• by Laurie Sullivan , Staff Writer @lauriesullivan, April 25, 2012

The industry still continues to operate under old privacy rules, though it's changing -- a change fueled, some believe, by the tension between first-party companies and third parties that use the data.

Alan Chapell, president of Chapell & Associates, who founded the privacy program at Jupiter Research,  detailed the tension between privacy and innovation in a presentation at MediaPost's just-concluded Seach Insider Summit.  

He discussed concerns about independent third-party companies taking ownership of consumer data to create targeting segments. It turns out there's an imaginary line, which ad networks have been told not to cross, but has been freely crossed by email marketers for the past decade. Apparently, there are different rules for first and third parties. Chapell said this distinction is important because as the industry relies more heavily on demand side platforms (DSPs), the model continues to blur. It's not necessarily an ad network model anymore. In this new model, the advertiser owns a large swath of data, and the DSP some.

The transition from an "audience creation" to an "advertiser enablement" model supported by DSPs and search engine marketers require a change in thinking. Chapell gave an example, pointing to the Facebook Like button. Do Facebook Like buttons have the right to collect data as if it were a first party storing data? It's a different concept than what the industry has seen in the past, he said.

This presents a real question: Does Facebook own the data, the third-party application company, or the advertiser? Similarly, does the search engine own search intent data, search engine marketer, or the advertiser?

Chapell said under the guise of protecting privacy, Facebook doesn't think third parties should be allowed to use the data, which is a way to protect its closed-loop network.