Why Jeff Chester Thinks the Online Ad Industry Stinks at Privacy

Jeff Chester is executive director of the Center for Digital Democracy in Washington D.C., a consumer privacy group which helped pass the historic Children’s Online Privacy Protection Act in 1998. Chester believes that the ad industry isn’t innately evil, but that, like other forms of commerce, it needs a clearly articulated set of rules about what can and cannot be done with consumer data. That said, Chester also described the battle over consumer data as “an arms race.”

The most vocal privacy advocates have described the digital advertising industry as, at best, indifferent to legitimate privacy concerns and, at worst, slightly antagonistic. What’s your take on the industry’s attitude?
Slightly antagonistic? They are diametrically opposed to privacy protections! Look, three years ago Randall Rothenberg attacked privacy people like myself in an article and said there wasn’t a privacy problem. The online advertising community has been dragged kicking and screaming to a place where they were forced to say, “OK, there are some privacy concerns.” The fact is that no one in the industry has really stepped up to the plate and said, “We are engaged in a broad range of very powerful data-collection practices designed to target consumers and hold information which includes their health, race, politics among other data.” In a democratic society, there has to be a balance between the right to privacy, civil liberties and commerce. We are saying, this is a real issue, let’s do something. However, the digital advertising industry is working around the clock to expand its data-mining practices. So three years ago they denied that there is a problem, and now they’re doing self-regulation — there’s this little icon that nobody sees and that doesn’t really effectively protect consumers. The industry is still being disingenuous about protecting consumers online, and they are unwilling to trust American consumers to decide if they want their information to be corrected or how it should be used.
Brands need to measure their audience- and they need to see if their ads are effective. How can this be done without monitoring the audience in some way?
There is a balance that needs to be struck between the needs of the industry to advertise and to measure ad effectiveness and the need to protect the rights of consumers. And no one has really articulated what that balance should be, and that is what I am most disappointed with in regards to the digital advertising industry. Microsoft and Intel have come out and said that they are supportive of privacy initiatives, so there are some leaders in the market who realize that something needs to be done, but really it is the advertisers that have failed to address this. Look, this is totally different than what people are used to. Now everyone is a part of this global focus group and wired into techniques that constantly track, measure and evaluate their data. I talk about all data not being the same; there’s a whole category of sensitive data that brands need to be aware that they need to be more sensitive to. Collecting data in order to sell a handbag is very different from collecting financial data to sell a financial product. The industry has failed to differentiate between sensitive data and data that consumers exchange in more commonplace daily transactions. I think the answer is, you really have to ask the consumer before you collect the data.
So what does the privacy community want, more regulation?
I think there needs to be a form of consent for ad exchanges. I think it is incredibly dehumanizing that companies feel that they can sell access to a consumer, to their profiles, behaviors, influencers, in real time, to the highest bidder. Mobile marketers need to explain to users that it isn’t just your behaviors and preferences that can be accessed, it’s also your location. There are also platforms that promote the integration of online and offline data on consumers. There is a sea of new developments that pose new questions about privacy in ad tech. They need to explain to consumers in a forthright manner exactly what is happening with their data — how the system works. Instead, consumers get a fairy tale about what happens to their data. There is a way to do measurement and branding, but it has to be honest. These aren’t just ads, these are ads that follow you, that learn about you, that transform in real time in response to your actions and profile, that create a sales mechanism that sells your data off to the highest bidder. The industry needs to admit that they have this Orwellian power over data.
There’s been some controversy about a study by Stanford researchers on privacy compliance, which stated that many companies aren’t really blocking what one would think. What can marketers do to make sure that their data-mining practices aren’t in violation of existing laws — there seems to be a phalanx of pending legislation. Is ad-compliance verification the answer?
It sounds like digital McCarthyism. These big companies will win, naturally, because no one knows who is on the white list or the black list. This may hurt certain publishers that depend on their advertising as their core business model. If they have controversial content that some people find offensive, then they may find themselves on the wrong list.
So what does the future look like?
A handful of privacy advocates have had to deal in hand-to-hand combat with the industry, and it has become like an arms race. The industry for the most part has refused to sit down and engage in meaningful dialogue about this. There’s going to be a backlash because the industry has not been responsible. And it is really distracting from building a digital economy that can really help America. This is about building the economy, the right way. As long as we have to fight the basic business model, it is going to hinder the industry’s development — something we all need to see.There is a lot of power here, and we need to figure out — both the industry and the advocates — how to use it correctly.
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