At FTC Hearing, Privacy Policies Bomb

The evolution of media consumption and interaction was on the minds of speakers and attendees at yesterday’s Federal Trade Commission hearings on “Protecting Consumers in the Next Tech-ade.” Marketers are both anxious and excited at the prospect of targeting niche audiences through highly-refined cross-media data tracking and segmentation; however, others are concerned today’s privacy protections are not well suited to guard consumers in this increasingly data-driven world.

It is a “period of chaos that the advertising industry is in at the moment,” said Alan Shulman, chief creative officer of creative agency Brand New World. “We’ve gone from a mass marketing world to a micro marketing world.”

Despite what he called “seismic” media landscape shifts, Shulman coaxed chuckles from the crowd of lawyers, FTC staffers, corporate technologists and consumer advocates at George Washington University in Washington, D.C., when he added, “Maybe Tom [Cruise] has it in his mind, but we haven’t gotten to the point where billboards are talking to us.”

Users now have an upper hand; they can opt in to view what they want to see when they want to see it. This new dynamic, said Shulman, has led to a greater desire for instant gratification on the part of users who are becoming accustomed to choosing how they’d like to consume media or participate in creating it.

It’s all forcing advertisers to ask, “How from AM through PM can we be adjacent to all these experiences?”

Meanwhile, this refined data collection and targeting is compelling others to ask how consumer privacy can be protected in the coming age. Demand for convenience and instant gratification, “can only be provided with great amounts of information,” said Fred Cate, professor and director at the Center for Applied Cybersecurity Research at Indiana University School of Law, during the panel discussion on “Key Changes Predicted in the Next Tech-ade.”

All these digital points of contact enable never-before-seen tracking capabilities, making for increasingly robust databases filled with information that can be attributed to particular users. As those data are aggregated by marketers to target advertising, new privacy implications arise.

Information aggregation is “very controversial today,” said Cate. “We don’t have a very thoughtful way of thinking about information aggregation,” he continued, predicting, “This set of issues will have to be addressed in the next decade.”

Current provisions for protecting individual privacy and security may not suffice. Notice and choice, today’s standard for corporations gathering information on consumers, are poor means of protecting privacy and security, said Cate. He also took aim at privacy policies, stating, “There’s no one in America who’s read a privacy notice who wasn’t paid to.”

Two consumer watchdog groups that submitted a letter to the FTC last week requesting investigation into online advertising practices also have questioned the efficacy of privacy policies. In a follow-up statement distributed at the FTC hearings yesterday, The Center for Digital Democracy and U.S. Public Interest Research Group singled out Microsoft, deeming its privacy policy, “a complex, convoluted document that… few consumers can be expected to read, much less understand.”

Specific privacy policies may accommodate the needs of one company as it pulls data on its consumers, but in the scheme of things, “The practical reality is technology today says that just isn’t so,” said Dr. Michael Geist, Canada research chair of Internet and e-commerce law at the University of Iowa. During a late afternoon session on user-generated content, Geist argued those little bits of information, which are increasingly pooled together by marketers and others, have a “real impact” on consumer privacy.