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Marketers claim that regulation could bring the end of free content as we know it

Behavioral advertising, the subject of an FTC town hall debate last November, is facing yet more scrutiny from the FTC. Now, says the Commission, it is considering new guidelines to protect the privacy of web surfers everywhere, by heavily clamping down on what data advertisers can store and how they can store it.

For now, the guidelines will probably be voluntary: a sudden onset of mandatory rules could disrupt marketers, who so far have expressed disagreement with the FTC’s course of action.

At the root of the problem lies the invasive nature of behavioral advertising: by assigning websurfers a tracking cookie unique to the advertising network, marketing firms can track and analyze a user’s activities whenever he or she enters a site that carries an advertiser’s ads. As such, the cookie will follow a user around the internet, silently collecting information on his or her surfing habits in order to serve ever more relevant, targeted advertisements when the opportunity presents itself: in one example, The Washington Post illustrates how advertisers might find a bride by looking for people who “read about weddings in the news, entered ‘bridesmaid dresses’ into a search engine or surfed fashion pages for wedding styles.”

Such tracking has rights groups up in arms over privacy concerns, who claim that the tracking behind behavioral advertising can build intimate profiles of users and, consequently, betray a given surfer’s identity.

According to the marketing companies, the only way that users are linked with past history is through an anonymous, random tracking ID, which cannot be used to identify an individual.

Further, users have the option of deleting the cookie that the tracking ID is stored in.

Privacy groups say that marketers’ protections are not enough. “It is not anonymous if the companies are tracking the same user over time,” said Center for Democracy and Technology spokesperson Ari Schwartz. An even bigger concern, says Schwartz, is that advertisers can know what a person is reading, regardless of whether it’s news stories or fiction stories.

Conceivably, forensic investigators armed with a suspect’s tracking ID – lifted from his or her cookies, could subpoena a marketing firm for the suspect’s browsing history, all without a wiretap.

Behavioral advertising is a must in today’s market, say marketers: online advertising, which grossed $11 billion annually last year, is struggling to compete with the larger players in the advertising world; television ad revenues totaled $64 billion in the same time period. Even the owners of some of the world’s largest advertising-supported websites, including YouTube, MySpace, and Facebook, “struggled” to make money from internet ads.

Moreso, limiting behavioral advertising could kill free content on the internet as we know it: webmasters require the highest-paying ads they can find, but advertisers are only willing to pay more when they know more about their users. To revert to untargeted advertising would cut advertisers’ payouts and leave users to rot in a graveyard of annoying, flashing gimmicks. Television advertisers receive deep insight on their audience, so why can’t internet advertisers have the same luxury?

The Washington Post uses the example of a commercial web page that pitches a product, versus a noncommercial webpage that has “no product to pitch.” In the first case, advertisers can infer what would be considered good ad placement and what wouldn’t – but in the second case, unless they have outside information, the best a marketer can do is place ads blindly, or choose something with a universal – and therefore low-value – appeal.

“The problem for newspapers is that a story headlined ‘Two Dead in Baghdad’ isn't very product-friendly,” said Kent Ertugrul, who serves as the CEO for UK-based Phorm, an advertising network that partners with news outlets. “But if you know who is looking at the page, that's where the opportunity is.”

Despite marketers’ assurances, most users are uneasy with being tracked: one poll, conducted by Harris Interactive, found that six out of 10 users expressed concern with the level of tracking over the internet.

To remedy the situation, the FTC wants advertisers to give users a clear warning that they are being tracked, and provide them the option of opting out of behavioral tracking altogether. “Every Web site,” reads a draft, should allow surfers to choose “whether or not to have their information collected for such purpose.”

Newspaper Association of America representative Paul Boyle, whose members both support and often rely on revenues from behavioral tracking, sees little worry about. “I really don't know that there is a personal privacy issue here … the government really needs to let things play out.”





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