• by Steve Smith , Staff Writer @popeyesm, December 12, 2008

The launch of the AT&T-backed Future of Privacy Forum last month (see our own interview with principal Jules Polonetsky here ) sparked discussion about how digital media should best address the debate. Matthew Wise, CEO, Q Interactive and former senior vice president of account services at Draft, is a member of the Interactive Advertising Bureau board who takes issue with some of the early statement by FPF members. Rather than start the debate over whether data is or should be collected, Wise argues here that the argument really should surround data's proper use.

Behavioral Insider: Since you are on the board of the IAB, do you think there is a need for a new privacy body?

Matthew Wise: Obviously we support any time people in the industry want to get together and talk about concepts and bring those to the attention of players in the field. In the interactive advertising community the leading body is the IAB and others like the NAI, and in direct marketing the DMA, so there are previously established organizations. I don't think there is a need specifically for a new organization.
 
BI: There does seem to be a greater prospect of some kind of regulatory recommendations from the FTC or others.

Wise: Our discussions at the IAB with regulators is that there is no pending legislation, but the risk of that has increased dramatically over the last 24 months. In the last 12 months there has been a stepped-up effort to establish guidelines and privacy processes so that legislation doesn't come about. Most of the legislation that we see is well-intentioned but poorly executed, and often more detrimental than positive to the industry. We don't believe it is healthy for individual states to establish legislation or for the federal government to do so. We believe if the industry as a whole cannot coalesce behind something and there is a need for the protection of consumers, then the appropriate spot would be legislation -- but only if the industry fails at self-regulation.

BI: But privacy is a public policy issue, isn't it?

Wise: There is still an open question of what is the privacy question. We attempt to create laws to protect consumers. But the protection assumes there is some harm to the consumer. When you think what is done in online advertising, the collection of consumer information to provide more efficient advertising, there is a fundamental question of what the harm is.

BI: But that is where public policy comes into this. The industry is taking this 'no harm done' argument. But the point is that privacy is a civil rights issue. I am not sure how much traction the no harm argument has in the policy and legal arenas. It seems that the Future of Privacy Forum is trying to embrace that with a diverse mix of members.

Wise: There are many institutions that have been debating privacy on the consumer front for decades. There is no need for The Future for Privacy Forum, period. There are plenty of vehicles to debate these policies. For someone to create another one adds confusion to the marketplace and is less efficient. I think it is highly circumspect, the funding of this one as opposed to others that are broadly funded. The opening statements of some of the members of this group border on the absurd.

BI: For example?

Wise: One comment in the press was a recommendation for consumers to delete cookies and use the browser privacy settings to prevent tracking. That is a fundamental step back for the advertising economy. It is like saying, let's make advertising more stupid.

Ad dollars are spent in the billions, and everyone knows that billions of that are wasted. Here you have an organization saying we should enhance the wasting of those dollars by turning off all the things that can make advertising more efficient. And cookies serve a tremendously important aspect of how personalization unrelated to advertising is done on the Web. So when you see comments like that come out, you wonder what Luddite is working on this stuff. Can't someone with a better appreciation of how the Internet works be the voice of a forum?

BI: I am not sure if they have positions on cookies yet. In our discussion with the Forum founder, my impression was there might be an early consensus around time limits of holding data, however. 

Wise: And that is something I would strongly disagree with. It is a policy of appeasement. There is no reason to delete the data. There are good reasons to hold onto it over time. Many consumer relationships are multi-year. You buy a car once every three years, you move once every seven years. So there is a good business rationale that marketing data should be held for longer periods than six, 12 or 18 months. And there is zero rationale for deleting it other than throwing a bone to an irrational argument, which is what they have done.

They are trying to come up with things that sound good to the fear-mongers rather than asking what is best for the U.S. economy and the consumers. 

BI: Well, then, what are legitimate limits on data use?

Wide: We don't want to allow governments to interfere with consumers. We don't want to allow businesses to unfairly manipulate consumers or not offer them health insurance based on something in their browser behavior. Those are misuses of the data.

So I think that is where the debate should be, what are reasonable uses of the data, not should it be collected. Once you accept that data is always collected on consumers, the real debate in American should be, how should that data be used and what walls do we need to erect to protect against the misuse of that data, the stealing of that data, the misapplications of that data for things the public doesn't agree with. I don't think anyone would say putting less irrelevant ads in front of people and making our economy more efficient is a bad thing.

BI: Let's pursue the argument that the use of data helps make advertising more relevant. But how is the benefit apparent to consumers? It sounds like we are telling them, yes you already get irrelevant ads, but it could be worse if we can't track you.
 
Wise:  And that is a good point and a question of whether the consumer will ever feel that. The reality is that there will always be an ad on the top of the page and if that ad is relevant 2% of the time or 15% of the time -- and will they notice the difference?

One of the things our company does is mathematically predict consumer response. We can see when an ad is wasted in front of a consumer and when an ad has an impact and results in some downstream activity. What is likely to occur is the advertising eco-system is likely to become substantially more efficient, which will result in lower prices to the consumer. But will they note the fact that their iPod costs a dollar or two less because the advertising didn't get wasted? That is an open question.

BI: Where do you see the privacy discussions ending up? Are there standards all players can agree to?

Wise: That is our hope. I honestly believe there is momentum in the industry to accomplish that. What gives me grave fear is seeing comments like those from the Privacy Forum and looking at where they are starting.

Often, the default is that consumer behavior and information is a practical evil and we should make sure the consumer can block these companies. If the debate starts there, we will set the industry back decades and waste literally billions of dollars.

I hope we will come with a default that the sharing of information is in the best interests of consumers. The debate should be around the right uses of that data and giving consumers the opportunity to block and surf anonymously. But if we have to get consumers every day to say I truly want the information gathered to make things more efficient, no one is going to click on that option. It has to be the other way around.