April II 2008

Fredric Morris, Editor-In-Chief, Connect-World
Fredric Morris

Content rules? Rules for ads, Big Brother and nerds

Content is king – or so they say. Still, notes here and there in the international press, blogs, newsletters and chats with friends make one wonder where content’s kingdom is – in the UK or Nepal. I would bet on Nepal.

I have long had doubts about the revenues most content can generate. The problem is not content; it is the willingness, the ability, of enough people to pay for it on a regular basis.

There is enough content produced to drown in, but much of it – look at YouTube – is free. It’s hard to compete with free; the price is right and it sets a mark that all other content competes with. Content costs money and consumers don’t like to pay.

There is a time-tested remedy for situations such as these – advertising. Advertisers are learning to love audiences they can target precisely – and that is what online service providers can offer.

To target ads, advertisers accumulate data about visits made to the sites of third-party advertising network members, and correlate consumers’ surfing habits with their personal product tastes and the likelihood that certain types of advertising will appeal to them. The same data, though, can also let advertisers draw conclusions about a wide range of personal behaviours that many consumers would not like others to know about – conclusions that can be embarrassing, erroneous, dead wrong, or even dangerous. Data gatherers are often guilty – intentionally or not – of outrageous invasion of privacy.

What are advertisers to do? What are the ethical ramifications? What do advertisers know about you that you wish they didn’t? What if this information is misused or falls into the wrong hands?

A press release last week from the NAI speaks to these issues. From a different point of view, these are some of the same issues I spoke of in my eLetter at the end of March – about some of the risks inherent in the growth of Internet access and the Information Society.

The NAI addresses the problem of dealing with the sensitive personal data that Web sites and advertising networks gather by tracking visitors to their sites.

The NAI, the Network Advertising Initiative, which counts Google’s DoubleClick, Yahoo’s BlueLithium, AOL’s Advertising.com and Tacoda among its members, is a “cooperative of online marketing and analytics companies committed to building consumer awareness and establishing responsible business and data management practices and standards”. They published a draft (open for public comment until June 12 – http://www.networkadvertising.org/networks/NAI_Principles_2008_Draft_for_Public.pdf) of a “Self-Regulatory Code of Conduct for Online Behavioral Advertising“. The draft is the NAI’s response to proposals made by the U.S. Federal Trade Commission’s last year.

The NAI’s aims to protect the consumer’s privacy, to control the abuse of OBA (Third-Party Online Behavioural Advertising), provide consumers with safeguards that inform them when OBA is being used, and allow them to opt out – to deny permission for its use.

Few people that are not involved in online marketing are aware of the systems in place for third-party online behavioural advertising. The systems come in a variety of flavours, but the principles are the same. Online advertisers often take part in advertising networks. The networks maintain databases of all the users that visit the sites of any of their members. They use cookies and other technologies that let them identify Web surfers that have visited any of the sites of a given network’s members.

Typically, when users visit the site of a member of a third-party marketing network they are automatically linked to a third-party ad server site. The ad server identifies the visiting computer and sends it a ‘cookie’ – a bit of text that is saved by the computer in a cookie file. The ad server then records the user’s access in its database. Every time a consumer accesses the site of one of the advertising network’s members, the ad server records the visit. In time, ad servers can collect a sizeable amount of data concerning the consumer’s habits, so whenever the ad server detects one of its own cookies in a visiting computer, it will check its files and send back banner adds most likely to be of interest to the consumer. The advertising network site currently visited by the consumer will then display the banner.

It all sounds very innocent and, in truth, most often is – advertisers can narrowly target their ads at the consumers most likely to be interested. On the other hand, when the information that is gathered goes beyond normal marketing needs it invades the consumer’s privacy. The NAI’s proposed guidelines sets forth an ethical framework for dealing with information gathered from members of, as they call them, ‘restricted’ and ‘sensitive’ consumer segments.

The NAI prohibits members from targeting online behavioural advertising to sensitive consumer segments and to children less than 13 years of age. “Restricted and Sensitive Consumer Segments” include, but are not limited to:
1. Certain medical/health conditions–
A. HIV/ AIDS status
B. Sexually-related conditions (e.g., sexually transmitted diseases, erectile dysfunction)
C. Psychiatric conditions
D. Cancer status
E. Abortion-related

2. Certain personal life information–
A. Sexual behaviour/orientation/identity (i.e., Lesbian/Gay/Bisexual/Transgender)
B. Criminal victim status (e.g., rape victim status)

There is another list of “potentially restricted” consumers. These are not automatically excluded, but NAI members are expected to evaluate this data within the context it will be used. This category includes – but, once again, is not limited to data regarding: age /birth date, addictions (e.g., drugs, alcohol, gambling), alien status or nationality, criminal history, death, disability, ethnic affiliation, marital status, philosophical beliefs, political affiliation or opinions, pregnancy, racial identification, religious affiliation or lack thereof and trade union membership.

This is an explosive list of personal characteristics, but it is far from exhaustive. It is great as far as it goes, but it only goes as far as a handful of NAI members – and I am certain there is a longer list of equally explosive characteristics that can be data mined that are not even covered.

Some of NAI’s members are gigantic; even so, they cover only a small percentage of the consumers on the Web. Then too, the rules depend upon a great deal of case-by-case judgement by the members and the temptation to interpret the rules leniently, loosely, is as great as the potential rewards for doing so. Some of these ‘sensitive’ markets – racial groups, sexual preference groups – are enormous and highly lucrative.

I suspect that, at best, the NAI rules will prevent only the crassest misuse of data – its greatest strength will come from the consumer ‘opt-out’ and the disclosure procedures to which members must adhere. I am certain that much of the online behavioural advertising will just skim the line between the ordinarily tasteless and downright bad taste – sanctimoniously defended by their rigid adherence to the most liberal possible interpretations of the rules.

The NAI rules are a step in the right direction, but without legally enforced adherence by all online behavioural advertisers to a comprehensive set of broadly debated rules, Big Brother is an ad agency nerd fondling a database.


Our next Connect-World Europe Issue will be published later this month. This edition of Connect-World will be widely distributed to our reader base and, as well, at shows where we are one of the main media sponsors such as: Sviaz / Expo Comm (14-18 May, Moscow), FT Mobile Media Conference (15-16 May, London), Wimax World Europe (29-31 May, Vienna), and Von Europe (11-14 June, Stockholm).

The theme for this issue will be, The evolving ‘Net’ – Rising to the challenge of rising use.

When speaking of networks, conventional wisdom and traditional business models no longer work as they did. The lines are blurring in the fixed, mobile and even broadcasting markets. Wired networks now handle traffic once thought suitable only for wireless and wireless is substituting wired in a broad range of applications. Seamless handoffs between wired and wireless networks –and, indeed, mergers, partnerships and consolidations bringing together networks and players of all sorts – further confuse the once prettily organised networking landscape.

This issue will examine what these changes in technologies and the market mean for the sector. How can the residential and business consumer best be served? What does the future hold for network operators of all types?

Europe II 2008 Media Pack; Click here


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