The promise of the free and open web is still alive, even amid growing concerns surrounding consumer data privacy, writes the American Advertising Federation’s Clark Rector for our Data & Privacy Deep Dive.
Online privacy, interest-based advertising and the use of data by marketers are all back in the spotlight. Then again, have these intertwined matters ever left the news cycle?
In July, for the first time, the House Energy and Commerce Committee advanced a federal data privacy bill – the American Data and Privacy Protection Act – a measure that, if passed in Congress, would greatly limit marketers’ ability to use data in a responsible manner.
Soon after, the Federal Trade Commission (FTC), without waiting for Congressional direction, initiated a rulemaking proceeding that could severely limit data use in advertising. A clue to the agency’s mindset is its repeated use of the term “commercial surveillance.”
These lawmakers and regulators seem to be approaching this issue with the point of view that the use of data by advertisers is inherently bad. In the view of advertising industry stakeholders, however, nothing could be further from the truth.
In fact, the responsible use of data fuels the open internet and provides numerous benefits to consumers, brands and the economy. For one, data-driven advertising supports a competitive online marketplace and contributes to strong economic and job growth. It allows small, local and niche businesses to grow and find potential customers nationwide – and often, even across the globe.
In essence, responsible data-driven advertising helps fund the internet as we know it and enables consumers to access free content and information. Loss of advertising revenue means much of that free content could go to a subscription-based model, which the FTC has acknowledged many consumers likely would not be able to afford.
Consumers recognize, and approve of, the value proposition that comes with sharing their data. A survey conducted by the Digital Advertising Alliance found that more than eight in 10 US consumers prefer the current ad-supported internet on which most content and services are free over a paid internet with no advertising. 85% said they’d reduce their online and mobile activities if they had to pay hundreds of dollars a year for the content and services they currently get for free. On average, in fact, Americans place a value of more than $1,400 a year on free digital content, services, and mobile apps funded by advertising.
In another survey, consumers mentioned harm and misuse of personal data as their primary concerns. Threats like financial losses, misuse of personal data for unauthorized purposes, incidental harm caused by a data breach or leak and data used for medical care and credit eligibility loomed large in their minds. The use of personal data for advertising was low on the list of consumer fears.
Clearly, consumers understand and are comfortable with the responsible use of their data.
Still, it’s clear that a strong privacy standard is necessary. Extra protections are warranted to protect young children as well as certain categories of sensitive data, such as medical and financial information.
It is also important that the US adopts a single, national privacy standard. While it is understandable that state lawmakers want to protect their constituents, a patchwork of up to 50 inconsistent or contradictory state laws would benefit no one and put an unnecessary stranglehold on one of the most vibrant and beneficial segments of the American economy.
The desired outcome is for lawmakers and regulators to enact privacy and data standards that will protect consumers, but also allow the advertising-supported internet to continue to flourish.
Clark Rector is the executive vice-president of government affairs at the American Advertising Federation. For more on how the world of data-driven advertising and marketing is evolving, check out our latest Deep Dive.