In Monday’s Lunch Pail post, Casey shared FTC Chairman J. Thomas Rosch’s skepticism of the industry’s ability to self-regulate. He’s actually considering empowering the FTC to require online display firms to “answer under oath questions about their information practices” related to data “collection, use, sharing and retention.” I seriously doubt that having people testify under oath about how they collect and use people’s online activity is going to make much of an impact on protecting consumers online (besides increasing the size of the FTC staff to enforce and increasing the burden on the rest of us). I doubt this would stop those who are unscrupulous to begin with.

What I’m really curious about is whether or not Rousch is waiting to see what Europe will do before defining U.S. policy. According to a recent article in USA Today, a group called “European Union’s Article 29 Data Protection Working Party” wants to require online display marketers get specific permission from every single European consumer in order to use each and every tracking cookie. (The word “Working” in the name of any organized group makes me cringe.) This effort to “empower” consumers may make a burdensome, more frustrating online experience for them. Plus, I don’t see how this could possibly encourage economic growth.

Personally, I dread an online experience without cookies. As a busy marketer, wife, and mom of two teens, I don’t have a lot of time in my day for things like surfing around online. I want to find what I need, then get to the next task on my to-do list, with no time wasted. I don’t want to see ads for baby diapers or hiking equipment. What I do want to see are ads in line with my own interests, from my favorite stores or what should be my favorite brands. I want to learn about savings on products I’ve Googled recently. I want relevance – right down to the ads on my screen. What some perceive as a “threat” to privacy I see as useful and time-saving. Cookies can be good for you.

In addition, the proposed legislation would not only require companies to notify consumers of collection and use of personal data, but it would require companies to keep that data safe from hackers.

Data that would be protected includes a variety of personal information such as a person’s email address (if it contains a person’s name), name, and physical address. The bill states that companies can use a person’s collected information to market to them, but only if the person opts-in to have their data collected.

Noting that consumers want to shop and browse in an environment where marketers are respectful of their personal information, McCain stated, “Our legislation sets forth a framework for companies to create such an environment and allows businesses to continue to market and advertise to all consumers, including potential customers. However, the bill does not allow for the collection and sharing of private data by businesses that have no relationship to the consumer for purposes other than advertising and marketing.”

As with the proposed ‘Do Not Track’ legislation, the FTC would enforce the guidelines in the bill. State Attorneys General would also play a part in enforcing the guidelines.

You can read the full bill here What are your thoughts on the newest player to enter the privacy law arena?

As a refresher, the Federal Trade Commission (FTC) introduced the idea of a “do not track” mechanism that would allow online consumers to decide if and where on the Internet they would like to be tracked by marketers and advertisers.As the New York Times noted, the intention would be to provide consumers with the type of control they have over telemarketers with the Do Not Call Registry.

Shortly after the FTC announcement, Microsoft announced that it would be including tracking-protection functionality in the latest version of Internet Explorer. According to ClickZ, the feature “will enable users to download lists to their browsers including “do not allow” or “allow” commands for individual third parties, which will control their ability to track users’ online behavior and to place cookies on their machines.”

Late in December, a Gallup/USAToday poll showed that 67% of consumers would favor a “do not track” policy that would prevent marketers and advertisers from showing them targeted ads and content.

Several marketers have expressed their concern over the proposed legislation, saying that industry self regulation will continue to be effective.

Recently, the Direct Marketing Association announced that it is enforcing its own self-regulation data collection program. The program requires DMA members to place an “Advertising Option Icon” on digital ads. It will privately investigate consumer complaints about non-compliance by DMA members.

ClickZ’s Kate Kaye outlines what marketers, advertisers and consumers can expect from the ongoing privacy law debate during 2011. You can access the article here.

Of course, the value of behavioral targeting and the safe effectiveness of onsite targeting have been covered quite a bit here on The Lunch Pail.

If you have an opinion, now is the time to share it. The FTC is accepting comments on the proposed legislation through Feb 18, 2011. Visit this site and give them your feedback.

What are your thoughts on the online privacy debate? Stay tuned to The Lunch Pail for commentary and news.

As a top resource for direct digital marketing information, The Lunch Pail authors have contributed a wide array of content on behavioral targeting – from the basics (which approach works best), to the safe effectiveness of onsite targeting.

• Is behavioral targeting some sort of online stalking? Lesley breaks down the basics behind the different types of behavioral targeting ,and provides some great resources for beginners. (She also provides a terrific overview of cookies, plus the differences between first party and third party cookies here.)
• If you’re wondering about behavioral targeting standards and classifications, this post provides some context.
• Privacy is always an important issue. The debate about behavioral targeting continues on Capitol Hill and among privacy advocates. Check out this update on some of the recent happenings in Washington and the importance of marketing transparency.
• And Knotice CEO Brian weighs in on the onsite targeting discussion that outlines the differences between an algorithmic-based approach and a rules-based approach to targeting.

If you’re hungry for more behavioral targeting resources, don’t forget to check out The Lunch Pail’s behavioral targeting archives.

