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Behavioral Advertisers Need to Change Their Behavior

On Thursday, two House Energy and Commerce subcommittees held a joint hearing to discuss something called “behavioral advertising,— the tracking of users’ Web site visits and searches in order to deliver tailored online advertisements. Almost a decade ago to the day, I testified before the Senate Commerce Committee on the very same topic as the chief privacy officer of DoubleClick. At the time, I said:

[IMGCAP(1)]“Consumers have the right to know what kind of data net advertisers are using, and they have the right to have control over that use. There are significant steps that industry can and should take to give consumers more confidence in and more control over their Web experience. Primary among them are notice and choice. Consumers need and deserve real choice. They need to know the type of data that is being collected about them and they need to have the ability to opt out, to choose not to participate if they want to.—

Today, I would admit to being less confident that old-fashioned notice and choice is still the right model. After years of working more directly with consumers at AOL, I am convinced that companies need to be more honest and open with users about how they collect and use their data.

Despite my background as a lawyer, former public policymaker, and a technologist who oversaw multiple ad networks, it is still difficult for me to decipher what many sites are doing when they collect users’ data. In fact, even after analyzing their privacy policies, peeking at the actual ad tags, using a “packet-sniffer,— and then reaching out to the site’s administrators for more information, it is not always attainable. And today, far more data about Web surfers is being used than in those early days. Users can routinely have data about their disposable income, offline purchase history, social network activity and other data appended to their searches and Web site history profiles.

The good news is that industry is finally moving to do more — labeling ads, providing access to user profiles, adopting retention periods and working with us at the Future of Privacy Forum to research meaningful ways to engage users about data use and help fix the broken opt-out process. Trade groups are also working hard to reach agreement on new self-regulatory requirements, and the Federal Trade Commission and Congress are considering whether and how to step in.

But with or without new laws or standards, CEOs across the industry need to approach the collection of user data with a new perspective: It is time for you to wake up and realize that if your business models depend upon robust uses of data, your long-term success depends on maintaining user confidence.

You need to stop talking about consumer privacy because most of you are not in the business of protecting privacy. You are in the business of using data to tailor your customers’ experience to make it more useful for them, and at the same time to increase the success of your company. But you need to take the sensitive data that may concern users off the table, erase long-term data that could be lost or misused, and consider how to best provide users with the real transparency and control that is in the spirit of Web 2.0 and beyond.

The success of and Netflix shows that consumers are copacetic with data being used on their behalf, even to market to them. However, the process has to be done in an honest, fair and obvious manner.

You don’t think you are in the same line of business as Amazon just because you are an advertiser or publisher? Have a good chat with your ad network representative and open your eyes to the amount and types of data being captured and used. Then, once you have done that, get to work on some new features that show users what is going on and let the user control the process. The good news? If what you are doing with their data is actually useful and relevant to consumers, they might even begin to help you serve them better.

At a time when the weak economy has us all looking for reliability and stability, putting consumers first to integrate privacy, personalization and profits might be just what we need to spur business growth forward.

Jules Polonetsky is the co-chairman and director of the Future of Privacy Forum, a think tank that seeks to advance responsible data practices. Polonetsky has previously served as the chief privacy officer at AOL and DoubleClick and as the Consumer Affairs commissioner for New York City.