Multi-Billion $ Stakes for Online Consumers in How Congress Protects Their Privacy and Transactions

It’s time for policymakers to act and protect online consumers–who are at risk confronting a largely invisible, sophisticated, and far-reaching digital marketing system.  It’s useful to see how much was spent targeting U.S. consumers online.  This is from the IAB’s 2009 online advertising revenue report [my bold]:
Retail Advertisers Continue to Drive Consumer Ad Spending –2009 Annual Results
 Retail advertisers continue to represent the largest category of Internet ad spending, accounting for 20 percent of revenues for the full year of 2009 or $4.5 billion, down from the 22 percent ($5.0 billion) reported in 2008.
 Telecom companies accounted for 16 percent of 2009 full year revenues or $3.6 billion, up slightly from the 15 percent ($3.5 billion) reported in 2008
 Leisure Travel (airfare, hotels & resorts) accounted for 6% percent of 2009 revenues ($1.5 billion) compared to the 6 percent or $1.4 billion reported in 2008.
 Financial Services advertisers accounted for 12 percent of 2009 full year revenues or $2.8 billion, down from the 13percent ($3.0 billion) reported in 2008.
 Automotive advertisers accounted for 11 percent of 2009 full year revenues or $2.5 billion, down slightly from the 12 percent ($2.8billion) reported in 2008.
 Computing advertisers represented the fifth-largest category of spending at 10 percent of 2009 full year revenues or $2.3 billion, in line with the 10 percent reported ($2.4 billion) in 2008.
 Consumer Packaged Goods and Food Products represented 6 percent of the full year 2009 revenues ($1.4 billion), in line with the 6 percent or $1.5 billion reported in 2008.
 Entertainment accounted for 4% of 2009 full year revenues ($1.0 billion), up slightly from the 4% ($917million) reported in 2008.
 Media accounted for 4 percent of 2009 full year revenues or $881 million, up slightly from the 3 percent ($764 million) reported in 2008.

[and to underscore its importance, note the definition of financial services online marketing used by the IAB:  Financial Services—includes commercial banks, credit agencies, personal credit institutions, consumer finance companies, loan companies, business credit institutions and credit card agencies. Also includes companies engaged in the underwriting, purchase, sale or brokerage of securities and other financial contracts. 

As well as the $1.5 billion spent last year on:  Lead Generation—fees advertisers pay to Internet advertising companies that refer qualified purchase inquiries (e.g., auto dealers which pay a fee in exchange for receiving a qualified purchase inquiry online) or provide consumer information (demographic, contact, behavioral) where the consumer opts into being contacted by a marketer (email, postal, telephone, fax). These processes are priced on a performance basis (e.g., cost-per-action, -lead or -inquiry), and can include user applications (e.g., for a credit card), surveys, contests (e.g., sweepstakes) or registrations. 

Online Advertising and News: How HuffPost Worked with GE

An excerpt from Ad Age’s interview [June 30, 2010] with Greg Coleman, Pres. of Huffington Post.  Coleman described the online news site as a “social media company,” able to “help our marketers beam their messages throughout the internet, across the galaxy, the internet, and the world.”  One of their advertisers is GE.:

Ad Age: Can you give me an example of Huffington Post’s view on social advertising?

Mr. Coleman: One example is a terrific project we did with General Electric, where GE has this whole campaign on “healthymagination.” We allowed them to run advertising on anything tagged “wellness” across our site — they were looking for positive health information. We then created a special share bar for GE, and any time you tweeted that article or retweeted that article or shared it, the ad module would go with it. So when you shared it with your friends on Facebook, the GE ad module would go there. When you retweeted it, [you’d get] the hashtag “GE healthymagination.” … We’re trying to come up with the real metrics, but we believe that the reach of the campaign is far greater off of our site, as a result of the social tools on our site.

Teens and Online Privacy: Empowering Adolescents to Control How Online Marketers Can Stealithily Target Them and Collect Data

