Commentary

Why Proposed Privacy Legislation Will Do More Harm Than Good For Web Publishers

There has been a great deal of discussion about the European Union enacting legislation that would require Web users to consent to Internet cookies. This law dictates that Web cookies cannot be placed on a user's computer unless it is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the user.

For Web publishers the implications are widespread -- Web sites use cookies for countless legitimate reasons -- including session management, content management, preferences, analytics, and advertising revenue. Can you imagine a digital world where every time a user visits a Web site they are prompted with a message: "If you would like our site to enable anti-spam and flood control, would you be willing to accept our cookie / ?"

Among lawmakers in the United States, a conversation similar to what occurred in Europe is taking place. Proposed legislation is being crafted in Congress that may place restrictions on the use of cookies: as well as the collection of information, under a broad definition, that could be considered personally identifiable.

As one of the founders of an ad network that has been around since 1995, my company has always done its best to be a good citizen online. Through industry organizations such as Trustee, IAB and NAI, we are involved with many other companies to ensure that we create and follow best practices when it comes to consumer privacy. We have developed ways to allow a consumer to opt-out of our targeting techniques, and limited the types of data we collect. We have also visited Washington, D.C. along with representatives from other ad networks as well as many small Web publishers to educate lawmakers on the practices we use to maintain privacy and the benefits that these policies afford the consumer. Our outreach to Washington is necessary, since one of the most obvious impacts that potential legislation will have on publishers is on the revenue they earn from advertising. The inability for ad servers and ad networks to use cookies when serving ads substantially affects the way online ads perform. At the simplest level, without cookies, ad servers are unable to perform basic functions such as frequency capping (limiting the number of ads per advertiser shown to an individual) and fraud analysis. At a more advanced level, we lose the ability to measure conversion rates or serve an ad to someone who has expressed prior interest in a topic. Without these capabilities, large brand advertisers -- who have finally become comfortable moving more and more marketing dollars to the Internet -- will either have to buy far more impressions at much lower prices or move their campaigns offline in order to meet their marketing goals.

Another possible effect of this legislation is that it may limit the tools Web publishers are able to use in managing their Web sites. For instance, third-party services such as Web Trends, Google Analytics, Open ID or any applets that plug into a site all use cookies to provide significant functionality. In addition, if legislation goes as far as limiting all cookies, Web publishers may find that their content management system needs a complete overhaul.

Moreover, most Web publishers will need to become experts in compliance. Many Web developers shy away from hosting ecommerce sites because of the complexity of keeping the data secure. Imagine if the same requirements to manage credit card numbers were applied to collecting a seemingly anonymous user data such as ZIP code. There are elements of the proposed legislation that could do this. If a Web publisher fails to comply with the compliance elements of the proposed legislation, they could face fines that could make or break their business. Imagine a world where all Web publishers -- no matter how big or small -- would need the additional complexity and cost of a compliance department!

Lastly, despite the results of a recent Annenberg study that suggests that consumers do not care about whether the ads on the sites they visit are relevant. I have to believe that if consumers saw the alternative -- multitudes of pop-ups/layers that ask for cookie permission, less free content and more annoying ads -- they would reconsider.

If this new world of less ad revenue but more regulation, more annoying ads, more complex content management and compliance concerns -- you get involved. Work with industry organizations like the IAB and NAI that are out in the trenches educating consumers and legislators on the value of contribution on online media and advertising. Also, institute best practices within your organization to ensure that consumer privacy is respected and protected.

Lastly, one of the best ways for the industry to avoid the legislative action is to insist on better self-policing that detects and prosecutes the "bad actors" in the industry. This self-regulatory environment protects consumers and protects the industry's good citizens without creating laws that make it difficult to do business.

1 comment about "Why Proposed Privacy Legislation Will Do More Harm Than Good For Web Publishers".
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  1. Karen Carr from Kidipede, April 26, 2010 at 12:34 p.m.

    This FUD doesn't make any sense. I don't need a compliance division, I just need to not collect any information. And I'm certainly not going to let my advertisers show annoying permission pops to my visitors! Advertisers are still going to advertise online, because that's where the people are. If publishers were worried about this, they'd be writing their own articles, not leaving it to ad networks.

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