Online Advertising is Critical to the Future of Broadband Media – But Not At The Risk of Privacy

Implications: I have openly supported online advertising.  I believe that it is critical to the future of wireless media and wireline media.  Targeted advertising is an essential component of making online advertising effective for advertisers. However, no one should risk their privacy.  Society is already having difficulty dealing with identity theft.  Advertisers, media companies, and any company handling consumers’ data need to be held accountable.  

Analysis: Target marketing and micro-sifting demographic information about online users has been around awhile and is rapidly maturing into a huge industry.  Data mining has reached new heights as a result of the various Internet tools.  When you combine the capabilities and tools of the Internet with that of wireless location technology a web-based company and wireless retailer have the ability to target market a consumer within spitting distance of a shopping mall.

A consumer’s specific needs can be accessed and addressed by retailers and advertisers.  A consumer’s buying pattern and preferences can be stored and used for modeling purposes by advertisers.  A web surfer’s interests, via purchases and page views, can be used to tailor marketing campaigns to that particular surfer.  Actions and behavior can be stored and examined.

Frightening is it not?

Think about this.  You are browsing web pages looking to buy new furniture.  A major online retailer may first ask you what city you live in.  You are having trouble picking out a style of desk for your home office.  The online retailer says it can help you narrow you selection if you answer a few of their questions.  The retailer asks you to fill out a survey to help you and the retailer determine the best style to fit your personality.  Of course the retailer will ask you for salary information and professional career information.  The retailer may ask you if you have any children because the retailer says it wants to make sure you don’t buy anything that is not kid proof or can be easily damaged by the child.  The retailer may even ask you if you plan on having your spouse use the desk.  All of the information requested is fairly general information; no harm.  Guess what it is still too much information about you.  We protect even less personal information when we speak to people face-to-face.  The Internet has created a false sense of security.

The last several years have depended on industry self regulation.  Frankly it has been a disaster.  There has been a need for government involvement.  If it were not for various laws to protect the privacy rights of users, we would have seen more trouble than we have seen now.  The kind of trouble I mean involves loss of personal financial information, loss of personal residential information, and the horrors we read about in the newspapers today – and that is with laws in place.  Imagine companies feeling as if they had no accountability.  It is too horrible to imagine. Think about the people knowing where you live and how you live.  Imagine an advertiser relying on a low cost process to protect your data.  You get hurt and the advertiser says “it’s not my responsibility”.

If anything we need more government involvement.

Now here is where even government involvement can be bad.  When government involvement stifles innovation the marketplace suffers and that means consumers suffer.

The rights of the individual need to be considered in conjunction with the rights to build web-based businesses and our economy.

The Consumer Federation of America has called for stronger rules to protect the privacy rights of the individual.  I often think the FTC’s primary job is to promote fair business practices in the nation and not protecting the consumer.  The FTC needs to write stronger rules.

That little piece of information about the consumer; for example the web page the consumer clicked on at 9:00PM is gold to many advertisers.  We may find over dozen corporate parties involved in the collecting and dissemination of that piece of information.  Who is held accountable for mishandling that data and letting an unsavory company or person get a hold of it?  My view is probably every corporate party in the information chain has some responsibility to protect the information and has a responsibility of ensuring that the company they are passing the information directly to meets some industry and government criteria.  Periodic review of the data recipients’ legal status should be required.

Can stronger rules be burdensome to companies?  Yes and too bad.  The upside for venture capitalists is that information security becomes an even bigger business than it is today.

It may sound too much like big brother.  However, when you think about the crooks, thieves, under handed companies, and wackos who are using the Internet (wireline and wireless) to hurt people, I would rather play it safe.  A company in that information chain saying “oops I did not mean any harm” just won’t cut it for the victims.  A single person victimized by the careless handling of personal information is one person too many.

A balanced but aggressive approach is needed to regulating the Internet and its data miners.  The current activities of the industry are woefully inadequate.