|October 18, 1999
Mr. Donald S. Clark
Dear Mr. Secretary:
On behalf of the Association of National Advertisers, Inc. (ANA), I am submitting comments and requesting to participate in the Department of Commerce/FTC Public Workshop on online profiling on November 8th. We are interested in participating in Session II (Implications of Online Profiling Technology for User Privacy) and Session III (The Role of Self-Regulation).
ANA is the advertising industry's oldest trade association and the only organization exclusively dedicated to serving the interests of companies that market regionally and nationally. Our membership is a cross-section of American industry, consisting of manufacturers, retailers and service providers. Representing more than 7,500 separate advertising entities, these member companies market a wide array of products and services to consumers and other businesses.
Most of our members are engaged in electronic commerce in some form, but there are many different approaches to this new marketplace. For example, the e-commerce efforts of a packaged goods company may be very different from those of a software company or a financial services firm. Whatever the product or service, the potential for one-to-one, marketing, is one of the tremendous values of the Internet. It has the potential for greatly enhancing competition and economic efficiency, by providing consumers with the information they want, when they want it. However, the business community recognizes that the full potential of the Internet will never be reached unless consumers feel secure in the electronic marketplace.
We commend the Department of Commerce and the Commission for the leadership roles they have played on a broad range of electronic commerce issues, including online privacy. ANA worked closely with the Commission and members of
Congress to develop the Children's Online Privacy Protection Act (COPPA), which protects the unique interests of children in the online world. Even before that legislation, we played an active role in the development of the new online marketing guidelines of the Children's Advertising Review Unit (CARU), which are consistent with the COPPA rules.
We were pleased that in July, the majority of the Commission called for no new federal legislation to address the privacy rights of adults in this new environment. In fact, consumers already have strong privacy protection and more tools and programs are being developed every month.
There are also three major privacy "seal" programs that provide consumer recourse and the assurance that a website actually follows the policies that are posted. Many of our member companies are participating in BBBOnline, TrustE or CPAWebtrust.
The private sector is also developing numerous technologies, from "anonymizers" and "cookie cutters" to the Platform for Privacy Preferences (P3P), which will provide consumers with further tools to protect their privacy in the online environment.
Finally, there are tremendous incentives for competition in the marketplace on privacy protection. A number of major marketers, including IBM, Disney, Microsoft and others, have announced that they will not place advertising on any websites that do not have strong privacy policies. Also, online shoppers are sophisticated and will shop around for the sites that provide the best privacy protections.
Online profiling is a complex area and subject to different definitions. To some, it means gathering anonymous clickstream data and using the resulting profiles to create online advertising targeted to browsers who visited their Web sites. To others, online profiling may mean the potential merger of clickstream data with personally identifiable information, however gathered. The privacy implications of online profiling become more difficult and complex as the definition or scope of the practice is expanded. We urge the Department and the Commission to proceed carefully in defining the practice of online profiling.
ANA believes that online profiling can provide substantial benefits for both consumers and marketers. Profiling and personalized marketing allow a company to reduce costs by sending information only to those individuals who are most likely to be interested in a specific product or service, based on their clickstream habits. Consumers are better served by not receiving information that is of no interest to them.
For example, a new parent may be very interested in receiving information about disposable diapers, while someone with no children would not share that interest. To go a step further, the parents of a "preemie" would be most interested in a more select part of the disposable diapers market. Online profiling facilitates this type of personalized marketing.
There are numerous other examples of the potential benefits of this type of personalized marketing in the online environment. One of our members, Procter & Gamble, recently announced the development of a new, entirely web-based, product line for cosmetics. This project has the goal of creating customized cosmetic products for consumers, based on the specific information they provide to the company. This is just one example of the one-to-one, interactive nature of the cybermarketplace which can truly revolutionize the way in which products are developed, marketed and delivered to consumers. Based on information that consumers provide to manufacturers, specific products can be developed to meet specific needs of specific consumers.
Marketing to specific market segments is not a new phenomenon created by the online marketplace. In every media, advertisers engage in target marketing by placing their ads in those places where they are most likely to reach consumers who are interested in their product or service. The target audience for "Monday Night Football" would be very different from the target audience for a cooking show.
While the practice of personalized marketing is not new, the electronic environment does raise new privacy concerns that may not exist in the bricks and mortar marketplace. For example, certain information about consumers' preferences can be tracked and gathered as they surf and browse the Internet. Such information is not typically available in the traditional shopping mall, if ever, until the point of purchase. Consumers should not be surprised about how information about them is gathered or used. We recognize that some consumers may not wish to be profiled and believe that websites should provide notice when a "cookie" is being placed. Web browsers can be easily configured to not accept "cookies", thus providing consumers with the ability to opt-out of online profiling.
We strongly urge the Commission and the Department of Commerce to support such an "opt-out" approach. COPPA adopts an "opt-in" approach to address the unique interests of children, since they may not be fully capable of understanding the consequences of giving our personal information online. That is not the case for adults. ANA believes that providing adults with notice and the ability to opt-out of online profiling provides sufficient protection.
In fact, a mandated opt-in requirement may raise First Amendment concerns. In August, the Tenth Circuit Court of Appeals held that opt-in restrictions are highly suspect and will be found unconstitutional unless the government carries out a careful calculation of the costs and benefits associated with the burden on speech imposed by an opt-in rule, and demonstrates that an opt-out approach would not sufficiently protect consumer privacy. See U.S. West v. Federal Communications Commission, No. 98-9518 (10th Cir. 1999). The court made it clear that an opt-in approach was likely to chill speech and violate the "narrowly tailored" requirement of the Central Hudson test, without clear evidence to the contrary. Thus, the choice of opt-in or opt-out has been raised from merely a policy debate to a question of constitutionality.
Finally, ANA believes that not all information is created equal and the government should avoid imposing a one-size-fits-all approach. We support continuing the sector-by-sector approach to privacy protection. There may be some particularly sensitive areas that deserve special treatment, but the vast majority of online profiles deal with a myriad of mundane facts that do not present the same level of privacy concerns.
Online marketers are concerned about online privacy and are taking effective steps to create meaningful self-regulation. Imposing cumbersome or overly prescriptive requirements in the electronic marketplace could destroy the interactive value of the Internet. There is a balanced approach to protecting legitimate privacy interests without destroying the ability to market to specific key audiences. We look forward to working with the Department and the Commission on reaching that balanced approach.
We would appreciate the opportunity to participate in this important workshop. Please feel free to contact me at (202) 626-7800 if you have any questions.
Daniel L. Jaffe
C: John J. Sarsen, Jr., ANA