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More pressure to limit behavioral targeting threatens startup media companies September 1, 2009

Posted by jeremyliew in ad networks, advertising, behavioral targeting, legislation.
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Last month I raised some concerns that the government could make monetization even harder for online ad networks and publishers through limiting their ability to do behavioral targeting. The pressure to do so is rising as the NY Times reports:

On Tuesday, 10 major privacy groups plan to demand new privacy legislation from Congress regarding online behavioral tracking and ad targeting.

The roster of groups is a who’s who in consumer and privacy circles: Consumers Union, Electronic Frontier Foundation, Consumer Federation of America, Center for Digital Democracy, U.S. Public Interest Research Group, and others.

Among the things they’re asking for: No sensitive information (like health or financial information) should be used for behavioral tracking, no one under 18 should be behaviorally tracked, Web sites and ad networks shouldn’t be able to keep behavioral data for more than a day without getting an OK from the individual they’re tracking, and behavioral data can’t be used for discriminatory purposes.

While it is always hard to argue against privacy, the impact of this level of restriction would be enormous for companies relying on online advertising. Financial services and pharma/health are two of the leading categories for online advertising; the youth demographic is highly attractive to many advertisers, and limiting behavioral targeting to one day without an opt in severely restricts the usefulness of the data.

I’ve spoken to a number of people at venture backed ad networks, and it is clear to me that more needs to be done to organize feedback to the FTC and congress about the proposed rule changes and legislation.

Comments»

1. simo - September 2, 2009

to me it’s not yet clear if this kind of behavioral targeting really works or it’s just the “new kind of ad” phenomenon, that has yet to be learned and then avoided by users.

2. HipMojo.com » Better Content, Not Behavior Targeting, Is The Answer - September 2, 2009

[…] think while some VCs might make the argument that: “the government could make monetization even harder for online ad networks […]

3. privacychoice team - September 2, 2009

I couldn’t agree more, and I’m amazed at how poor the industry effort has been in heightening disclosure. Perhaps it’s time for publishers to get more involved in the process. At privacychoice we’ve proven that it’s easy for websites to inform their users about what networks are collecting data on their site, their privacy policies, and the ability to opt out. For example, see the network privacy profile we created for techcrunch:

http://www.privacychoice.net/techcrunch.com

If you prominently link this kind of page throughout your site, haven’t you gone a long way to informing and empowering consumers to make their own choices?

4. Zach Coelius - September 2, 2009

Amen. Unless we as an industry want to go back to punch the monkey ads, we need ensure that our voice is heard.

5. Darren Herman - September 2, 2009

Jeremy, I wholeheartedly agree that a lot more needs to be done to organize feedback and disseminate the value proposition of audience targeting.

6. Jason Crawford - September 2, 2009

Totally agreed, thanks for sounding the alarm on this.

7. I see you, you see me « ginsudo - September 2, 2009

[…] Liew is concerned that the recent public interest push for privacy regulation will threaten startup media companies, suggesting that the ad networks should band together to lobby against online privacy regulation.  […]

8. ginsu - September 2, 2009

I’m in favor of startup opportunity as well as consumer privacy, so I think regulation should be aimed at enabling competing businesses to provide solutions that help both advertisers and consumers. Both the privacy groups and ad industry efforts against them seem to unintentionally support weak business models. This is perhaps overexplained on my blog.

9. william bao bean - September 3, 2009

we are getting 150-450% increase in conversion to sales in China. if done properly BT gives the consumer ads they are more likely interested in. should be worth trying to protect in the US.

william bao bean – softbank china & india

10. WebmasterHelp » Will tough privacy regulations hurt startups? - September 4, 2009

[…] a blog post, he suggests that restrictions on behavioral targeting will make it harder for ad networks and online publishers […]

11. Jeff Chester - September 5, 2009

Instead of addressing the core consumer protection and privacy concerns, you appear to only be interested in how to protect your more narrow interests. Consumer financial, health and youth related data require meaningful safeguards under the control of users. Venture funders should be taking an ethical leadership stand on privacy to protect consumers. Anything less will bring discredit to the VC industry.

12. Will tough privacy regulations hurt startups? | E-Commerce Blog - September 5, 2009

[…] a blog post, he suggests that restrictions on behavioral targeting will make it harder for ad networks and online publishers […]

13. jeremyliew - September 6, 2009

@ Jeff. Such hostility! My post does not say that there should no change; rather it says that the proposed changes would adversely impact many startups and they are not well organized to have their voice heard in the debate. That doesn’t seem unreasonable.

14. Jeff Chester - September 24, 2009

When you say the following, it’s more than just about start-ups.

You wrote: the impact of this level of restriction would be enormous for companies relying on online advertising. Financial services and pharma/health are two of the leading categories for online advertising; the youth demographic is highly attractive to many advertisers, and limiting behavioral targeting to one day without an opt in severely restricts the usefulness of the data.

15. Where will the next ad network breakthrough come from? « Lightspeed Venture Partners Blog - September 24, 2009

[…] more of a commodity, the real question will be whether this data can be proprietary. If the proposed FTC rules on third party cookies for behavioral targeting take effect, it could give some of the big web […]


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