EC chief will sanction eavesdropping online if admen agree to behave themselves

Ever heard of Robert Madelin? The chances are you have not. Don’t worry, it won’t hold you back in life. Unless you happen to be a major advertiser or senior advertising executive. In which case, you should be ashamed of your ignorance.

Forget the Bailey Report, forget erotically charged images on posters. The frontiers of commercial freedom have already moved to a more strategic battle-front. One where the weapons of choice are electronic spies and surveillance.

If advertisers win this battle, the prize is very great. Using what is termed “behavioural targeting” – (sometimes “behavioural analytics” or “online tracking”, but let’s call it BT for the sake of simplicity) – they will be able to plot the course of any internet journey an individual ever makes. True, they won’t be allowed to know that individual’s real name, date of birth or physical address. But they will, by inference, be able to draw over time an incredibly intimate portrait of his or her most heartfelt material desires.

BT is, or rather will be, infinitely more valuable to advertisers than their best current tool, contextual advertising – which relies upon careful targeting of web-page content rather than anything known about the disposition of its visitor. Andrew Walmsley, a noted industry expert on the subject, is in no doubt that BT will supplant demographics-based contextual advertising:

We’re still going to see demographics used online, but principally so it can be benchmarked against other media. But, just as we sometimes hear the Fahrenheit temperature given on the weather forecast, it’s really just for the old folks.

His article is, by the way, a useful reminder that not all BT is the same: there are at least six varieties, of varying potency.

So, win-win: bring it on. Except, of course, that BT is deeply invasive of individual privacy. Technically, it relies upon access to an electronic spy – a special kind of cookie – planted in the heart of every individual’s hard-disk drive. Without consent, its exploitation could be considered not only an infringement of the Data Protection Act, but the wider European Human Rights Act. Many civil rights advocates would go further and invoke the shade of George Orwell. Unregulated, information acquired through online tracking could pass into the hands of shady, unlicensed third-party operators – for example, totalitarian-minded apparatchiks or deeply unscrupulous businessmen – with who knows what consequences for our civil liberties.

I come back to Madelin. Who is he? None other than the director general of Information Society and Media, European Commission (EC/INFSO for short). In other words, the senior civil servant in charge of the Brussels bureau concerned, among other things, with reconciling the needs – commerce among them – of the information society and EU civil liberties.

One of Madelin’s unenviable tasks is to act as ringmaster in the interpretation of a new ePrivacy Directive, promulgated in May this year but only fully effective from next spring.

A key bone of contention between the two warring factions he must conciliate – let’s call them “industry” and “civil society”, because that’s what they call themselves – is whether the new legislation actually requires “prior informed consent” being given to any organisations wishing to place or access files stored on a personal computer. And if so, just what definition is placed on the term ‘file’.

An extreme interpretation of these new rules would mean unmitigated triumph for the privacy lobby. Every time a cookie (not all of which are concerned with online tracking, of course) came up, it would have to be accompanied by a pop-up demanding instant consent or denial. Tedious in the extreme for the online user, and disastrous for industry.

The more nuanced civil society position seems to be an “Opt In” choice for the individual user, backed by  statutory legislation, but applicable only to those cookies capable of commercial online tracking.

Not surprisingly industry, whose position has been articulated by the Internet Advertising Bureau and something called EASA (European Advertising Standards Alliance), is having none of this.

It believes the civil society stance is flawed and naive. Specifically, the privacy lobbyists fail to understand that the free advantages we enjoy on the internet these days  – such as email, news, social networking, maps, entertainment – have only come about because they have been subsidised by advertising revenue. In this sense, BT is merely “the next stage” in a process which has been going on for two decades.

Worse, what lurks behind the civil society position is not so much a concern for advancing individual privacy as a profoundly hostile attitude to commerce – which is regarded as sinister and manipulative.

Industry is not arguing there should be no restrictions on BT, merely that they should be – you guessed – minimal and self-regulated; in fact, drawn up on the British ‘voluntary’ model of advertising regulation. It disputes that the “informed consent” required by the new legislation need be “prior”. Hence its adoption of what we might call an “Opt Out” strategy.

Put simply, the industry proposal amounts to a website where consumers can block online tracking by going through a long list of advertisers (those at least signing up to the IAB initiative) and clicking on check boxes. This mechanism will be identified by an icon appearing on sites where commercial tracking technology (particularly third-party cookies) is being used. And promoted along the lines of ‘better technology leads to a better life; but you, the consumer, remain in control’.

There is some doubt – even within the industry camp – that the IAB-devised plan will be enough to turn the trick on its own. Nevertheless, industry is becoming increasingly confident that is has won the day, barring a few concessions.

This confidence was backlit a few months ago by some extraordinary shenanigans in Brussels, when one member of the civil society faction stomped out of a Madelin-chaired committee meeting and subsequently accused Madelin of being “captured by industry“.

What this seems to mean is that Madelin has indeed come down in favour of Opt Out. But there will be a price to pay. It will include an open, independent, audit to which advertisers will have to submit themselves; total transparency (whatever that means, exactly) in their dealings; and an effective consumer tribunal for handling any complaints.

A key voice in all of this will be that of Chris Graham, the UK Information Commissioner and – as former chief executive of the Advertising Standards Authority – something of an expert on how the self-regulatory system works. (Purely coincidentally, the ASA is likely to be the UK  regulator if Opt Out prevails.)

Graham has yet to pronounce ex cathedra on the subject. But the broadly benign texture of his views can be gauged by a visit to the ICO website, where the talk is of the industry facing up to ‘transparency’ and ‘independent audits’.

My understanding is that the advertising industry is being given a few more months’ grace to define its regulatory position satisfactorily. Failing which, Madelin will move down the path to statutory legislation. As can be imagined, every sinew will be stretched to ensure he does not feel the need to do so.

Before leaving this convoluted subject, it might be of passing interest to hear what the punter, rather than self-appointed experts speaking on his behalf, thinks about BT.

Handily, McCann Erickson has just published a relevant piece of research under the McCann Truth Central banner. The study, which quizzed 6,500 people in the US, UK, Hong Kong, Japan, India and Chile, shows that people are indeed concerned about attacks on their personal privacy. But targeted marketing is way down the list of threats, the two principal issues being the security of financial data and the security of personal reputation.

McCann WorldGroup global IQ director Laura Simpson notes that:

65% of people around the world are aware of Web tracking and 44% are aware that marketers use it to determine the interests of consumers. “Many welcome it,” she adds, because they believe there is a fair exchange, including access to promotions and discounts and ads directed at them that are more relevant to their needs.

Then again, as one industry commentator on the article points out, that enthusiasm may be conditioned by poor understanding of how sophisticated BT actually is.

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