Report: Most People Don’t Want Online Tracking Even If It Means Relevant Ads Or Savings

Get ready marketers: a credible new report with sweeping implications from the University of Pennsylvania and UC Berkeley is likely to be the nail in the coffin of self regulation of online advertising. Specifically I’m talking about behavioral targeting, which largely concerns online display advertising but does marginally touch search at Yahoo and Google.

The NY Times discussed the report, released today:

The study’s authors hired a survey company to conduct interviews with 1,000 adult Internet users. The interview, which lasted about 20 minutes, included questions like “Please tell me whether or not you want the Web sites you visit to give you discounts that are tailored to your interests.” The results were later adjusted to reflect Census Bureau patterns in categories like sex, age, population density and telephone usage.

Tailored ads in general did not appeal to 66 percent of respondents. Then the respondents were told about different ways companies tailor ads: by following what someone does on the company’s site, on other sites and in offline places like stores.

The respondents’ aversion to tailored ads increased once they learned about targeting methods. In addition to the original 66 percent that said tailored ads were “not O.K.,” an additional 7 percent said such ads were not O.K. when they were tracked on the site. An additional 18 percent said it was not O.K. when they were tracked via other Web sites, and an additional 20 percent said it was not O.K. when they were tracked offline.

Lawmakers have been ready to regulate “behavioral advertising” for some time and the FTC has signaled that it did not believe marketers were doing a good enough job with self regulation. However, the new economic and political climate, more favorable toward regulation, combined with public frustration and anger generally have set the stage for regulation of some kind.

Search will largely be exempted because of the way it works — keyword matching rather than data mining —  although the search engines’ data retention policies are implicated by the report (which I quote a bit more fully on my blog). Yahoo is using search queries as part of its behavioral targeting and Google not long ago implemented “Interest Based Advertising,” a euphemism for behavioral targeting.

However, Google’s privacy and preferences management could become a kind of model in some new regulatory regime.

Very soon lawmakers will introduce legislation to more aggressively protect consumer privacy. One member of Congress, Rick Boucher of Virginia, recently wrote:

Because consumers need an assured level of control over the collection, use and sharing of information about them, a statute providing those assurances is now called for. That goal should be achieved by legislation, which reflects best industry practices and requires that they be followed by all websites that collect information from Internet users. Legislation assuring Internet users that their online experience is more secure will be a driver of greater levels of Internet uses such as e-commerce, not a hindrance to them.

In my view all this points to “when” rather than “if” and the question is: what disclosure and data management burdens will imposed on marketers and publishers? As I said, I think search will largely be unaffected but display could be profoundly affected.

If people are required to be given an “up front” opportunity to “opt-out” of targeting a majority likely will: “Tailored ads in general did not appeal to 66 percent of respondents.”