Wednesday, December 08, 2010

Do-Not-Do Do-Not-Track

Do-Not-Track sounds great, doesn't it? Just like Do-Not-Call, imagine a world where marketers and tech companies can't track your activities online, where you can remain truly anonymous and do as you please with no prying eyes. Sounds great, doesn't it?

Unfortunately, this view is uninformed, confused and short-sighted:

It's uninformed, because the vast majority of the tracking that happens online is, for all practical purposes, anonymous. It is based on cookies, which are temporary text files that identify a specific browser program, not a person. Cookie-based tracking of users is FAR more anonymous then the tracking people put up with every day when they swipe a credit card and that purchase is permanently and inexorably linked to their name and postal address.

It's confused because the need for Do-Not-Call is based on the desire to avoid interruptions in the home by marketing calls. Joining a Do-Not-Call list removes these interruptions. The effect of Do-Not-Track will NOT be to stop online advertising. It will stop RELEVANT advertising.

Most importantly, it's short sighted because the reduction in advertising relevance will lead DIRECTLY to series of negative consequences for consumers:

==> It will kill off a class of companies whose sole purpose is to make advertising more relevant to consumers by offering better targeting (do we care about the innovation economy?).

==> It will lead DIRECTLY to lower ad spend by advertisers, who see online become a less effective channel to reach consumers. I've worked in online advertising for most of the last 15 years and I say with certainty that online ad spend is tied directly to performance. Reduce performance, and you will reduce spend.

==> Sadly, and ironically, it will result in MORE advertising online, not less. Publishers will be forced to introduce more advertising on their pages and applications to make up for the diminished performance of the existing ad inventory. This is akin to joining a Do-Not-Call list and having the marketing calls you get actually go UP!

==> It will result in LESS free content, not more. Those publishers that exist on the margins of profitability will see their revenues diminished as advertisers pull back. How in the world is this good for consumers?

==> Advertisers will slow their migration of ad spend to online channels, instead relying on more traditional media options, enhancing the support system for print (read: killing more trees), or for direct mail (read: killing trees AND using an advertising medium that really does track you right into your home). Talk about the law of unintended consequences!

So what do we do about all the worries around online tracking? First, government should feel to legislate away truly bad behavior, like spyware, malware, anything preying on children, etc, etc.

Second, there is a really simple solution for tracking that supports mainstream online advertising, but one that lacks the false veneer and high gloss that politicians typically look for: require universal adoption of industry self-regulation. What's wrong with requiring any company that does tracking of consumers online to join an industry self-regulatory body like the NAI? The NAI offers a simple opt-out mechanism for all its members, but doesn't throw the baby out with the bathwater. And well over 95% of all ads served in the US are already delivered by companies who are members of NAI. All the big boys are there -- Google, Yahoo, Fox, AOL. The only problem has been that lots of smaller players haven't joined yet. If the government requires tracking companies to join a self-regulatory regime of this type or else face onerous government regulation, you'd have the universal adoption sought by privacy advocates.

I may be Don Quixote in this particular story, but I'd like to believe that our government can understand the issues well enough to avoid all the unintended consequences.

Update: A USA Today editorial agrees with me.


thedom said...

Great post Dave...subtitle could be the law of unintended consequences!


Jon said...

Agreed! What's more, as a society, we should be promoting changes to the Internet that help it evolve in a positive way, contributing to an enhanced experience for users. As you indicate, "do not track" will lead to less relevant advertising. What's less evident is that it halts a major source of development and progress on the Internet - advertising as we know it today is an embryonic version of what it will be in the future. We should work together to envision a future in which online advertising is an integral and valuable part of the web experience - not a nuisance or annoyance. "Do not track" stops much of the progress being made toward evolving advertising into something useful. Yes, of course we have to protect consumer privacy and interests - there are a lot of nefarious players out there that will seek to use personal information for ill gain. Your suggestion for mandatory self regulation is a great way to enable us to continue progressing while protecting the consumer. Interesting times we live in - I hope we can act together as a society to promote and pursue the next generation of online advertising, instead of pushing ourselves back to 1995.

Pedro said...

I agree completely.
As you point out, the "Do not track" legislation is ultimately bad for consumers.
I want more free content not less and as a consumer I can already control when I'm being tracked or not via browser controls.
I also like your point about consumers getting bombarded with more, less relevant ads as a result.

Pedro said...

Completely agree.
This is bad for consumers and for advertisers. Not sure who wins here.