Some commentators–and groups funded by online marketers that target teens–are worried that proposals to the FTC and Congress that adolescent privacy be protected will somehow create a system that requires forms of age verification online.  The coalition of leading consumer, child advocacy, health and privacy organizations filing comments at the FTC last week aren’t calling for the parental permission paradigm used by the Children’s Online Privacy Protection Act [COPPA] be extended to teens.  But there are many online commercial services specifically targeting adolescents–that’s their target market.  It’s those sites and services specifically focused on adolescents that we want to have better privacy safeguards.   We want those sites to be governed by an opt-in regime that gives teen users meaningful control of how their information is collected and utilized.  Those sites should be required to engage in the Fair Information Principles known as  “data use minimization.”  Commercial sites targeting adolescents should make its data collection practices fully transparent and under the control by the teen (including a truly accessible privacy policy).  In another words, a privacy safeguard regime that really should be available for everyone.  Teens are ‘ground zero’ for much of digital marketing–for examples see our site: www.digitalads.org [especially the update section].  If you look at the reports on that site, you will see that the most recent scholarly thinking is that brain development in adolescents occurs much later than what was once thought.  They don’t have the ability to effectively understand the intent of highly sophisticated interactive marketing and the corresponding data collection which underlies contemporary digital advertising. That’s why empowering them so they can protect their privacy strengthens their rights.

Google, ITA, Travel, Privacy and also Competition

Travel is a major part of the online marketing industry.  But it has lots of privacy concerns–who knows where you plan to go, spend time [in the exact location via geomapping, etc], how much money you generally spend, with your family or on business, etc.  There are a host of civil liberties issues related to commercial and government access to this data.   That’s one of the reasons why competition and privacy regulators around the world should closely critically analyze the proposed Google acquisition of travel information leader ITA Software.

Google is currently expanding its online travel advertising business–and swallowing ITA will undoubtedly boost its market share–and give it access to reams of additional data on consumers and business practices.  For example, in its Seattle regional office, Google is hiring several marketing specialists, including:


*Display Account Manager, Travel:  [“As a Display Account Manager, you’ll sell and manage advertising for the sixth-largest media property in the world and other Google display offerings. You will be a part of the team on the cutting edge of interactive marketing and media. You will drive the online video marketplace forward and engage advertising agencies and brand marketers in programs that move the needle for their companies. The primary responsibility of the Display Account Manager is to drive new business revenue for YouTube and other Google display services and products with Fortune 1000 advertisers across multiple industries.”]   They also want an Account Manager, Travel Vertical and a Display Account Executive, Travel.  Other travel online ad sales jobs are posted for London [“As a Google Industry Manager, Travel you will be working with clients to provide digital solutions for sales & marketing objectives via a variety of Google’s Search, Display and Tools. This job is a mix of finding and managing new and existing business customer relationships, and working closely with the Industry Head to develop Google’s marketplace in the Travel sector. You’ll combine digital media and deep commercial knowledge with strong presentation and communication skills. You’ll own the relationships with clients and agencies, targeting, educating and developing new clients to grow the business in unpenetrated territory.”]; Australia [Account Strategist, Travel Industry].  Plus its DoubleClick division performs travel related online marketing work.  Of course, given Google’s recently expanded role providing mobile ad targeting, via its Admob acquisition, related privacy and competition issues are also raised.

Draftfcb uses neuromarketing, academic ties to create Institute for Subliminal Advertising

Actually, the ad giant says it’s calling its new research arm the Institute of Decision Making. But given their plan to harness neuromarketing to better tap into the “instinctual ways that consumers behave,”  we think it should be renamed.  At the Cannes ad festival, Draftfcb discussed, according to a report, “how advertising messages have a mere 6.5 seconds to make a connection with the audience.”  A Draft exec. told the New York Times that “[U]nderstanding the foundation of consumers’ behavior decisions has become more complex [as they] consume more information and make decisions faster” [than before].   Hence, marketers like Draft–whose clients include MillerCoors and Levis–want to use neuroscience to create ads that deliberately bypass  a consumers rational decision-making system.   The ad agency is working with academics at UC Berkeley and Stanford–raising questions about the role scholars should play helping marketers–or anyone else–deliberately tap into our subconscious minds in order to influence our behavior.

Harvard’s Berkman Center, its online marketing industry connections, and the need to prominently disclose

The Berkman Center is well-known for its work on digital media issues.  But it has often failed to address–in its research and public work–the negative consequences of online marketing and interactive advertising.  Berkman is partially funded by leading online marketers–including Google and Microsoft.  When Berkman conducts research on such issues as children’s online marketing and privacy [an issue I am involved with], it should always prominently disclose on the first publication page its funding conflicts–including whether Berkman staff work with online marketers.  Berkman should tell Congress and the FTC about such conflicts when it submits research and testimony.

