FTC Investigation of Online Advertising and Consumer Tracking and Targeting Practices

On November 1st The Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group (US PIRG) filed a complaint with the Federal Trade Commission (FTC) calling for an immediate investigation of online advertising practices and, specifically Microsoft.


I have labored through the 50-page filing and have read through a number of other commentaries.  This post is a critical summation.  The document has 5 sections that try to set up an argument for why personal privacy is being violated online.  The 6th section attacks Microsoft directly and I am going to address that in a separate post.


I will also identify many of the companies that are attached in this filing and will use them in later posts as examples on a number of topics I want to explore further based on this filing so stay with me.  Comments are definitely welcome!


The filing has four primary points:


  1. A call for an immediate investigation into the online advertising industry as to the practice of personal privacy violations
  2. An exposition of personal privacy violations
  3. A series of calls to action to discontinue privacy violation practices
  4. A call to action for legislation to protect personal privacy in the online medium

As an opener, the filing described the online marketplace as a $100 billion US market (e-commerce sales).


It describes personal privacy violations and surveillance as stemming from fields of Web analytics, online advertising networks, behavioral targeting and rich media and clarifies that these mechanisms “…threaten the privacy of the US public.”


The specific areas of concern that CDD and US PIRG are concerned with include and the companies they attack include:


A.    User Tracking/Web Analytics


This entire section is setting up the argument that companies are actively tracking behavior of users on web sites and analyzing the behavior in order to optimize content presentation and ad presentation to facilitate preferred customer responses, transactions and revenue generation.  The implication made by the filing is that the practice is deceptive and a violation of personal privacy and users should have a right to know that they are being profiled.


         Touch Clarity (Behavioral targeting)

         Atlas (Ad serving)

         Casale (Retargeting)

         ClickTracks (Website analytics)

         24/7 Real Media (Pixel tracking and path analysis)

         PointRoll (Rich media)


What is completely absent in this perspective is the transparent nature of this tracking or any comparative practice of this tracking to other marketing industries such as cataloging and DM.


B.    Behavioral Targeting


The case presented in this section is the argument that profiles are leverages to target people in an unknowing manner.  As an attack on personal privacy users are supposedly being violated.


         Blue Lithium (Path analysis)

         ValueClick (Behavioral targeting on an ad network)

         Zedo (Ad targeting – geo, day-part, etc.)

         FutureNow (Navigation targeting)

         Specific Media (Ad network targeting)

         Claria Corporation (Behavioral marketing platform)

         DoubleClick (Event-based targeting)

         Coremetrics (Behavioral modeling)


Okay, this is where I start to get burning.  First of all, as I mention above, take a look at the cataloging industry.  Anyone every wonder why you receive all of those catalogues?  Ever notice how well profiled you are?  When you buy from one retailer, your information is sold to central catalogue database companies like Abacus and Next Action who resell your information to other retailers.  When you buy from a J. Crew Catalogue they shared your profile information with the central providers to get more information on you and doing so enables other cataloguers to get access to your information as well.


So why is this SO different.  The end result is that you are seeing ads that are relevant.  But what this filing is trying to do is induce a scare tactic.  Something that is not being acknowledged here is that the Internet is FREE.  Advertising is the price you pay for free content online.  Banners, buttons, email advertising it’s all the cost for free internet content.  Network TV has advertising and so do newspapers and magazines – that’s why newspapers and magazines are so inexpensive.  Cable does not have advertisements because you PAY for it.  Do not call lists became legislated and direct marketers can no longer call you during dinner time because you PAY for your phone line.  But you don’t pay to visit a web site and so t hat web site has a right to post advertising.  It also has a right to track what is happening on that web site.  Privacy policies state what information is collected and how it is used, people just don’t read them.  But this filing does not go into attacking a company’s privacy policy.  Well, actually it does but I will touch on how it attacks Microsoft in a minute.


C.    Audience Segmentation


Why on Earth the authors of this filing believe that audience segmentation is unique to the Web is beyond me.  Perhaps they are the only people who do not scan a little grocery card every time they shop for food to get those extra $6 off their total at the A&P or the Kroger.  But those supermarkets maintain massive customer segment models.  Sure they use them to spit out coupons but they also use them to figure out what products to put on the shelves and where to put them.  They also use them to figure out what to put in the circulars that get mailed to your personal address.  They know every product you buy in their store and who you are and where you live … and your phone number since it is usually the ID number you use to type in!  So why is it all of a sudden that these people are screaming VIOLATION?


LL Bean has every customer segmented based on product preference and shopping habit and has done so ever since its first catalogue.  Amazon recommends good books to us when we visit their web site.  Customer segment modeling produces benefits that as customers are useful.


         Tacoda Systems (Network behavioral targeting)

         Omniture (Website analytics)


D.   Data Gathering/Mining


Mining data is also nothing new.  Using information to create data models and figure out how to better communicate to your customers help cut the clutter.  Why send someone the wrong catalog?  Why send them the wrong email message?  Why not put the right ad in front of the right person at the right time?  These are useful things.


         Unica (Web Analytics)


         Touch Clarity

         Revenue Science (Behavioral targeting)


The filing talks about the marrying of information, anonymous and personally identifiable.  It actually quotes Revenue Science as saying its customers intermingle clickstream data with PII information.  That’s illegal.  So it is probably the one piece of information that raised a true red flag.  But if it is true, then someone should call them on it as it violates PII law.


E.    Industry Consolidation


This section is calling smoke where is not really a fire.  Actually this filing does this a lot.  Calling out all of the mergers and acquisitions is an attempt to demonstrate that data is being brought together.

_uacct = “UA-980395-1”;