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Marketing Marauders or Consumer Counselors?
How companies can use online behavioral advertising to win customer confidence
For the rest of the January 2011 issue of CRM magazine please click here
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Is your online marketing scaring old ladies?

A recent article in The Wall Street Journal featured an elderly woman whose personal online information was shared with at least 23 data and advertising companies after she had logged into e-card provider Pingg. Linda Twombly began receiving personalized online ads for a Republican Senate hopeful as the result of information collected by Rapleaf. The online tracking company had identified Twombly as “a conservative who is interested in Republican politics, has an interest in the Bible, and contributes to political and environmental causes,” according to the article.

It's not surprising that companies can use software to track your Web activities and gather personal information, but what was intriguing was how alarmed Twombly became after she received those ads. "Holy smokes," the article quoted her as saying. "It is like a watchdog is watching me, and it is not good."

Is Twombly right? Are online behavioral advertisers watchdogs? Or should she be thankful for the targeted information she’s receiving as a result of enhanced data collection technology?

The debate over online behavioral advertising stems from a marketing paradox—Internet shoppers want to receive personalized, timely offers based on their wants and needs but they resent that companies track their online purchase and browsing histories. Setting the rules and determining the ethical landscape for online behavioral advertising have been mostly the responsibility of marketers themselves, though the Federal Trade Commission did release a report, “Self-Regulatory Principles for Online Behavioral Advertising,” in 2009.

According to FTC.gov, the report discusses the potential benefits of online behavioral advertising to consumers, as well as the privacy concerns that the practice raises. The concerns, as stated in the report, include the invisibility of data collection to consumers and the risk that the information collected could be used for unanticipated purposes. The ramifications of and potential uses for behavioral advertising have been thoroughly analyzed and debated within the marketing industry, but the conversation has been mostly outside the public’s earshot.

Recently, however, Facebook committed the one cardinal sin of data collection and, as a result, has brought the debate into the mainstream (for more on Facebook’s data collection practices, see “Facebook: The Black Sheep of Online Behavioral Advertising,”). What Facebook failed to do—and what every marketer with whom CRM spoke asserts that behavioral advertisers must do—is to be as transparent as possible in collecting and using online data.

In an effort to comply with the FTC report, and to not turn a tried-and-true marketing strategy into outrage, the nation’s largest media and marketing associations have launched their own program geared toward enhancing the transparency of online behavioral advertising (see "Online Behavioral Advertising Regulates Itself,"). The program is based on seven self-regulatory principles and corresponds with the views expressed in the FTC report.

The participating associations include the American Association of Advertising Agencies, the American Advertising Federation, the Association of National Advertisers, the Better Business Bureau, the Direct Marketing Association (DMA), the Interactive Advertising Bureau (IAB), and the Network Advertising Initiative.

“The FTC came out with its report and a series of recommendations about online behavioral advertising,” says DMA Executive Vice President of Government Affairs Linda Woolley. “The FTC laid out a bunch of things it thought should happen. [It thought] that the industry should pick up the mantle and do [the work] on its own. As a result, DMA convened a group of companies that operate across the Internet: ad agencies, ad networks, publishers, Internet service providers, the entire Internet ecosystem. We started with the FTC’s recommendations and worked on putting together a set of principles that the industry could follow when serving online behavioral ads.”
One initiative these marketing associations have begun to implement that may alter consumers’ perception of behavioral ads is the Advertising Option Icon Application (AOI). According to aboutads.info, AOI will provide enhanced notice of online behavioral advertising practices through an illustration that appears whenever data are being collected.

“When consumers get an ad that the icon appears on, they can mouse over the ad or click on the icon and get a screen [detailing] why they got this ad,” Woolley says, “and then in the next click they can opt out of behaviorally targeted ads.”

These principles seem well-intentioned, and the ability to opt out will likely provide an escape to those consumers most worried about their online privacy, but can marketers be trusted to regulate themselves? Will consumers take the time to click on the AOI and read about online behavioral advertisements? And if they don’t opt out, is there anything to worry about other than the creepiness associated with someone watching your online activity?

“Technology always creates the potential for misuse of information,” says Mike Zaneis, vice president of public policy at IAB. “So we have to be vigilant on the hypothetical front. But, by and large, those types of nightmare scenarios don’t happen.”

Zaneis does acknowledge that the potential for exploitation is real and that someone with criminal intentions could take advantage of data online. But he argues that restricting data collection outright could damage how the Internet functions.

