Commentary

The Value Of Strong Self-Regulation

A couple of weeks ago, the Network Advertising Initiative (NAI) announced the appointment of Marc Groman as our new executive director. I recognize that such announcements may go by without much fanfare -- and unless you happen to be a member of the NAI, maybe you didn't pay it much heed. But trust me -- this is a huge deal for our industry.

Why? I can begin with the fact that after having gotten to know him really well as we went through the interview process, I can say that Marc is an extremely talented and well-respected person. I can talk about how the chief privacy officer at the FTC might know a thing or two about privacy and creating effective mechanisms for industry regulation. But I'll save the glowing remarks to others who have already done so more eloquently than I: here and here.  Rather, I thought I'd outline what having a strong leader and strong NAI means for our industry.

Digital Advertising Alliance Can't Go It Alone

I've been asked this a few times privately, so I thought it might be helpful to address it publicly. So let me just state for the record, in my humble opinion, the NAI isn't fading away any time soon. Quite the opposite. We couldn't have landed someone of Marc's caliber if that wasn't the case.

And in fact, it’s a great time for the NAI to be stronger than ever. This is the exact time we need the intermediaries of our industry (i.e., the platforms, exchanges, networks, etc) to push even harder toward self-regulation. And let's face it -- the intermediaries are the ones saddled with implementing the lion's share the changes when it comes to self-regulation. This is the place where the NAI excels. And I don't see that changing any time soon.

Philosophically, the NAI and DAA are providing different, albeit complementary functions. The DAA is about providing consumers with transparency and a level of control. It's not a complete privacy program; it's a component of a larger privacy program. The NAI has created a full-scale privacy, vetting and compliance program that has earned the respect of regulators.  It's worth providing credit here to the great work done by outgoing NAI executive director Charles Curran and his team over the past few years. Don't get me wrong -- I'm not criticizing the DAA -- I'm an active participant as well as a fan. I've worked on the DAA advisory board and am helping them build out a mobile component to the program. They are a critical piece of the self-regulatory puzzle. But if we're going to be successful over the next few years, the DAA can't be the only piece.

In fact, the IAB, NAI, DMA, MMA -- almost all of the industry associations that participate in the DAA -- have had their own, enforceable codes of conduct that span well beyond the scope of the DAA program. That's a good thing. I'm also not implying that the NAI hasn't done some great work over the past few years. Much of the self-regulatory work that's gone on over the past several years has the NAI's fingerprints all over it.

The European Union

If you're looking to expand into the EU (or you’re already there), you probably know we are facing a pretty significant set of privacy and jurisdictional issues that are going to make working there very difficult if things don't change. In short, the Europeans don't think we care much about privacy on this side of the Atlantic. As a result, they are passing some pretty draconian privacy laws, including an affirmative consent standard for many types of cookies. How does one obtain affirmative consent for cookies? Beats me. A rather humorous description can be found here.

Fortunately, the Commerce Department is trying to address these concerns with the European Commission and other influential groups. Look for a white paper on privacy from the Obama Administration in the very near future -- one I'm certain will extol the virtues of effective self-regulation. If a compromise solution is to be had that will enable the free flow of ideas across international borders, it can only be found by clearly demonstrating that the online media industry is serious about self-regulation. Bringing in the person who was good enough to address privacy for the FTC is a huge first step. Ensuring that the scope of self-regulation is sufficiently broad to satisfy the Europeans is going to be a challenge. It can only be done by a comprehensive self-regulatory effort led by strong leaders.

Innovation Needs Self-Regulation

One of my favorite things about my work life is when I get to spend time with smaller startups. Often, it feels like that's where the true innovation is taking place.   I see all kinds of new and exciting uses of data to drive relevance. While I'm not trying to signal where I think the NAI should be heading, it might be helpful for some of these new business models to adopt a privacy-by-design approach that's so in vogue in regulatory circles. I remember some really interesting things taking place with social ads a few years ago -- and many innovative ideas were thrown out as a result of some bad apples. A strongly led NAI might be able to help the next wave of social media idea. Which leads me to my final point.

Sometimes I'm asked how I went from the study of human rights law to working in the privacy world. One of the most significant challenges in human rights law is: How does one get a large player to do the right thing when there is little legal force compelling them to do so? In that way, privacy law is exactly like human rights law.

Here's a quote from Facebook's Andrew Noyes, who stated that Facebook's practices "stand in stark contrast to the many ad networks and data brokers that deliberately and, in many cases, surreptitiously track people to create profiles of their behavior, sell that content to the highest bidder, or use that content to target ads."

Some of the distinctions Noyes is drawing here are pretty interesting.  I'm not sure if the issue is that Noyes doesn't fully understand how his own company operates, or if this is just a case of chutzpa. But take a look at Facebook's partnership with Nielsen and then try to explain why what they're doing is significantly different. I’m not saying what they are doing is either right or wrong. I'm just reminded of an old saying involving people in glass houses….

And apparently Facebook believes that it “does not belong in the same camp as Google, Microsoft and the rest of the online ad industry's major players." Facebook CEO Mark Zuckerberg made this point to interviewer Charlie Rose. On that point, I agree with Zuckerberg: Google, MSFT and much of the rest of our industry are actively participating in  self-regulation efforts. I live in fear of draconian legislation coming down as a result of a misstep by one of the market makers.

That's the larger issue here. Self-regulation should involve bringing everyone in the tent -- and strong leadership will (hopefully) help cast as wide a net as possible. The NAI brought Google into the tent a few years ago -- even got them to make some well-publicized changes to their beloved home page in order to do so. That was a huge win for the industry. Facebook, Apple and some of the other larger players seem to be standing on the self-regulatory sidelines for now. Maybe a strong NAI can move them toward change.

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1 comment about "The Value Of Strong Self-Regulation".
  1. Paula Lynn from Who Else Unlimited , December 7, 2011 at 11:13 a.m.
    More like The Value of Strong Damage Control. What are the consequences when a company decides to do what it wants anyway ? And no, the consumers may not know about any of this and no, the consumers may not do anything about it since their time and energy investment in the services keep them from moving on.