For example, Berkman’s faculty co-director John Palfrey works for a venture investing firm that financially backs behavioral targeting and other online marketing companies.  Professor Palfrey does disclose on his blog that in addition to his Harvard duties, he is also a “Venture Executive” at Highland Capital Partners.  Highland’s “Internet and Digital Team,” which Prof. Palfrey serves on, has one current investment in Affine Systems, a video targeting company. Affine’s Video Platform explains it enables marketers to engage in behavioral targeting:  “Affine integrates behavioral data from exchanges and exclusive third-party partnerships. This data is used to audit and optimize campaigns as they run. Detailed analytics are collected, and valuable retargeting data is generated with every campaign.”  [“What makes the Video Targeting Platform special is the amount of insight it provides…by taking advantage of the data provided by Affine’s data partners, you can even target specific demographic or psychographic groups, and reduce the waste that is currently expected from online video buys.”].  Highland also invests in search engine and interactive TV companies serving the China market and many others. [Given the investments in China’s online market by Mr. Palfrey’s company, it also raises questions about Berkman’s Global Network Initiative role evaluating how companies like Google and Yahoo operating in China and elsewhere address human rights].  Previous online marketing (and behavioral targeted related) investments made by Highland included the youth online targeting company Bolt, Coremetrics, and mobile ad targeting company Quattro.

The well-known online analyst and commentator Dana Boyd is a Fellow at Berkman, and has made it clear she also works for Microsoft Research.  But given Microsoft Advertising global efforts to extend the power of online marketing and personalized data collection, including its online ad research lab in Beijing, its support for neuromarketing in digital ads, and its extensive behavioral and online targeting apparatus–including for junk food targeting youth in its gaming divisions, we hope Ms. Boyd will more closely examine her employers work in the area.

Online Ad Lobby and Chamber Celebrate Victory over Consumer Protection & FTC

Yesterday, the online ad lobby [IAB, ANA, DMA]–working with Chamber of Commerce–scored a major political victory by forcing the Financial reform bill conference committee to drop proposed provisions that would have strengthened the FTC.  Under the House bill, the FTC would have been given the same kind of regulatory authority most federal agencies have [APA rulemaking].  Marketers and advertisers are celebrating their win, because it keeps the FTC on a weakened and short political leash.  While consumer protection is significantly expanded because of the CFPB and new financial rules, the FTC is to remain largely hamstrung.  The online marketing and advertising lobby [including ANA, DMA–see below] were afraid that the newly invigorated FTC under Pres. Obama would require the industry to protect privacy online and also become more accountable to consumers engaged in e-commerce.   I heard IAB and Chamber are dancing in the streets! Congressmen Barney Frank, Henry Waxman and Sen. Rockefeller deserve praise for working hard to protect consumers, including their proposal on the FTC.

Here’s what two of the ad groups placed on their sites about the FTC issue:

Progress on FTC Enforcement Provisions in Wall Street Reform Conference

June 23, 2010

The marketing and media community has made substantial progress on defeating the broad expansion of FTC powers that is included in the House version of the Wall Street reform bill.  But we still need your assistance to keep these provisions out of the final bill.

Yesterday the Senate conferees presented an offer on the bill that rejected the new FTC powers that are in the House version.  Chairman Dodd indicated that while he may support changes in the Magnuson Moss rulemaking process, there is no Senate provision and these issues are too complex and important to be resolved in the context of the Wall Street reform bill.  Conferees hope to finish the conference this week so the final bill can be cleared for the President’s signature next month.

The House conferees may still continue to push for these provisions, so it is very important that marketers contact the Senate conferees to express our appreciation for their support and to urge them to remain strongly opposed to these new powers for the FTC in this bill.  Contact information for the Senate conferees is located here and our letter to Senate conferees is available here.  Please let the Senators know if you have plants or operations in their states.

ANA took part in a very important meeting yesterday with Senate Commerce Committee Chairman Jay Rockefeller on these issues.  We argued that these issues are very important to the entire marketing community and deserve careful consideration outside of the context of the Wall Street reform bill.  The Chairman strongly indicated that he will continue to push for changes in the Magnuson Moss rulemaking procedures this year.

If you have any questions about this matter, please contact Dan Jaffe (djaffe@ana.net) or Keith Scarborough (kscarborough@ana.net) in ANA’s Washington, DC office at (202) 296-1883.

http://www.ana.net/advocacy/content/2418

DMA Asks Financial Reform Conferees to Keep FTC Expansion Out of ‘Restoring American Financial Stability Act’

June 10, 2010 — The Direct Marketing Association (DMA) today was joined by 47 other trade associations and business coalitions in sending a letter to each of the conferees on H.R. 4173, the “Restoring American Financial Stability Act” (RAFSA), urging them to keep language that would dramatically expand the powers of the Federal Trade Commission (FTC) out of the final bill.

