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Fear and Loathing in Online Advertising

May 3, 2010, 2:21 pm

Have you ever seen an interactive advertisement while browsing around on the Web and, even though it was from a brand that you recognized promoting a product, service or event that you found interesting, you simply refused to click on the image because of a nagging sense of trepidation? What really lies beyond that alluring digital veil? Is the offer worth the risk? What of my digital privacy might I be giving up by responding to that message?

Me too… and according to our latest study, those fears are not lost on industry.

We talked to senior marketing executives – decision makers and check signers – with 90 organizations from a broad spectrum of industries that are actively engaged in online marketing. In total these firms account for more than $3 billion in annual revenue, and they believe wholeheartedly in the efficacy of the medium. According to our research, 63 percent of those we surveyed said behavioral advertising generated their greatest return on investment.

Yet 98 percent told us that, because of consumers’ privacy fears, their companies are curtailing investments in online behavioral targeting. These companies are willing to sacrifice the revenue they believe they can generate through an online campaign rather than risk the potential hit to brand reputation for being as aggressive as they would like to be.  Overall that curtailment has kept more than $600 million out of the behavioral targeting industry.

Looking beyond the financial impact, the results of this study strongly suggest that, contrary to what some might say, self-regulation works. I don’t mean to suggest that consumer and privacy advocates are acting like Chicken Little when they lobby regulators with dire messages and thinly veiled accusations of treachery directed at the behavioral targeting industry. To the contrary; in order for self regulation to work effectively there needs to be a rigorous and active dialog that includes industry and consumer advocates as well as the engagement of an objective regulatory body.
The goal of that dialog should not be to force the unconditional surrender of the so-called opposition, but the development of true solutions to the very real potential for misuse or unintended abuse of personal information. Consumers have long benefitted from advertising in its many forms. Radio, television, print, and a great deal of online content is made freely available because of the revenue generated by the sale of advertising space.
As we conclude in our report, “the Internet advertising community should work closely with the privacy community and regulators to find ways that substantially reduce the public’s fears about actual and perceived privacy risks when responding to behaviorally targeted ads. To this end, better disclosure models, consumer education, effective consent mechanisms and enabling technologies will help advance the cause of safe and effective Internet advertising.”
 
Has your company spent less online because of these fears?  Do you think behavioral advertising self-regulation is working in favor of the consumer?  Do you want to see more or less regulation of this industry?  Let us know what you think.

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Comments

December 8, 2011 4:51pm
Mike Spinney

Thanks for the note, Jeff, and for your interest in our research. Of course we are happy to share our report with you, and we hope you agree with us that the goal of this and all of our research is to better understand the many risks to personal data. By gaining a better understanding through objective, independent research we can help industry and government organizations address those risks through the development and adoption of security, privacy, and responsible information management best practices. We look forward to your comments on the study. -- Mike

December 8, 2011 4:50pm
Jeff Chester

I have asked to see the research, because I have serious doubts that the instrument used meaningfully assessed the data collection process, inc. the role of behavioral targeting. The blog's suggestion that self-regulation is working is not supported by a careful analysis. Anyone who follows the industry closely recognizes the tremendous and out- of -control growth of data collection for profiling and targeting.

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