“Every commercial Web site depends upon third parties to deliver relevant content, to run site analytics, and to serve ads into that site. We’ve built the Internet around an economic and technical architecture that requires third parties. Changing that architecture is going to have a deep impact on business operations. Recognizing that, the trade-off to increase privacy is going to have devastating impacts on the operations of the Internet. Rather than having the government come in and divine where the proper balance is, the industry has come in and taken the right steps to let consumers determine where their level of comfort is.”

Woolley agrees. “The whole business model of the Internet is supported by interest-based ads because those are the ones that are the most relevant,” she says. “For the people who say there shouldn’t be any ads on the Internet, if that is the case, if we go in that direction we really need to rethink everything about the Internet. The only reason we have so much free content on the Internet right now is because of interest-based ads. It’s the reason a poor kid in Malawi with a hundred-dollar computer can access the Internet and access the world’s best library at his or her fingertips.”

Not only does analyzing consumer behavior help keep the Internet afloat, but it’s also benign, according to Jeff Gilleland, product marketing manager for SAS customer intelligence solutions. “It’s no different than Nielsen looking at television viewership,” he says. “The Web enables you to attribute learning to individuals, which enables marketers to make more precise decisions about how to treat individuals. In the end, it’ll provide a richer experience for customers.”

Gilleland argues that data collection technology is still a new set of mediums and capabilities, and no one knows what types of collection will be considered intrusive. “Companies need to focus on having policies that are transparent to the customer, that demonstrate that they’ll treat customer information in a way that the customer values, and that they’ll use the information to serve the customer’s needs.”
Jay Henderson, director of product marketing at Unica, a provider of marketing software solutions, echoes the argument that consumers, not the government or marketers, will define the boundaries.

“Things people might have thought were creepy five years ago they might not consider creepy right now,” Henderson says. He recalls that when Amazon began showing consumers products they had previously considered buying, the initial reaction to the practice was negative. If marketers can create an appropriate value exchange for the collection of data, consumers won’t mind that they’re being watched, he says. “The culture can adapt so that it might not feel quite as creepy to us. Given that it’s a new set of mediums and capabilities, and we’re not sure what’s going to be creepy, marketers are experimenting and trying to build out marketing programs that will allow them to test out these ideas to get initial feedback and make adjustments without having a broad brush across their entire customer base feel like privacy has been invaded.”

While most industry insiders with whom CRM spoke don’t believe the collection of behavioral data will bring a catastrophe, many expect the conflict to grow in intensity. Alex Coleman, director of privacy certification at eTRUST, which promotes online privacy by establishing best practice and policy, argues that the issue will grow within the next five years because, despite some self-regulatory principles, there is “very little regulation of the data collected and what happens to it.” Coleman praises the AOI and any attempt by marketers to be transparent in their data collection but argues that, ultimately, marketers will need to know when the data collection is and isn’t appropriate.

“[Marketers should view data collection] as a tool that is right for some circumstances and not for others,” Coleman says. “Take a good look at the product and service you are selling and consider if it’s a right fit. People are not opposed to behavioral advertising, but they are opposed to any attempts to disguise it.”

Bill Westerman, principal and founder of Create with Context, a strategic design and research firm focused on the digital experience, also foresees a rise in hostility over the subject. When Westerman talks to U.S.-based clients, he has noticed they are less aware of the controversy than their European and Japanese counterparts. “There hasn’t been much buzz and concern around privacy in the U.S.,” Westerman says. “Even things that have made their way into the press haven’t generated that much buzz. We’re all waiting for something major to happen that’s going to trip the U.S. populace over to becoming as concerned as other places in the world.”
When asked what can stop this “something” from happening, Westerman answered as each of his colleagues had: “Transparency is always the best route. Allow people to have control over the mechanisms that are used for personalization.”

Whatever happened to Linda Twombly? Did she come to terms with data collection and welcome the opportunity to receive more relevant personalized ads each day? Not according to The Wall Street Journal. Soon after speaking to the newspaper, Twombly tweaked her Web browser to limit cookie installation and removed applications from her Facebook profile that were transmitting data to Rapleaf.
Opt out: 1. Stay in: 0. 


Juan Martinez is Assistant Editor at CRM. To contact the editors, please send an email to editor@destinationCRM.com.


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To contact the editors, please email editor@destinationCRM.com
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