The Ad Predicament and the End of Tracking?

At a very crude level here’s where we are today:

  • Traditional media are less and less effective because of audience fragmentation
  • Agencies are still largely clinging to traditional media because of “inertia” and familiarity
  • The Internet is where huge audiences are today but they’re harder to effectively reach
  • Arguably search is the most effective online ad medium
  • Brands generally don’t want to spend money on search
  • Taking the lessons of search to heart, display advertising — where most of the brand advertising is seeking to go online — is tapping behavioral targeting (BT) and other, similar strategies to make display more “relevant”

Previously I wrote that if publishers, portals and other became too aggressive in their efforts to data mine and target/retarget, you’d see regulation and legislation. Well here’s the first of it:

After reading about how Internet companies like Google, Microsoft and Yahoo collect information about people online and use it for targeted advertising, one New York assemblyman said there ought to be a law.

Assemblyman Richard L. Brodsky, the sponsor of a New York bill to limit how companies collect data on computer users.

So he drafted a bill, now gathering support in Albany, that would make it a crime — punishable by a fine to be determined — for certain Web companies to use personal information about consumers for advertising without their consent.

And because it would be extraordinarily difficult for the companies that collect such data to adhere to stricter rules for people in New York alone, these companies would probably have to adjust their rules everywhere, effectively turning the New York legislation into national law.

From a legal standpoint this law wouldn’t survive a court challenge because, assuming it passed, it would violate the Commerce Clause of the US Constitution, which doesn’t allow individual states to regulate “interstate commerce.” Of course there are exceptions one can find but this wouldn’t be one of them.

What’s significant here is that it represents a first step in what is sure to be an ongoing legislative and regulatory discussion of consumer privacy. This is analogous to what happened with Click Fraud only more extreme: the search engines failed to “get out in front” of the issue from a PR perspective until they’d been repeatedly hammered in the press.

There are efforts to “self-regulate” BT within the IAB. But those efforts will need to be stepped up and become a lot more public or all the anticipated benefits of BT and other, similar schemes are going to go away as legislators impose restrictions on Web publishers and ad networks that require notification of tracking and the ability to opt-out.

That legislation or regulatory action would likely come amid a flurry of negative publicity in newspaper articles and on TV news broadcasts — publicity that will make ad networks and companies like AOL, Yahoo, Microsoft, Google and others look highly sinister. In that context, how many consumers, once they discover they’re being “tracked,” are likely to not opt out? I would say fewer than will buy the argument that the ads they’re getting by not doing so are more “relevant.”

8 Responses to “The Ad Predicament and the End of Tracking?”

  1. Turning Display Ads into ‘Search’ « Screenwerk Says:

    […] Display Ads into ‘Search’ I wrote below that consumer privacy concerns may create problems for publishers, ad networks and advertisers seeking to turn aggressive targeting into greater […]

  2. Webmedley Says:

    That is a true shame, because we’re only just now getting clients to buy into the idea that they can track everything that formerly used to be the sole decision of whoever in the room was paid the most 🙂

  3. » Will Pay Per Click Companies Be Forced To Drop Cookies? Pay Per Click Journal Says:

    […] to Greg Sterling at Screenwerk, even if it did it wouldn’t stand up in court against the Constitution: From a legal […]

  4. Relevant Ads but No Tracking Please « Screenwerk Says:

    […] I previously wrote about how overzealous BT will bring regulation that effectively hobbles it: The Ad Predicament and the End of Tracking? […]

  5. » update market news XI» Blog Archive » nugg.ad blog Says:

    […] But: From a legal standpoint this law wouldn’t survive a court challenge because, assuming it passed, it would violate the Commerce Clause of the US Constitution, which doesn’t allow individual states to regulate “interstate commerce.” What’s significant here is that it represents a first step in what is sure to be an ongoing legislative and regulatory discussion of consumer privacy….more […]

  6. Regulation IS Coming to Online Ads « Screenwerk Says:

    […] IS Coming to Online Ads By Greg Sterling I argued early last year that if behavioral targeting and tracking became too pervasive and/or aggressive […]

  7. BT in the Crosshairs « Screenwerk Says:

    […] in the Crosshairs By Greg Sterling For some time I’ve been anticipating regulation to be imposed on behavioral targeting (and possibly more broadly on online advertising). […]

  8. Privacy and the Paradox of Targeting « Screenwerk Says:

    […] and the Paradox of Targeting By Greg Sterling I’ve discussed multiple times in the past the paradox that when you ask consumers whether they want to be targeted […]

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