What marketers need to know about the FCC’s proposed new consumer privacy rules

A new Federal Communications Commission privacy proposal up for a vote this month stands to fundamentally alter the way ads have been served to consumers through internet service providers like Verizon and Comcast.

The new regulations, unveiled last week by FCC chairman Tom Wheeler, would require these providers to obtain consumers’ consent before sharing and using their data for ad targeting and marketing. The proposal is scheduled to be voted on by the FCC at its Oct. 27 meeting and is likely to be approved, given that Wheeler and his fellow Democrats have a majority.

Regulation-averse marketing trade groups are, to put it mildly, worried. The Association of National Advertisers and the American Association of Advertising Agencies called the regulations an “unprecedented step” which would “upend the established and thriving Internet economy.”

Here is everything you need to know about the proposed changes and their implications for marketers:

What exactly is the FCC proposing?
The rules proposed require internet service providers notify consumers of data collection and use — and more controversially — obtain opt-in consent from consumers before using or sharing sensitive information. ISPs would have to specify exactly what information it collects about them, how it uses and shares the data, and even identify whom it shares the information with.

Who is affected?
The rules would apply to all providers of high-speed Internet service  — and hurt their plans to make money off customer data. Marketers will be affected, too, as they rely on consumers’ digital data for ad targeting and building consumer profiles. But search engines like Google, social networking platforms like Facebook are not included.

“To be clear, this proposal focuses on information collected from consumers when they use broadband services, such as residential or mobile connections,” said Wheeler. “It would not apply to the privacy practices of websites or apps, over which the Federal Trade Commission has authority.”

That doesn’t seem entirely fair. Why is that?
Well, the FCC has responsibility only for the network functions that connect devices to an app or mobile sites. But it is the Federal Trade Commission that has oversight of providers that these internet service providers connect consumers to, such as Facebook and Google or Apple.

Many ISPs were initially worried that the rules would hurt them compared with internet giants like Google or Facebook, which continue to be governed by FTC rules. And let’s face it, Facebook and Google have enough advantages in the market already. This is because the first draft of the proposal from March this year, would have required consumers to opt-in for virtually any marketing of their broadband data to third parties. But the new proposal is less extreme and requires consumer opt-in for marketing of sensitive information to third parties and allow the use of nonsensitive information unless customers opted out.

As the Wall Street Journal reported, Verizon chief privacy officer Karen Zacharia said last week the company was “encouraged that the FCC appears to have taken seriously the input” of internet service providers and others.

Where do marketers fit in the equation?
The FCC definition of sensitive information is broader than the ad industry’s narrow definition around health or financial information. For the FCC, app-usage data and even web-browsing history can be sensitive. While ad networks and website operators allow consumers to opt out of receiving targeted ads based, they don’t require people to explicitly opt-in. After all, very few people would do so. This would stop Internet providers like Verizon from using data collected from browsing habits elsewhere in ad targeting — unless people chose to allow it.

Will marketers’ access to data be limited?
Yes. Marketers that obtain consumer browsing and location history from providers like Verizon and Comcast stand losing access to a vast repository of data. Their claim: nobody wants to be bombarded with opt-in messages. Left unsaid: Few will say yes.

“Putting specific guardrails like this can really limit our ability to provide meaningful content as advertisers,” said Azher Ahmed, evp and director of digital at DDB. “It’s like going back to the Stone Age in terms of advertising in a non-targeted way to a mass audience you know nothing about.”

But consumers still win, right?
That’s up in the air. Consumer advocacy groups like Consumer Watchdog and The Center for Democracy and Technology have lauded the efforts, with some even calling for stricter provisions.

“There’s no denying that this move makes sense from a consumer perspective,” said Taylor Malmsheimer, senior associate of the intelligence group at marketing researcher L2. “Consumers face endemic over-messaging across digital channels, and even if they share personal information and allow cookies online, the content they receive is often irrelevant, leading to the rise of practices like ad-blocking.”


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