WFA Analysis: "Digital marketing, data collection and privacy: get it right or risk trust in our brands"

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29/01/2010
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"A powerful global digital marketing system - designed to deliver personalized interactive commercial messages of persuasion wherever we are - is emerging as one of the defining features of the Internet era," says Jeff Chester, one of the leading critics of digital marketing and prominent privacy advocate.

"At the core of the new marketing landscape is a commercial surveillance system that raises significant threats to the privacy of all citizens and consumers, especially children and adolescents". His blog on the Consumers International website quickly evokes Orwellian imagery.

Consumer groups and NGOs have been quick to seize on this. Pointing to the less regulated digital environment, they criticize companies' use of behavioural targeting, mobile phone advertising, virals, social networks and online games to market products to children in new, more "devious" and "manipulative" ways.

Ongoing debates about food marketing to children and alcohol marketing have- like the new generation- moved online. Issues of public health are merging with concerns about the time today's kids spend online or using digital technologies. Add to that the combustive elements of data collection and privacy - particularly insofar as children are concerned - and industry has quite a challenge.

A challenge we must face now or significantly risk losing many of the huge opportunities that digital marketing presents. The US Congress conducted an inquiry into behavioural targeting last year and is now considering increasing the Federal Trade Commission's regulatory powers in this field. FTC Chairman Jon Leibowitz is piling the pressure on industry. "Put simply", he stated, "this could be the last clear chance to show that self-regulation can -- and will -- effectively protect consumers' privacy in a dynamic online marketplace." Across the border, the Canadian Privacy Commissioner has just launched a public consultation on emerging technologies, including online tracking, profiling and targeting of consumers.

The EU passed legislation last year that will require explicit user consent for cookies, the small text files dropped on internet users' computers to remember previous purchases, webpage visits, etc. The details are still to be hammered out but it could make targeted online advertising, which relies heavily on cookies, much more cumbersome for advertisers and consumers alike.

For 2010, the EU is planning a fundamental revision of its data protection legislation, with a focus on the new challenges posed by digital media and marketing. "You can be sure that fundamental rights, including data protection, will be top of my list," said incoming European Commissioner Viviane Reding during her confirmation hearing with the European Parliament just two weeks ago.

Although data protection and privacy issues are at the forefront of current discussions, the debate goes to the very heart of digital marketing. Digital media enables a welcome shift from mass marketing to individual conversations; but do consumers even know when they are being marketed to? Targeted marketing may be more relevant and less intrusive, but does it not unduly influence consumers? Marketing through social media may offer opportunities to reach and engage with new audiences but does it not create even more peer pressure and, potentially, "pester power"?

So, what does all this mean for us? Whose job is it to deal with all this; the media, advertisers, Internet Service Providerss, publishers, or regulators? Should advertisers take a backseat or should we tackle the issue head-on?

The regulation of data protection and privacy in the digital environment is a complex and technical issue, which advertisers have largely stayed out of until recently, letting media and technology companies take the lead. But the issue has quickly morphed from a technical matter into a thorny political question - and data protection and privacy are only the tip of the iceberg of the debate on digital marketing as a whole.

At the heart of this debate is our brands' relationship with consumers. Ultimately, it is us advertisers who pay an increasingly wide range of media owners and agencies to use an ever greater range of techniques to market our brands in the digital media. Ultimately, and increasingly so, it is our brands that take the flak when things go wrong.

Consumer trust in our brands is at stake. First and foremost, it is as brand owners that we need to study and come to terms with the many facets of digital marketing that are causing political concern. Failing to address these concerns adequately - both technically and politically - would mean failing to shape the future marketing environment on which our brands will increasingly depend.

It would also mean jeopardizing the credibility of our advertising self-regulatory systems more broadly, an area where we have made great progress in recent years. Put simply, if we fail to tackle the issue adequately, we risk turning the great promise of digital into a consumer and reputational backlash.

In July 2009, WFA released a set of Global Principles for Self-regulation for Online Behavioural Advertising, following the release of similar principles in the US, developed under the leadership of the Association of National Advertisers (ANA). These Principles set out the common basis on which advertisers worldwide would seek to engage their industry partners in order to develop national self-regulatory schemes. Building on the ambitious industry initiative led by the ANA in the US, we are now engaged in intensive discussions with our partners to translate these Principles into effective self-regulatory systems.

Delivering on this commitment, in the US, Europe and beyond, is our top priority. Failure to do so will only fuel Big Brother conspiracies and convince regulators of the need- perhaps ironically - for state intervention.

WFA, January 29, 2010
For more information please contact Will Gilroy w.gilroy@wfanet.org


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