Final Warning

Rich LeFurgy knows more than most of the people in the online ad space have forgotten.

LeFurgy helped found both the Internet Advertising Bureau and the Procter & Gamble FAST (Future of Advertising Stakeholder) Summit initiative. He’s both IAB chairman and chair of the FAST Steering Committee. He’s now working as a venture capitalist for Walden Venture Capital in San Francisco.

When Rich LeFurgy talks, in other words, take what he says as serious as a heart attack. Today he’s warning that Internet advertisers have just a few months to prove we can respect consumer privacy, or the government will rouse itself to action.

“Last March the government looked at all the privacy statements,” on corporate Web sites, “and next March they’ll look again,” he said.

“They’re not going to just look if you have one, but are you giving proper notice, proper information, and proper opportunity for people to opt-out. I think the industry has stepped up to the plate,” and there’s a lot of positive momentum for privacy protection, “but it’s like a fund-raising campaign where you need to give more.

“The online industry needs to redouble its efforts to satisfy the government and the consumer that the consumer’s privacy is being protected,” he concluded.

He doesn’t need to add “or else.” Or else what? If the next Federal Trade Commission survey of the industry doesn’t show real progress in protecting privacy, “the government won’t be able to hold back legislation.”

The fact is a process and model for bipartisan action on this issue already exists. The Clinton Administration and Republican Congress worked together to pass the Children’s Online Privacy Protection Act (COPPA), and enforcement regulations have already come out.

If voters see that same urgency on general questions of Internet privacy, the same bipartisan cooperation is likely, LeFurgy agreed. “Big Brother has been a persistent fear of the American public and the global population for decades. What we’re seeing is a lot of that fear being transferred onto corporate America and global corporations.”

The stakes in this case are enormous, because Internet commerce can’t really fulfill its potential unless advertisers can collect and use data on consumers and businesses. “We will fall flat as an industry if we can’t raise personalization and targeting to the next level,” LeFurgy argued.

If Internet advertisers lose on privacy, due to consumers’ fear that companies like DoubleClick will combine cookie files with its Abacus databases and misuse profiles of consumer behavior, the winner will be direct mail, which currently offers superior targeting ability.

Fortunately, LeFurgy concluded, the solution to this problem is in the industry’s hands, and it involves our strength, communication. “The big issue is what happens to passively gathered data,” as from cookies, “and the wall with actively gathered data on the other side,” as from registration and customer databases. Consumers deserve notice of what advertisers are doing with their data, the ability to opt-out or control whether they give data, and a benefit for sharing the data, LeFurgy concluded.

“Once we give notice and control, plus a benefit, then it’s not an issue. What seems to be lost is making sure the consumer understands the benefit.” Relationship marketing won’t proceed in a micro sense, in other words, unless consumers can be made to understand it in a macro sense.