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article imageAdWeek claims online privacy measure will yield 'apocalypse'

By Michael Krebs     Dec 20, 2010 in Business
In an editorial piece detailing the online advertising industry's concerns with the FTC's Do Not Track discussions in Congress, AdWeek claims the measure will result in an "ad apocalypse."
Not surprisingly, AdWeek, a trade magazine for the advertising industry, has come out against the Federal Trade Commission's Do Not Track measure that has begun making its way through Congress. Under the headline "(Ad) Apocalypse Soon," AdWeek's Katy Bachman wrote: "At stake is the burgeoning behavioral targeting (BT) segment, a more than $1.1 billion business growing at a double-digit clip, according to eMarketer."
Behavioral targeting is a methodology utilized by some internet advertisers to follow consumers from one site to another, serving specific advertising messages based upon a given click-based interest the targeted consumer displays.
"BT uses complex algorithms to analyze (albeit anonymously) individual click-by-click Internet activity to serve up relevant ads in near real time. The practice is a scary proposition to consumers worried that Web companies are noodling with personal data (like health and insurance information) they’d rather keep private." Bachman wrote.
After concerns emerged from some internet users that overall privacy was being compromised for the sake of advertising revenue, the FTC assembled a regulatory model that follows along the same lines as Do Not Call - the legislation that kept telemarketers from disturbing families during countless dinner hours.
Mozilla, the company that created the Firefox web browsing software, is entirely behind the Do Not Track measure, according to AFP.
"Technology that supports something like a 'Do Not Track' button is needed and we will deliver in the first part of next year," Mozilla chief executive Gary Kovacs said.
AdWeek's Bachman characterized the privacy legislation as an affront to competition and supported the advertising network business - where third party companies buy mass advertising inventory cheaply only to resell it across the many sites participating in their model.
"Heavy-handed privacy legislation could actually curb competition by crippling ad networks that serve ads to niche Web sites dependent on advertising to fund content," Bachman wrote. "Web sites would have to resort to pay models in a medium where free content is the norm. No doubt the big brands would still draw contextual advertising, but that would come at the expense of new, emerging brands, thus squelching competition in a space that has thrived on it."
The demise of advertising networks would likely yield more jobs, as sites wishing to compete for advertising dollars would need to hire advertising sales staff; and contextual advertising models, placing relevant advertising messages among like-minded editorial, would likely yield more focus on online branding dollars - a direction the online advertising industry has been challenged to find.
Internet advertising has parted along two camps - one that believes in technology like behavioral targeting and advertising network algorithms, and one that believes in the value of branding among editorially relevant environments. The branding model has yielded considerably more innovation and high-value advertising dollars in dynamic sponsorships, including branded content pages; custom content modules; deep-dive video experiences; graphic skins; and numerous interactive products and experiences.
The Do Not Track legislation would not affect the higher-yield branding business but would have a direct impact on the more technology-focused web advertising business models. And this is where the "apocalypse" concern resides.
“It’s the Fortune 1000 companies that see [BT] as a way to spend money more efficiently that are really going to be upset. It will take away a more efficient way to bring products and services to market,” Joe Apprendi, CEO of online ad network Collective, told AdWeek.
But are the Fortune 1000 companies going to be "upset," or is that more an emotion reserved for advertising networks?
"The user needs to be in control," Mozilla's Kovacs said, according to AFP.
More about Adweek, Privacy, Advertising, Legislation, Not track
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