   The Obama White House should have–by now-found someone who would led the FTC, so it can better protect the public.

The principles being released today were only made possible because of the Bush FTC give-away to Google, when it approved its takeover of online ad giant DoubleClick.  CDD, the Electronic Privacy Information Center (EPIC), and USPIRG fought the merger, including on privacy grounds.  FTC Commissioner Pamela Harbour played a key role forcing the agency (then run by Chairwoman Majoris, whose husband’s law firm represented DoubleClick) to address the privacy concerns. As a consequence of the political pressure from its failure to seriously examine the consumer privacy issues of the Google deal, the FTC staff were told to develop these principles.

The next chair of the FTC needs to take privacy and online consumer protection issues seriously.  The agency does need more resources, but also a new spirit.  If the FTC had been on the job, and was examining how lending institutions were recklessly promoting loans and mortgages, maybe today’s mess wouldn’t be as tragic as it is.  More to come after the commission releases the principles.

Marketers Urging Targeting of Hispanic Tweens, including via Mobile [Annals of Mobile Marketing]

There’s nothing to say except read what this marketer wrote for MediaPost’s Engage series.

Excerpt:  “To effectively reach Hispanic tweens…Don’t forget mobile. Many tweens already have cell phones, and they use them daily to text their friends. Text messages are a key way to connect with tweens, especially if you offer them a fun service, such as daily horoscopes, that doesn’t feel like an ad. Cell phone numbers can be collected right alongside emails in your lead-gen efforts. You get a branding boost, as well as their mobile number in your database for future text messaging campaigns.”

source:  Make Your Marketing Dollars Pay: Target Tweens.  Engage Hispanics:  MediaPost.  February 6, 2009