As the US moves, gingerly, towards regulating the tracking of user behaviour online by ISPs and advertisers, new research shows that when web companies are prevented from mounting such surveillance Internet-based marketing campaigns lose much of their effectiveness. Martyn Warwick reports.
Individual consumers using the Internet are rightly concerned about having their browsing activities tracked ISPs that apply deep packet inspection and other surveillance software that may well be in breach of national data protection and privacy laws.
However, advertisers and web retailers want to be able to draw up profiles of online buyers so that they can get them to buy and buy and buy again via 'targeted' advertising directed straight to individuals and based on their shopping/interests/behaviour history.
ISPs have a fine line to walk on this and, on occasion, many have slipped over onto the dodgy and probably illegal side of the fence. Such incidents have led regulators and legislators all over the world to consider beefing-up privacy protection laws and threaten transgressors with swingeing penalties for breaking them.
However, there is little doubt that targeted ad campaigns over the web do work and, in a new report, Catherine Tucker, a professor at the Sloan School of Management at the Massachusetts Institute of Technology (MIT) demonstrates that the European Union's strict rules about the tracking of Internet users have resulted in a 65 per cent drop in efficacy of online marketing campaigns. If a punter can't be tracked, selling to one becomes very, very much more difficult.
Over on this side of The Pond, it was back in 2002 that the powerful European Commission (EC) first weighed-in against ISPs and found for the right of the privacy of the individual and for him or her not to be tracked despite intense lobbying on the part of the industry and the serried ranks of advertisers.
As Professor Tucker says, “Online advertising became much less e?ective in Europe relative to elsewhere after the regulation was enacted.”
Now pressure is mounting for US legislators to enshrine the right of the individual to online privacy and tomorrow a Congressional subcommittee is to address the issue.
The hearing, “Internet Privacy: The Impact and Burden of E.U. Regulation”, will take evidence from five expert witnesses, one of whom will be Professor Tucker.
The US authorities have been slow to act on the ever-increasing incidence of invasions of privacy and the almost uncontrolled collection, archiving and manipulation of personal data amassed, in the main, by covert means and without the users knowing anything about it - until the barrages of unsolicited targeted ads come crashing in.
Furthermore, those lobbying for the Internet ad industry are powerful groups that can, and do, whisper sweet nothings into the ears of legislators in a relentless effort to maintain the status quo.
So, US lawmakers have a tricky task. Many Americans are wary of the institutions of the European Union, believing that they are thinly-disguised embodiments of state socialism. There is a considerable groundswell of opinion that the US should just let things be but, that said, there's also a growing belief that invasions of privacy by ISPs are becoming far too commonplace and deep-reaching and that something needs to be done to curb their selfish enthusiasm. And, if self-regulation doesn't work - and it certainly seems that it doesn't - then legislation will be necessary.
We know that targeted advertising is highly effective but it has to be regulated to ensure that the surveillance of individuals and the tracking of their online activities is done with their consent and knowledge.
Given the chance, many ISPs (as well as government agencies) would no doubt like to be able to place surveillance cameras in every home to spy on us all - for our own good, of course. And that's worth a quote from the song "Everybody knows" by the poet, musician and erstwhile Buddhist monk, Leonard Cohen, who is 77 today.
"Everybody knows the scene is dead
but there's gonna be a meter on your bed
that will disclose
what everybody knows"
Some ISPs would just love that.
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