• by Wendy Davis  @wendyndavis, November 5, 2007

It's not hard for consumers to say why they dislike intrusive ads, pop-ups served via spyware, in-box-cluttering spam, or a telephone ringing during dinner. But whatever damage is caused by targeting, or serving ads to people based on the Web sites they visit, is harder to pinpoint--which is leading some Internet industry executives to question whether the FTC even has the authority to call for the regulation of the practice.

"What we haven't seen is that real harm," Mike Zaneis, Interactive Advertising Bureau vice president of public policy, told the FTC Friday, on the second day of a meeting to address behavioral targeting. He dismissed as "speculative" advocates' concerns that companies would misuse information gleaned from monitoring Web-surfing behavior.

Consumer and privacy advocates like the World Privacy Forum say they worry that companies could make assumptions based on Web users' online activity and then use that information to consumers' disadvantage. For instance, a health insurance company might decline coverage to people whose online behavior indicates they suffer from AIDS or other costly medical conditions.

But Zaneis and other Internet executives appearing in Washington last week say that the prospect of that type of scenario shouldn't lead to broad curbs on targeted advertising. They also argue that governmental attempts to regulate behavioral targeting will hurt the online ad industry's ability to grow and innovate.

Further, they argue, people already have the ability to opt out of a great deal of online tracking, either by telling the major ad-serving companies not to monitor them as they surf the Web (a request that many of the biggest companies voluntarily honor), or by deleting their cookies.

Since 2000, the Network Advertising Initiative has maintained a Web page where consumers can opt out of being tracked by ad-serving companies. That move grew out of concerns about behavioral targeting triggered by DoubleClick's buyout of offline market research company Abacus. At the time, advocates feared that DoubleClick would merge online and offline data to create highly detailed consumer profiles.

But privacy advocates counter that many consumers aren't aware of the NAI's opt-out program. The site receives around 1 million visits a year, according to executive director Trevor Hughes. By comparison, Google drew 561 million unique visitors worldwide in August alone, according to comScore.

In a move timed to coincide with the FTC meeting, the World Privacy Forum released a 46-page report that took direct aim at the NAI. "Consumers do not widely know about or understand the opt-out, the opt-out does not work reliably, and the opt-out does not persist reliably," states the report.

Among other issues, the report highlighted that some Web companies use methods other than conventional tracking cookies for monitoring online behavior, and the NAI's program doesn't appear to give consumers the ability to opt out when those newer types of tracking devices are used.

Meanwhile, companies like Google, Microsoft, AOL and Facebook repeatedly reassured the FTC last week that their existing privacy policies were sufficient to protect users' rights.

But others point out that many smaller ad companies don't allow Web users to opt out of behavioral targeting. Currently, the law doesn't require companies to offer consumers the ability to decline being tracked.

"What happens to those companies who don't offer opt outs?" Ari Schwartz, deputy director of the Center for Democracy & Technology, asked Friday. "What do we do then? There's nothing illegal about what they're doing."

"The primary risks to consumers are not posed by the people who are here in this room," added Mozelle Thompson, a former FTC Commissioner who now runs a consulting firm.

Panelists on both sides of the privacy debate last week agreed that another hurdle in this area is that many consumers don't have the time or inclination to read and comprehend existing privacy policies, much less educate themselves about cookies and behavioral targeting.

"I don't think you can force consumers to look at these things," said Web guru Esther Dyson, chairman of EDventure Holdings. "If they don't, it's nobody's fault."

Dyson herself floated the concept of "Disclosure 2.0." Drawing on how people use social networking sites, she proposed that consumers could pick and choose what type of information they share with marketers. "If I curate my profile ... and if I can decide which of my friends can see which part of my profile, why can't I do that for marketers?"