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Ready, Fire, Aim: Consumer Privacy And Mistrust In The Digital Age

April 05, 2017

As seen in AdExchanger's Data-Driven Thinking column

2016 may well be remembered as the year of mistrust. Around the world and here in America, populist movements were fueled by a rising sense that government is losing its capacity to respond to the evolving economic needs of the 21st century.

Before the the presidential election, Pew Research found that just 19% of Americans trusted the government to do what’s right “just about always” or “most of the time.” These numbers are at an all-time low.

But this age of distrust isn’t limited to the government. In the advertising industry, trust between brands and agencies, which had been eroding gradually over the years, boiled over with the release of an ANA report that found “pervasive receipt and nondisclosed rebates” and other agency practices that did not serve the best interests of clients.

A common thread that weaves together distrust in our government institutions and the private sector is privacy and the use of personal data to monitor and target. Just as the ANA report converted suspicion among brands into outright alarm, the recent vote by Congress to repeal an internet privacy rule enacted by the Federal Communications Commission (FCC) under President Barack Obama has similarly brought the privacy issue into stark relief.

Congress has set the stage for internet service providers (ISPs) to significantly ramp up the collection and sale of users’ browsing and purchasing history. There is widespread concern among consumers and watchdogs that this action will set the internet privacy movement back many years.

At first glance, one might assume that despite the uproar, the repeal of this privacy rule would be good news for marketers, who require accurate consumer data to target and measure advertising campaigns. But in fact, the opposite is true.

Our industry has been addressing the complex issue of consumer privacy in the digital age for more than a decade. The IAB’s Self-Regulatory Principles [PDF], published in July 2009, represent the collective input of several leading organizations, including the 4As, the ANA, the Direct Marketing Association and the Better Business Bureau.

These practices are based on a widespread belief in notice and choice: Marketers tell consumers what they are doing and give them straightforward ways to opt out. That’s why they are almost universally followed across the marketing industry and do not require government oversight. We understood that it was in our best interests to establish a consumer-friendly approach long before such intervention might become necessary. The success of our self-regulating model proves that reasonable actors don’t always need the government to determine the “rules of the road.”

Unfortunately, Congress’ recent action threatens to undermine our industry’s success. Already we are seeing a rise in consumer use of virtual private networks and other privacy measures that prevent marketers from gathering data we have long used responsibly and with consumer consent. Rather than making informed decisions on a case-by-case basis, consumers will increasingly respond to this perceived attack on their privacy by taking a blanket approach that favors anonymity.

Intended or not, the legislation will also have the perverse effect of favoring industry titans, such as Google, Amazon and Facebook, which have long-established methods of collecting consumer data through real-identity login paired with nonnegotiable terms of service. Smaller media companies that produce premium content that advertisers crave, such as Time Inc., Hearst and Conde Nast, will struggle as they have not historically been able to convince users to share personal data at scale. In a world bending toward programmatic, these companies are at a disadvantage by not leveraging massive data for targeting and measurement.

The good news is that, for all the doomsday talk, there is an extremely easy fix for the problem. In repealing the internet privacy regulation, many members of Congress argued that the FCC was not the appropriate agency to set these rules, and that the Federal Trade Commission (FTC) has proper jurisdiction. To consumers concerned about invasive collection of their personal data, this is a distinction without a difference.

But if we take our elected representatives at their word, they should call on the FTC to immediately enact new regulations that match or exceed those repealed. This is a necessary though insufficient step in the long journey to restoring consumer confidence in the public and private sectors.