Online advertising may be facing their first big hurdle. The FTC is proposing a “do not track” policy for internet advertising, similar to the “do not call” for telemarketers. This would cripple many new media business, or at least slow them down a bit. Everyone from Yelp to giant Google, would be affected. Many online companies who are selling for billions of dollars would be worth much less than their current valuation if they can’t track and collect user data. That’s what makes them worth the billions in sale price.
This stems from privacy issues. Even Google realized in 2001 when they filed their papers with the SEC, that one of the threats to their business is if people mistrust them in how they use personal information. The FTC is not satisfied with how slow the industry is “self-policing” and addressing privacy concerns.
Stop collecting. The commission believes that the internet industry does not allow individuals to prevent online marketers to collect their surfing behaviors. They want an opt out ability on collecting, not just a stop targeting approach. That’s too narrow. There is starting to be a mild rumble from the public that they don’t like the fact their every click is tracked and data collected on them, especially without the individual knowing or giving permission to do so. I think it may be heading toward more of an opt-in instead of an opt-out, just like email and spam. Online marketers may have to get permission to track someone instead of the individual having to tell them to stop. This would dramatically alter online marketing and make it more difficult and less accurate.
The proposal from the FTC is to have a browser install a piece of software that will signal to online marketers that this individual has chosen not to allow their surfing habits to be tracked. This means, for example, Google would install a cookie onto their browser that would indicate whether a consumer has allowed their browsing habits to be tracked and that they are open to receive targeted advertising. It would be specific to each browser, not to the individual. So, if you decided to put into your Google settings “do not track”, Google would block all tracking of your browsing. Privacy advocates are in agreement with this approach and it has been shown that it is feasible to execute and is scaleable to include mobile as well.
If this comes to past, new strategies will need to be developed by online marketers to serve up advertising to you. Will this devalue some of the astronomical amounts companies are willing to pay for online sites? Would Google still be willing to pay $5 billion to Groupon if they can’t provide user behavior data? Would you still pay $350 million for Yelp if their consumer data no longer accurate or deep? It’s the data that is of value. So is there a balance between data collecting to give you more relevant ads and keeping your personal habits private?
I believe the individual must give their consent so they are fully aware they are being tracked and “collected”. It should not be the other way around where you are automatically being tracked unless you say no. Most people believe that when it comes to email marketing, so my guess, many will feel the same way when it comes to online browsing. What you do and where you go is your business, not anyone else. This is going to be interesting to watch as this heated debate is just getting started. There are powerful players on both sides. In the end, as a marketer and a search engine, if you are responsible, transparent, and honest, this issue should have minimal affect on how you do business.