Several weeks ago Shop.org announced it was able to successfully lobby against the Federal Trade Commission’s attempt to expand its rule-making power in the recently passed financial overhaul bill. The FTC’s move was in response to a privacy bill outline offered in May by Virginia’s Rick Boucher. Boucher’s outline was not turned into a bill, and the FTC’s expanded rule-making attempt never materialized. So, what now?

Illinois’ Bobby Rush introduced a bill yesterday, specifically on online privacy, and it was received more warmly even though it is similar to Boucher’s outline.

Here’s where the political fun comes into play. Boucher heads the House Subcommittee on Communications, Technology, and the Internet. His draft failed to gather input from Rush, who heads the House Energy and Commerce Subcommittee, a group that is charged with oversight on commerce, trade, and consumer protection. According to some industry experts and insiders it appears as though Rush’s bill is more clear about the FTC’s rule-making authority.

As far as direct digital marketing is concerned – especially onsite targeting – early reaction indicates that the Rush bill adheres to the same self-regulatory principles that are already largely in play. The obvious opt-out of behavioral tracking that marketers must provide is contained in the bill. Still, these opt-outs principles are primarily applied to offsite behavioral targeting, like ad networks. Onsite targeting simply tracks customer behavior on a specific Web site, or their entry point to site, with a transparent goal of making the shopping experience better. While offsite targeting is the primary target for lawmakers, it is wise for technologists and vendors that have onsite targeting solutions to offer a similarly transparent opt-out for their customers (like this one).

The truth of the matter is that quality marketers who are talented at creating conversions and generating sales know that transparency is not optional. To retain customer loyalty and build a relationship online with a customer the brand cannot afford to fool the customer – or creep them out with poorly executed marketing that leverages conspicuously captured data.

Marketers have a lot at stake with transparency. Sure, self-regulation may scare some lawmakers on all sides of the political equation. And that is understandable. But all parties involved must first realize that before marketing transparency becomes a legal have-to, it is already a successful marketing must.

"Nothing in this Act shall prohibit [a publisher or ad network] from collecting or disclosing aggregate information or [personal] information that has been rendered anonymous."

That is not strict privacy governance, which means those advocating self-regulation are currently winning a war that is entering new battlefront. Though the bill is only in the first of what promises to be many iterations, one primary reality seems to be taking shape.

Effective self-regulation of network, or “offsite,” behavioral targeting has earned enough respect on Capitol Hill – enough trust – that lawmakers are clearly willing to trust advertisers with data management and usage. Interestingly, that means that the traditional gateway for businesses to push their message to consumers – the opt-in – may be turned on its ear. Marketers are applying the “ask for forgiveness, not permission” model to behaviorally powered affiliate marketing. As this rule begins to take hold within the direct digital marketing industry over the next several months, its impact may spread to other direct digital channels.

The relentless spread of social media has likely had a major influence on this first version of the bill. The amount of personal information consumers are willing to share about themselves online is increasing every day, even in light of Facebook’s ongoing struggle to protect massive amounts of data that leaves many marketers salivating. For now it seems that self-regulation is still permissible, but those advocates may lose their momentum if Facebook is unable to better protect its users. Self-regulation advocates should be reaching out to Facebook in droves right now to prevent their opponents from building an effective use case for more robust data protection.

Currently there are different rules for different direct digital marketing channels. Onsite behavioral targeting is still safe from privacy concerns, but offsite behavioral targeting now uses the opt-out as a primary option for the consumer. With email and mobile consumers must first opt-in, even double opt-in at times. As self-regulation of direct digital marketing in general becomes a more trusted enterprise by consumers and lawmakers alike, it is worth contemplating how the opt-out may eventually replace the opt-in, and not just with offsite targeting.

What do you think: With direct digital marketing having such a broad channel concentration, should the next step of industry privacy regulation be a uniform set of rules that govern all direct digital marketing?

According to the study, ads that used behavioral targeting technology to determine what content is shown to a specific individual garnered a conversion rate that netted out to 6.8 percent for the year 2009. In the advertising context in which this study was performed, it is easy to see how the CPM increased accordingly with the level of influence behavior had in deciding what ad content is shown. While we here at The Lunch Pail still firmly believe that the safest and best application of behavioral targeting is confined to targeting done on a specific Web site (thus the term “onsite targeting”), this empirical evidence does prove the value of behavior’s presence in triggering content. Therefore it is reasonable to assume that if ad conversions are at 6.8 percent for behaviorally targeted ads, dramatic improvements in the performance of behaviorally targeted onsite content will be similar.

It is quite evident that when behavior is used to determine content, marketers and advertisers win. As the first bits of behavioral targeting’s statistical value begin to emerge, marketers must see the incredible opportunity that exists for behavior-based content targeting beyond the confines of ad networks. Whether marketers are working to preserve a customer’s product loyalties with targeted content, or a more linear goal like increasing Web site conversions and sales, using behavior to target content to site visitors is a necessary foundation of any modern marketing strategy.

For context consider the first and most important principle contained in the New Marketer’s Constitution, as asserted by the Association of National Advertisers president and CEO Bob Liodice.

