VOLUME 2, NUMBER 6 DECEMBER 5, 2007 Editors Welcome to a special issue of the Download, which covers the recent FTC “Town Hall” workshop on behavioral marketing entitled Ehavioral Advertising: Tracking, Targeting & Technology. What follows Alisa M. Bergman below is an executive summary of the workshop. A complete recap of the Town Hall can be found 202.344.4611 [email protected] beginning on page 4. Emilio W. Cividanes 202.344.4414 Assessing Behavioral Targeting: Notes From the FTC Workshop [email protected] Stuart P. Ingis On November 1-2, 2007, the FTC conducted a “Town Hall” on behavioral targeting online, 202.344.4613 the practice of delivering targeted advertising to online consumers. The event, Ehavioral [email protected] Advertising: Tracking, Targeting, & Technology, included nine panels composed of representatives from a number of leading online companies, government officials, and privacy advocates discussing the topic from the perspectives of technology, self-regulation, privacy Washington, D.C. 575 7th Street, NW advocacy and industry. Washington, DC 20004-1601 202.344.4000 C A L I F O R N ia • M A RY la N D • N E W Y O R K • V I R GI N I A • W A SH I N G T O N , D C Where We Are Today Baltimore Two Hopkins Plaza The first session, an “Overview of Behavioral Advertising”, set the stage for the issues which Baltimore, MD 21201 would be addressed over the course of the workshop. One panelist highlighted the fact that 410.244.7400 the concept of behavioral advertising stretches back to the days of the Montgomery Ward Los Angeles catalog of the late 19th century, which was mailed to a targeted list of rural consumers with 2049 Century Park East a known proclivity to purchase the goods advertised within its pages. The advent of online Los Angeles, CA 90067 retailing and the desire to provide an improved user experience replete with fresh, free content th 575 7 Street, NW 310.229.9900 and relevant ads have spurred the evolution of innovative new technology. With this innovation Washington, DC 20004-1601 New York comes many new opportunities for retailers—such as geographic-based targeting, keyword- 405 Lexington Avenue triggered advertising, and cookie-based targeting. These technologies have also been the New York, NY 10174 focus of many questions centered around consumer privacy, the regulatory environment of 212.307.5500 such practices, and the ways in which companies are adapting their business models in order to assure their customers of these legitimate practices and succeed within this constantly Rockville One Church Street shifting framework. Fifth Floor Rockville, MD 20850 A more in-depth discussion of the current state of online advertising followed, with 301.217.5600 representatives from various companies and organizations discussing their practices and thoughts on the evolving models. The ability to participate in effective online advertising Towson 210 Allegheny Avenue practices is crucial to many online retailers and content providers. Citing a study from April Towson, MD 21204 2006, it was noted that not only do a majority of consumers say that they pay more attention 410.494.6200 to advertising geared specifically towards them, but that their online experiences are improved by such practices. Beyond that, there is a general expectation from consumers of quality, free Tysons 8010 Towers Crescent Drive Vienna, VA 22182 703.760.1600 VALUE ADDED. VALUES DRIVEN. VALUE ADDED. VALUES DRIVEN. THE DOWNLOAD DECEMBER 5, 2007 2 THE DOWNLOAD DECEMBER 5, 2007 23 content on the web—something that is enhanced by the increasing efficacy of targeted binary equation of ad or no ad—rather, the issue is an ad to whom and from whom. He noted advertising and the associated revenue it brings to sites. In other words, so-called that the ad process will not be top-down only in the future. Users will receive ads and information “behavioral targeting” is now an inextricable component of online success. from their neighbors and friends as well. “It’s All About the Consumer” Trust but verify—how can we encourage trust? John Thorne of Verizon stated that consumers respond to different levels of privacy. He provided examples of how customers voted Two researchers—George R. Milne from the University of Massachusetts-Amherst with their feet and joined Verizon in the wake of other companies’ proposals to make available a cell phone directory, as well as ISPs’ practices in connection with responding to subpoenas. and Dr. Larry Ponemon of the Ponemon Institute—shared their findings on a broad He stated that privacy is important and that consumers distinguish among companies based on reaching survey related to consumer expectations and concerns related to behavioral privacy. Mr. Thompson stated that it is difficult to pursue bad actors. The real challenge, he said, marketing practices. In general, they found that consumers have a desire to control both will be to create a race to the top because businesses find it easier to deal with mediocrity. their online experience (i.e. through “opt-in” and “opt-out” options, blocking