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Do Not Track Should Not Pass Go

December 1, 2010

The Federal Trade Commission (FTC) today released its long awaited report to Congress on how best to protect the privacy interests of consumers in the online world.

We commend the Commission for acknowledging that advertising provides the financial foundation for the immense number of media and Web services available to U.S. consumers.   However, we strongly oppose the recommendation that Congress consider adopting a legislatively imposed "Do Not Track" regime to restrict online behavioral advertising.  That would be a very bad idea, particularly in today's challenging economy.

The advertising-supported business model has fueled the explosive growth of the Internet, creating a low barrier-to entry for an immense number of entrepreneurial online businesses.  According to research firm comScore, more than 200 million Americans age 15 or older use search engines each month.  These consumers are going to the Internet to access - at no cost - all types of content: from news and health, to sports and entertainment, to job listing and travel recommendations.  The most popular Internet search engines, news outlets, entertainment portals, photo and video sharing services and social networking sites all give consumers free access to vast content and online experiences thanks to their advertising revenues.

The online media has developed at an extraordinary pace.  It took 38 years for radio to reach 50 million Americans; network television took 13 years and cable television took 10 years.  It took only about three years for the Internet to reach 50 million users in the U.S. and it has been growing rapidly ever since

According to the Interactive Advertising Bureau (IAB), Internet advertising revenues in the U.S. totaled $22.7 billion for 2009 and $12.1 billion for the first half of 2010 alone.    To put this in perspective, the Internet today is a bigger advertising medium than radio, outdoor advertising and about the same as consumer magazines.  (www.iab.net).

However, policymakers need to refrain from imposing undue, legislatively rigid restrictions that would limit the effectiveness of interactive advertising, thereby diminishing the flow of ad dollars into this promising new media channel.  This is particularly true in today's challenging economy.  

Therefore, we are strongly opposed to the call in the FTC's report for a "Do Not Track" regime, similar to the "Do Not Call" registry for limiting telemarketing calls.  Such an approach would be a blunt, technologically complex instrument that would actually offer consumers a false promise.   A "Do Not Track" regime would not stop all online advertising.  In fact, the exact opposite result is almost certain to be fostered.

Consumers who joined the "Do Not Track" registry to block all online behavioral advertising would actually see more, not less, unwanted advertising about products in which they have no interest.  By limiting the ability of companies to reach the right consumer at the right time with the right message, such an approach would also seriously undermine the economic efficiency of the online marketplace.  The only way advertisers could reach consumers in an untargeted environment is to proliferate ads in the hope of accidently reaching someone interested in their products.      

We agree with the Commission that consumers should have transparency and choice over how information about them is collected and used.  ANA has been working for several years with a wide range of companies and trade groups across the entire online ecosystem to meet this legitimate consumer need.

On October 4, 2010, these industry groups (ANA, the American Advertising Federation, the American Association of Advertising Agencies, the Direct Marketing Association, the Interactive Advertising Bureau and the Council of Better Business Bureaus) announced the details of a comprehensive new self-regulatory program that will give consumers enhanced control over the collection and use of data regarding their Web viewing for online behavioral advertising purposes.  This new self-regulatory program represents the industry's response to the call of the FTC in 2007 for more robust and effective self-regulation of online behavioral advertising practices that will foster transparency, knowledge and choice for consumers.  More information about this program is available at www.AboutAds.info

While the FTC report criticized the pace of self-regulation, there have been many difficult technological and structural issues that had to be resolved.  These barriers now have been surmounted and the ad community is working to rapidly roll-out the self-regulatory program throughout the entire online ecosystem.

It would be totally premature to impose a legislative solution that is quite likely to be counterproductive, rather than protective of the public.  The FTC report states that a program to effectively protect consumers could be accomplished through "robust, enforceable self-regulation."  The advertising community is totally committed to meeting this challenge.  We hope the FTC and Congress will allow our new self-regulatory program to more fully develop before imposing onerous government restrictions.  

The Subcommittee on Commerce, Trade and Consumer Protection of the House Energy and Commerce Committee is holding a hearing tomorrow on the "Do Not Track" approach.  We will continue to work with other industry groups to demonstrate to policymakers that this is a very bad idea for consumers, the business community and our economy.

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