Principle #1: “Marketing must be increasingly targeted, focused, and personal.”

These elemental aspects of direct digital marketing are not just nice-to-have but absolutely necessary for effective email marketing and mobile marketing. The Web site, however, is the most direct channel for marketing a company has, and the same principle must apply. Onsite targeting is the most efficient method for applying the most important principle of modern marketing.

What ways can your website use onsite targeting so each visitor’s experience is as personal and relevant as possible?

The two different types of behavioral targeting – network-based and onsite-based – are both effective and valuable investments for the marketer. However, network-based behavioral targeting (read: affiliate marketing, etc.) comes complete with complexity and plenty of overhead.

The government, specifically the Federal Trade Commission, wants to ensure behavioral targeting does not invade the privacy of citizens. A noble effort. But, as the “online marketing” industry continues to evolve its practices – as evidenced by the new behavioral targeting icon unveiled last week – one method of targeting content to consumers is more generally acceptable by both government regulators and consumers alike.

The distinction between the two types of targeting is becoming more evident, as has been covered heavily in this space. Network-based targeting is essentially behavioral advertising while onsite-based targeting is behavioral marketing. The contrast is surprisingly lucid. For advertising, the scope is wide, encompassing the entire Internet and all of the various data collection issues that arise as a result. For marketing, the scope is far more targeted, with data and content specific only to an individual business. It is clear why marketers can employ onsite targeting technologies to boost business without difficulty, but behavioral advertisers encounter a host or rules and regulation and hoops that need to be jumped through.

While the catchall “behavioral targeting” term is used by the media and some influencers, the distinction between the two primary types of targeting will become even more apparent. Onsite targeting is largely withheld from heavy regulation and even self-imposed ones like the newly minted icon adorning many network-based programs.

Both primary forms of behavioral targeting will continue to be heavily invested in, as a new forecast from eMarketer revealed today. It is no secret that targeted content – whether it is considered advertising or marketing – helps increase revenue. The savviest marketers will likely invest in both.

When planning marketing investments it is important to understand onsite targeting is much easier to deploy and not subject to the heavy regulation that network-based targeting is. There is no need for the button, no best industry-wide mandatory principles to adopt and follow. While both methods secure a boost in revenue because of the marketing value of targeting content, investment in the path of least resistance makes the most sense.

One important take away from this article is the continued focus of the behavioral targeting debate on network behavioral targeting.

While the differences between onsite targeting and network-level behavioral targeting have been detailed in this space before, a new twist on understanding these two different types of targeting may help further clarify the primary distinctions. Network behavioral targeting is designed to capture information about consumers on the vast World Wide Web to redirect them to a specific product or service. Onsite behavioral targeting is designed to secure the purchase or engagement once a consumer has reached a business’s website. Given that distinction, it is easy to see why network targeting is the primary subject of the privacy disputes, and onsite targeting remains a safe and effective tactic that enhances direct digital marketing.

Onsite targeting enables marketers to strike a balance between encouraging loyalty and increasing sales (with smart marketing and remarketing) and not violating a consumer’s well-deserved privacy. Reviews of various onsite targeting technologies are available, and provide better information on what makes onsite targeting so distinctive and effective. Read one in Retail Merchandiser or E-Commerce Times.

The safety and positive business impact of properly using onsite targeting strategies are self-evident. Onsite targeting is not the invasive “red flag” technology that network targeting technology is, even though industry experts and media sometimes group the two together under one umbrella definition. In reality, the two types of technology – both in their application and the outcomes they create – are very different. While network behavioral targeting requires the capture and use of data points gathered from all over the Web to work, onsite behavioral targeting is contained, controlled, and as useful to the consumer as it is to the business.

The second, more obvious desired outcome of The Education Principal is to actually educate consumers on the various positive attributes of network behavioral targeting. You may have noticed that the Interactive Advertising Bureau launched a campaign earlier this month aimed at beginning a wholesale education process. The FTC has criticized some privacy pages regarding behavioral targeting are dense and unclear.

So, the IAB has taken to the media, by virtue of the big online display campaign, to argue what it believes are the positive merits of network behavioral targeting. The idea is to give consumers better access to how and why information is collected and used.

In case you are questioning the importance of this issue to online advertisers, note that WPP agency Schematic has designed and launched the campaign pro bono, thanks to heavy online advertisers like Microsoft, Google, and AOL all contributing the money muscle.

A little farther up the road on Capitol Hill, Virginia Congressman Rick Boucher has stated plans to introduce a bill designed to notify those browsing the Web when their information is being captured or used to serve up advertising content. Boucher’s bill would also include the possibility of requiring permission from a consumer, in certain circumstances.

The Boucher bill seems to be designed to appease the collective of consumer privacy advocates on one side of the aisle that are pushing for more stringent guidelines, but not completely give into the overhaul of online advertising and network behavioral targeting that wholesale changes would introduce.

The takeaway from what is now the “media round” of the behavioral targeting debate is that it is still the network version – not onsite targeting – that is drawing criticism. It is important for marketers and lawmakers to understand the distinction and continue to implement and use the more accepted behavioral targeting – onsite.