pop-ups, etc.) as well as the information which they share. The vast majority of consumers identified in the study stated that their privacy concerns extended only in so far as they were Closing Remarks—Eileen Harrington, Deputy Director, Bureau of Consumer not inconvenienced by the issue. Using this information, the researchers were able to Protection, FTC present opportunities for building trust with online consumers, including such practices as the effective maintenance of an online privacy policy, and appropriate placement of ads Summing up the Town Hall discussions, Ms. Harrington of the FTC made the following and uses of information. observations: Data Collection Practices (1) Behavioral advertising is a growing practice that is largely invisible; (2) There is general agreement that greater transparency and control is needed; (3) There are legitimate concerns about what happens to information. Among these concerns From there, the workshop moved towards a discussion of the policies that companies are secondary uses of information and data security issues, particularly where sensitive data is have in place regarding the collection, use and protection of data about consumers. involved. Panelists discussed the idea of “privacy by design” which is, in effect, the building of (4) The FTC wants a reasonable approach, which is flexible, provides consumers with control, privacy mechanisms directly into a company’s products. These mechanisms include prevents harm and creates greater accountability. such features as allowing consumers to control what information is shared, opt-in/opt-out features, requiring an authentication before using personalized services (such as email), She discussed some of the promising ideas, which include a Do-Not-Track List, updates to the and the collection of non-personally identifying information. NAI principles, and better consumer education. Ms. Harrington indicated that the FTC has not seen enough of the facts surrounding information collection for behavioral targeting. She also The central concerns involving the collection of data centered around the amount and stated that there is a lack of concrete suggestions about improving consumer protections. Finally, type of data collected, the effect this data has on the choices provided to consumers, and she stated that the FTC will continue to ask questions about these issues. the length of time the data is stored. Moving Forward on Disclosure With the foundation for the town hall now set—what behavioral targeting is, its uses, THE DOWNLOAD is published by the privacy team at the law firm of Venable LLP. Internet ad- benefits and potential drawbacks—the second day of the program centered around ways dress: http://www.venable.com. It is not intended to provide legal advice or opinion. Such advice to move forward, and how the government and private industry can effectively preserve may only be given when related to specific fact situations. Copyright enableV LLP 2007. the benefits of behavioral marketing while mitigating privacy concerns. Issue Editor: Stuart P. Ingis In the realm of consumer notification, companies are experimenting with various ways Associate Editor: Katharine A. Pauley in which to notify consumers about behavioral advertising policies. Striking a balance between providing meaningful, accessible information without overburdening the Questions and comments concerning information in this newsletter should be directed to Stuart consumer is key to effective notification. Businesses are accomplishing this in a myriad Ingis at [email protected]. of ways, including allowing consumers to curate their own profiles to dictate how much information is shared (and to whom), layered notices, color-coded notices and symbols, Please direct requests to be added to the distribution list or address changes to Kay Pauley at and even posting videos describing company privacy policies on YouTube. [email protected]. VALUE ADDED. VALUES DRIVEN. VALUE ADDED. VALUES DRIVEN. 3 THE DOWNLOAD DECEMBER 5, 2007 22 THE DOWNLOAD DECEMBER 5, 2007 3 world cookies), loyalty cards, passports, to assign a value to consumers as they The Cookie Question enter retail stores, future plans to use the technology in connection with offering bank patrons differential treatment, on billboards to target people and to scan The ensuing session involved one of the most discussed aspects of behavioral targeting: the use tags in garbage (to determine how quickly people consume particular products). of cookies. Ms. Albrecht stated that this is extraordinarily harmful to consumers. Cookies are a critical component of today’s Internet. Following the showing of a series of short Mozelle Thompson, CEO, , stated that there Thompson Strategic Consulting videos on the function of cookies produced by contestants participating in a contest sponsored by is a lingering, but incorrect, impression that the public is dumb; they may be the Berkman Center for Internet and Society at Harvard Law School, a panel convened to discuss misinformed or uninformed, but they make choices about privacy.