Online advertising is a revolution for marketers, who now can take advantage of previously unavailable data about readers' online behaviors and preferences to send commercial messages to individuals rather than to broad demographic groups. The question remains whether this development is something to applaud or to fear.
I got to hear both sides last week at the Computers, Freedom and Privacy conference in Montreal, where Jeff Chester from the Center for Digital Democracy and Mike Zaneis of the Interactive Advertising Bureau debated the potential dangers of internet advertising.
Chester found plenty to worry about. He pointed to ad companies' own marketing materials as evidence of the depth and breadth of the information collected. Websites today track clicks, browsing and user attention span, and amass information like wish lists, preferences and purchases. Advertising brokers create a detailed profile of site visitors and use it to serve ads targeted to appeal to an individual's particular tastes.
The problem, Chester argued, is one of user privacy and autonomy. Advertisers use the profiles they create to get consumers to buy their products or services, without users ever knowing that they've been tracked or profiled. Chester's organization has filed a complaint (.pdf) with the Federal Trade Commission detailing the extent of user profiling, data mining and ad targeting.
While many websites do not collect names, addresses, Social Security numbers or other "personally identifiable information," or PII, the information they do collect is extremely revealing. "They don't need to know your name to know who you are," Chester said.
A very different perspective came from Mike Zaneis of the Internet Advertising Bureau. Dressed in a much better suit than any other CFP participant, and sporting a John Edwards-quality coif and a smooth manner, Zaneis faced a hostile, privacy-loving crowd.
Zaneis stressed that profiling does not capture PII. But the audience appeared to agree with Chester that browsing history and search information was nonetheless private. "My clickstream data is sensitive information," said privacy activist Kaliya Hamlin, known as the Identity Woman, "and it belongs to me."
I'm not sure I care if an advertiser has a profile for Ms. X that contains everything about me, including what I read, what I buy, what I browse and for how long. As long as it's anonymous, I can probably live with that.
However, anonymous or pseudonymous profiles can be readily connected to real world identity. While advertisers may not collect PII, they do collect IP addresses, which can be traced to an individual most of the time. Also, Carnegie Mellon professor Latanya Sweeney has demonstrated that one can identify 87 percent of the U.S. population from ZIP code, birth date and gender alone. Privacy protections based on absence of PII isn't very robust.
But advertising makes the web go 'round. Without advertising, creators must rely on subscriptions or donations to survive, neither of which has proven a reliable source of income for online publishers. The majority of the most popular blogs carry ads, the revenue from which keeps good writers gainfully employed. What happens to the Boing Boings of the blogosphere if ads do not work?
The question, then, is whether targeted online advertising creates new problems or exacerbates existing ones. And how can we moderate those problems, whether through best-practices, consumer education or regulation?
Other than the privacy issues, some obvious risks are price discrimination, segmented markets and creating an ability for advertisers to exercise improper influence over consumers.
Economists tend to like price discrimination, because it allows wealthier purchasers to subsidize sales to poor customers, while maximizing profits. Consumers hate knowing that the person sitting next to them on the airplane paid hundreds of dollars less because they booked a day earlier. Purchasers might actually rebel if the reason they paid more for the same service was because the seller thought they had more disposable income than their seatmate. Perhaps for this reason alone, I think widespread price discrimination is unlikely.
Segmenting consumers by demographics creates the concern that users will be shown ads, or even editorial content, limited to what sellers believe is "typical," and that we will not be presented with novel choices or challenging information. University of Chicago Law professor Cass Sunstein expresses a similar concern in his book, Republic.com, where he demonstrates how internet users are able to personalize the media they receive and limit their exposure to topics and points of view of their own choosing.
Personalization, including targeted ads, is a mixed blessing: on one hand, personalized information is more useful and relevant to our lives. On the other, it reduces the opportunities for unanticipated encounters with ideas, people or products that may disturb or enlighten us. Personalization also interferes with the development of common experiences that people can use to understand each other and make common decisions.
More worrisome is the question of manipulation and abuse. As behavioral researchers learn more about the irrational ways people make decisions, advertisers can use that information to get consumers to buy things that aren't particularly good for them.
Consider cigarette smoking. Or the fact that consumers pay more for brand-name products that are no more effective than generics. Taco Bell is persuading already overweight Americans to embrace the concept of a "fourthmeal" between dinner and breakfast. Are these free choices and how much worse will it be when advertisers know more about our habits and psychology than we do?
While the Federal Trade Commission regulates deceptive and unfair advertising, targeted online advertising requires a better understanding of the psychological line between persuasion and control.
Asking customers to opt in to online marketing may limit the effectiveness of internet ads. Requiring consumers to opt out will not adequately protect privacy, whether or not advertising companies collect PII.
It's a quandary that I don't have the answer to. But we need to be sensitive to how modern advertising is novel and update advertising best practices -- and better educate consumers about information collection and advertising.
Finally, it's time to consider whether current regulations are adequate to protect consumer interests, while still allowing informative and effective online ad campaigns.
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Jennifer Granick is executive director of the Stanford Law School Center for Internet and Society and teaches the Cyberlaw Clinic.
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