As the House and Senate conferees work to reconcile their versions of the financial regulatory legislation, the associations — which represent hundreds of thousands of US companies from a wide array of industry segments — expressed strong opposition to provisions in the House version of the bill that would expand the FTC’s rulemaking and enforcement authority over virtually every sector of the American economy.

“The balance struck in the Senate bill is the right one,” said Linda Woolley, DMA’s executive vice president, government affairs.  “That bill makes the most sense in the context of financial reform legislation, maintaining the FTC’s existing jurisdiction without expanding its rulemaking and enforcement authority over industries and sectors that had nothing to do with the financial crisis.  Issues of FTC expansion deserve their own due consideration and debate in the more appropriate context of an FTC reauthorization, as has been done in the past.”

DMA and the other associations strongly believe that granting the FTC broad new authority is not a necessary or relevant response to the causes of the recent recession and, therefore, asked the conferees to oppose the inclusion of any provisions that would expand FTC authority, rather than making changes to the Commission that would have a fundamental impact on the entire business community and the broader American economy.

For more information please visit www.dmaaction.org.
http://www.the-dma.org/cgi/dispannouncements?article=1449

Location Privacy for Mobile Marketing: Time for Congress/FTC/States to Protect Consumers

Last year, CDD and USPIRG filed a complaint on mobile marketing, privacy and deceptive practices at the FTC.  We know that it woke up the commission to the issue–but they are acting too slow.  The recent decision by Apple to expand its data gathering for location ad targeting on the iPhone (and do a about-face on the privacy issue, really) is just one example of why safeguards are required immediately.  As Mobile Marketer explained in an article about what Apple is doing:

“Location is an important element that illustrates the promise of mobile and social,” he said. “Look at the way that the mobile environment is developing—proximity marketing is really the direction that we’re headed [Noah Elkin, senior analyst at eMarketer].

“Being able to marry data about a user’s location and data about a user’s likes and dislikes—being able to present a relevant offer—raises the bar in terms of the relevancy of the advertising messages.”…Apple acquired Placebase and Quattro recently, which gives it a mapping platform and an ad network.

“Collecting user positioning data is the next necessary ingredient for ‘location intelligence,’ which will bridge the gap between these two acquisitions and enable them to deliver a really relevant experience based on place and time,” Mr. Goodman said [Alistair Goodman, CEO of 1020 Placecast].

Meanwhile, companies like Loopt that merge social and mobile marketing techniques are extending how they target consumers, inc. data collection.  Loopt explains in its new “mobile rewards” service for marketers that:

Loopt Star offers retailers a virtual loyalty card, allowing them to connect directly with their customers when they’re out and about, driving foot traffic and encouraging repeat visits. It offers retailers and businesses a unique “cost per visit” business model.

“Hyper-local advertising should be about much more than simply clicking on a banner ad—it should be about connecting with brands and getting rewarded for loyalty. Brands want to turn their existing customers into better ones,” said Sam Altman, co-founder and CEO of Loopt. “Loopt Star enables brands to create customized campaigns that reach their customers in a completely targeted, interactive way that rewards the behaviors they want.”

In addition to brand-specific customized rewards, Loopt Star will also allow the person with the most check-ins at a specific place to become the “Boss” of that location. Leaderboards allow users to compete with their Facebook friends to for the most check in points. Dozens of hidden Achievements will also be available to Loopt Star game players at launch — to be won when certain check-in actions are performed.

Loopt Star adds a key social component by being the first mobile location App based purely on Facebook Connect. Users can share their current location in real-time with all of their friends on Facebook, and alert friends via their Facebook News Feed about special offers they see on Loopt Star that are available to anyone. With its close integration into Facebook, Loopt Star allows Facebook friends stay up to date on where friends are and what they’re doing…

Brands can use Loopt Star to create fun, engaging campaigns that deliver foot traffic, connect with customers, build a strong community and increase their Facebook fan base. Customized brand campaigns can specify:

  • The qualifying retail locations
  • The qualifying time of day, day of week, or time span
  • The qualifying number of check in times
  • Whether they need to check in with friends, and the number of friends
  • Which rewards are available to friends through the Facebook newsfeed (for example, “the next person to check into Joe’s Restaurant today gets free dessert” can appear on the newsfeed to all Facebook friends.)
  • Specific and virtual rewards, such as Achievements, special titles, discount coupons, etc. Special titles allow retailers to offer a custom “Boss” title and graphic to the person who checks in the most at an individual location

Loopt is working directly with top brands to customize all aspects of Loopt Star, from the activity needed to earn the reward, to the type of virtual or real-world reward earned.

