'Do Not Track' Could Backfire

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Whether the FTC heeds calls for a Do Not Track list will depend largely on whether consumers begin clamoring for one. Consumers clearly are concerned about their privacy. When AOL inadvertently released search data (BusinessWeek.com, 8/23/07) on 650,000 customers that was not expressly tied to individuals, many people sued and many more swore to stop using AOL's service entirely. The company later apologized and recently started letting users opt out of being tracked.

However, it's not clear that consumers care about privacy so much that they would be willing to pay for a service or see even more ads. Philip Kaplan, founder and president of products at AdBrite, which provides ad targeting, says his company originally refused to track user behavior, but found that nobody cared. Since not using that kind of targeting left him without a competitive edge, he eventually started using it. "Privacy is an old man's concern," says Kaplan. "Look at what kids are putting on the Internet these days…who they are married to, who their friends are, what they do."

Dixon, of the World Privacy Forum, agrees that some people may not care. The point, she says, is to give the people who are concerned a way to use the Web without being tracked and to raise awareness of what advertisers are doing on the Web. After all, consumers who don't want their online behavior tracked already have a way to opt out—at networkadvertising.org. However, few people have heard of that program, says Dixon. And few people set their browser to block so-called cookies, the tracking tags that enable much of the targeting on the Web today.

Pushing for More Transparency

Ad networks and publishers agree that more transparency in how online behavior is tracked is beneficial. Vanderhook says that companies with good practices should be highlighted while companies that target ads on sensitive information—say, showing ads about AIDS drugs to a person who may have visited a site on coping with HIV—should be called out and urged to change their practices. "We welcome innovative ideas in this area and believe the industry as a whole should, too," says a Google spokeswoman. "We look forward to learning more."

What Google doesn't want to see, however, is any list that negates the value of the ad targeting and delivery network it plans to acquire. Google announced plans to purchase DoubleClick, an ad delivery network that uses cookies to recognize Web surfers, for $3.1 billion in April, and many other major online players followed suit with ad network acquisitions of their own. The Google/DoubleClick deal is under review by the FTC and has been a catalyst to the recent privacy discussions.

In hopes that the FTC doesn't take overly restrictive measures, the industry is likely to adopt more stringent guidelines on their own behavior—what they track, how they safeguard privacy, and how they keep data anonymous. "Further transparency will lead to further tradeoffs by publishers to get individuals to say yes to targeted ads," says eMarketer's David Hallerman.

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Holahan is a writer for BusinessWeek.com in New York .