When Online Tracking Ends, Consumers Lose

With privacy concerns surrounding the use of personal information on the Web heating up, the Federal Trade Commission (FTC) and Congress seem to be headed down the road of implementing legislation that would regulate how advertisers are permitted to track users online. In February, a bill was introduced by Rep. Jackie Speier of California that would allow Web users to prevent advertisers from recording their online behavior for marketing purposes—along the lines of the Do Not Call Registry that was launched, to much fanfare, in 2003. Last week it was one-upped by John Kerry and John McCain's "Commercial Privacy Bill of Rights." Although the future and final shape of any "Do Not Track" legislation remain unclear, the effects on the online advertising world—and how consumers browse and experience the Web—are likely to be significant and far-reaching. Such legislation would have the potential to alter the online experience in some unintended—and not altogether positive—ways. Though the promise of greater privacy may sound alluring in the abstract, in practical terms consumers have a lot more to lose if online tracking disappears. The Industry's ResponseIn parallel with the push for legislation, the FTC has urged ad networks and software providers to work on their own solutions outside of any eventual regulatory framework. Across the industry, major players from advertising bodies to software providers have already felt the pressure to respond and have taken significant steps in this direction: Trade associations, including the Direct Marketing Association (DMA) and the Interactive Advertising Bureau (IAB) have made efforts to increase the transparency of what is being tracked with ads, and have made it possible for users to opt out of online tracking through, for instance, the Digital Advertising Alliance program. Google Chrome has implemented a "Keep My Opt-Outs" extension, which "remembers all of the tracking opt-outs a user has made, even if cookies are deleted." Mozilla Firefox has added a do-not-track option, which, when enabled, adds an HTTP header to sites it visits, saying the user does not want to be tracked. The solution requires ad networks to acknowledge the request. If they fail to do so, the option does nothing. Microsoft's Internet Explorer 9 has added a feature called the "Tracking Protection List," which allows users to block tracking from specific sites of their choosing. Additionally, IE9 has offered the same do-not-track option being used by Mozilla. Differing approaches, to be sure. But the fact that so many major players across the online landscape have responded to the call for stricter privacy protection demonstrates that the e-marketing industry at least understands and is prepared to address the threat, independent of regulatory or legislative mandates. As the debate rages and the wheels of government continue to churn, what will the result be for users and advertisers? It all depends on whether we end up with a self-policing, industry-driven solution, or greater government intervention. At DMi, our perspective is that the current front-runner—and the most agreeable solution for advertisers and users alike—is the Firefox/IE9 do-not-track option. It would result in enablers of the feature not receiving behaviorally targeted advertising that uses past browsing history to determine which ads to serve. The long-term effect on the online advertising industry itself depends on the adoption rate of the winning solution(s) and/or the shape of legislation. Why Consumers Would LoseOn the consumer side, there is no guarantee that an offer of greater privacy protection will lead to widespread adoption. Some critics note that browser-based features such as these are not always easy for the average user to implement, nor do they cover every form of tracking. But the fact is, many of the things that consumers have come to expect from a browsing experience—notably the timely delivery of relevant information and personalized marketing—depend on the very sort of behavioral targeting that has become the subject of the debate. For advertisers, the ability to serve targeted ads to the consumers they want to reach most, wherever they may be, has been proven to be far more effective than simply buying on a site-by-site basis. Despite protests from critics, targeted advertising simply offers a far richer experience for the advertiser and the consumer alike, and is a major driver of revenue for content creators. If the government imposes a solution, the outlook is even less clear. Current proposals range from solutions very similar to the industry-implemented initiatives to far more powerful and radical approaches, such as the complete outlawing of cookies or entirely changing the rules of consumer data usage. This would not only end behavioral advertising as we know it, but would throw a wrench into the very nature of e-commerce itself. Online shopping portals are dependent on cookies to remember shopping baskets and user preferences. Whatever the result, one thing is certain: As more and more consumers resist the notion of online tracking, advertisers will have a harder and harder time reaching their core constituencies. Success in online marketing has become so dependent on the practice of behavioral tracking that a mass adoption of online privacy solutions—whether adopted by industry or imposed by the government—would represent a seismic shift. And let's not forget the law of unintended consequences, which is in no danger of repeal. For online publishers and networks, the rise of "Do Not Track" could lead to a significant decrease in rates in order to keep advertisers coming back. Websites that have traditionally provided free content could also be forced to monetize their traffic by implementing paywalls to access content. The New York Times model, which now requires users to ante up between $180 and $455 per year, could become commonplace. Those who write, design and create online will face increasing pressure to monetize their content however they can. With advertising becoming a less and less attractive option, subscriptions and other strategies for getting into users' wallets will inevitably fill the void. Another strategy that might be (re)introduced to compensate for lost ad revenue is more frequent and more intrusive advertising. It's hard to imagine anyone would welcome a resurgence of pop-up ads with the end of behavioral tracking. At the end of the day, nothing is free. As we continue to move down the road toward greater online privacy, the industry, legislators, regulators and consumers would all be well advised to carefully think through the consequences of an online world without tracking. Patrick McKenna is CEO of marketing services provider DMi Partners. You can reach him at patrickm@dmipartners.com

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When Online Tracking Ends, Consumers Lose

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Patrick McKenna