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F.T.C. Member Vows Tighter Controls of Online Ads
A MEMBER of the Federal Trade Commission said yesterday that the agency would be exerting a tighter grip over online advertising, partly because of increased tracking by marketing companies of people’s activity on the Internet.
Jon Leibowitz, the commissioner, said he was concerned about ads being shown to children online and about the tactics advertisers are using to collect data about people.
“When you’re surfing the Internet, you never know who is peering over your shoulder or how many marketers are watching,” he said.
Mr. Leibowitz spoke in Washington at the opening of a two-day forum on behavioral targeting, the increasingly popular tactic of delivering ads to people based on what Web sites they have visited.
In practice, the targeting issue goes beyond just Web surfing: Google’s Gmail funnels ads to people based on key words in the e-mail messages they write, and MySpace helps marketers select ads for people based on the information about themselves they willingly post in online profiles.
To safeguard consumers, Mr. Leibowitz said that standard rules about the privacy policies of Web sites may need to be established. He pointed to a study that found that people with a high school education can easily understand only 1 percent of the privacy policies of large companies.
He also noted that none of the companies in the survey made targeting an opt-in decision. Most companies today make people take action in order to opt out of their tracking programs; Mr. Leibowitz suggested that more policies should be opt-in.
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“People should have dominion over their computers,” he said. “The current ‘don’t ask, don’t tell’ in online tracking and profiling has to end.”
But some people from the online advertising industry said that the commission, which conducted the forum, should stay out.
Randall Rothenberg, president and chief executive of the Interactive Advertising Bureau, said the agency should not regulate online advertising because it could limit what he called a recent “extraordinary pattern of innovation.”
At the forum, privacy advocates and executives from companies like Google and Microsoft debated the trade-off between the personal information that marketers collect and the relevance of the ads that people are shown. While most consumers would prefer to see an ad for something they might possibly buy rather than something irrelevant to them, even within the advertising industry there are disagreements about the kind of data that is appropriate for marketers to use.
Executives from several Internet companies said they could easily improve the quality and accuracy of their online advertising campaigns without compromising basic privacy principles.
“Privacy and trust are probably the two words that are going to make the Internet the healthiest in the future,” said Tim Armstrong, president of advertising and commerce for North America at Google. “User trust and loyalty are probably the No. 1 thing we focus on at Google.”
Executives from Yahoo, Microsoft, Facebook and AOL expressed similar sentiments.
Privacy advocates echoed the concern of Mr. Leibowitz about ads being shown to children and teenagers on the Internet.
Teenagers “are on there living their social lives and personal lives,” said Kathryn Montgomery, a professor at the School of Communication at American University.
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Because blogs and social network pages are for the most part available for anyone to see, the marketing industry treats their lives and personal details as “open books,” she said,
Another consumer advocate said that Web sites are asking visitors to provide excessive amounts of information, putting them in uncomfortable situations. Amina Fazlullah, a lawyer at the U. S. Public Interest Research Group, compared shopping online to visiting a used-car dealership. Online advertisers, she said, ask the kinds of questions about people’s buying power and interests that they would probably choose not to tell a used car dealer, for instance.
“In the brick and mortar world, if you’re asked for information, you can say ‘no,’” she said.
Mr. Leibowitz spoke briefly about the commission’s evaluation of Google’s pending deal to purchase DoubleClick, an Internet ad delivery company. The F.T.C. is determining whether the deal would have anticompetitive effects, not how it would affect privacy online. However, Mr. Leibowitz said, it was clear that the agency needed to increase its scrutiny of online targeting.
Google’s deal to purchase DoubleClick for $3.1 billion was just one of many Internet industry acquisitions over the last year. Microsoft bought aQuantive for $6 billion, the Publicis Groupe acquired Digitas for $1.3 billion, Yahoo paid more than $680 million for Right Media, an ad exchange, and AOL is believed to have spent $275 million for Tacoda, an ad network.
With all these deals comes more pressure to generate more money through online advertising, Mr. Leibowitz said.
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