For example, Loopt Star users can check into any bar in the United States with two Facebook friends, and everyone instantly earns five free songs from leading popular music recording artists. (To see the songs available to win, go to http://www.amplified.com/loopt.)

 

Google says it’s “at the forefront of a revolution in Marketing”– that includes for the health industry.

One of the areas requiring online privacy and consumer safeguards is the health and medical area.  As CDD told the FDA, the use of behavioral data profiling & targeting, immersive multi-media techniques, social marketing [via stealth-like influencer and word-of-mouth tactics, and brand channels, such as on YouTube, raise a host of concerns.  I don’t believe one’s largely private concerns about a health condition or remedy should automatically be fodder for digital marketing.  To see how important the health online marketing is to Google (and others), here’s an excerpt from a “Consumer Packaged Goods or Healthcare Industry Marketing Manager job opening:

Google is at the forefront of a revolution in Marketing – a shift from traditional Marketing tactics to new online, mobile and social strategies. Google’s advertising platforms provide savvy advertisers with multichannel marketing opportunities, linking online marketing to brand impact and offline sales.

Consumer Packaged Goods or Healthcare Industry Marketing Manager position shapes Google’s point of view on the changing advertising landscape. This leader will uncover, understand and explain the impact of evolving online media to industries that have traditionally relied more on offline media, such as healthcare, CPG, restaurants, education and more. This is a unique opportunity to set Google marketing strategy within our Emerging Industries practice and advise Fortune 1000 advertisers on cutting edge marketing strategies. You will arm the Google salesforce with marketing programs that establish fresh thinking in the industry and deepen engagement with clients…

Responsibilities:

  • Ideate, develop, and execute marketing campaigns that drive Google’s advertising business.
  • Develop thought-leadership materials, client/executive presentations, case studies and other content designed to accelerate our business momentum and better engage Google’s customers.
  • Develop compelling positioning and messaging for Google’s advertising solutions targeted to companies in industries relatively new to online marketing, such as healthcare and CPG
  • Partner with Google’s market research team to identify, execute and package compelling market research that supports Google’s value proposition to large advertisers in these industries.
  • Evangelize Google’s value proposition, best practices and perspectives to our customers and our industry peers via events, webinars, and other direct client communications channels.

Protecting Children’s Privacy Online at the FTC: Statement of Kathryn Montgomery, PhD

CDD will soon file at the FTC on how to ensure the Children’s Online Privacy Protection Act [COPPA] can better protect the online privacy of children under 13.  It’s a 1998 law that we led the campaign to have enacted.  Here’s a brief excerpt from what our colleague Prof. Kathryn Montgomery told the FTC today:

Statement of Kathryn C. Montgomery, PhD

Professor, School of Communication

American University

Protecting Kids’ Privacy Online: Reviewing the COPPA Rule

Federal Trade Commission

June 2, 2010

For the past decade, the Children’s Online Privacy Protection Act (COPPA) has served as an effective safeguard for young consumers in the online marketing environment. Because the legislation was passed during the early stages of Internet e-commerce, COPPA established a clear set of “rules of the road” to help guide the development of the children’s digital marketplace. The law created a level playing field, ensuring that every commercial player—from the largest children’s media companies to the smallest start-ups – would treat young people fairly.

Congress intended COPPA’s basic framework to be flexible, anticipating changes in both technology and business practices, and requiring periodic reviews by the Federal Trade Commission to ensure its continued effectiveness. Today’s children are growing up in a ubiquitous digital media environment, where mobile devices, instant messaging, social networks, virtual reality, avatars, interactive games, and online video have become ingrained in their personal and social experiences. The online marketing practices of the 1990s have been eclipsed by a new generation of tracking and targeting techniques.

In its current review, the Federal Trade Commission must ensure that its COPPA rules include the full range of Internet-enabled or -connected services, including the increasingly ever-present cell phones children use, along with Web-connected gaming devices and online, interactive video.  Moreover, COPPA’s definition of personal information must be revised to include the latest methods of identifying and targeting online consumers, covering the so-called “cookies” that are used for interactive marketing data collection, as well as “mobile geo-location information.” With these and other necessary updates, the law will continue to ensure that children reap the benefits of the digital age without compromising their privacy, safety, and wellbeing.