Big brother ads don't need to be banned, they just need to be labelled

Most internet users are completely unaware that they are tracked at almost every site they visit and that information gathered at one site is frequently used by a third party company to choose ads seen at another.

When properly regulated and controlled this isn't in itself a cause for concern, but consumers resent that the activity is hidden from them. Perhaps that is why in a recent survey 84% of people (27-page PDF) said it was unacceptable to display ads tailored to what they did on other sites they have visited.

The advertising industry needs to fix the problem, and quick, because regulators are circling.

The UK's Office of Fair Trading pledged in October to investigate behavioural advertising and whether it breaks consumer protection laws. A group of MPs and Lords called for a change in UK law to make it illegal to engage in behavioural advertising without explicit consent.

Europe's former Consumer Affairs Commissioner, Meglena Kuneva, has condemned today's targeting practices and threatened action. "If we fail to see an adequate response to consumers’ concerns on the issue of data collection and profiling, as a regulator, we will not shy away from our duties nor wait for a cataclysm to wake us up," she warned in March.

What is clear is that putting a vague note that hints about what actually happens inside a massive privacy policy that nobody reads is not going to be enough. Advertisers need to go further, and total transparency could satisfy regulators. Crucially, evidence is emerging that such honesty does not, in fact, scare off web users.

The industry seems reluctant to do embrace such transparency. Online advertising trade body the Interactive Advertising Bureau (IAB) has published Good Practice Principles for Online Behavioural Advertising (OBA), but they stop far short of insisting that behaviourally targeted ads be clearly labelled.

The Principles tell site operators to "provide clear and unambiguous notice to users that it collects data for the purposes of OBA". But this is usually contained in dense text in a site's privacy policy. Most visitors never even visit that page, never mind read it all, never mind understand the legal jargon it typically contains.

Is there another way?

There is, and Arizona-based advertising company FetchBack is showing that providing clear labels about how data is used needn't frighten customers away.

In June it started putting an 'Ad info?' link on all of its ads. That leads to a clear explanation of what data it uses and how as well as a big, clear 'opt out' button.

The most important piece of information for site owners and advertisers, though, is this: since it began the labeling, FetchBack's opt out rate has fallen. Fewer people now ask for their data not to be used than did when information about the use of their data was more obscure.

Here is a FetchBack ad for True Religion Brand Jeans. The 'Ad Info?' button is small enough to be unobtrusive, but big enough to be noticed.

The FetchBack link leads to a page which says "Wondering why you saw a display advertisement, provided by Fetchback?" It explains its use of behavioural advertising, it explains what advertiser it is working with, and there's a big button to opt out. Here's an example landing page for another of its advertisers.

So what do some of the bigger players do? Yahoo! and Google engage in a kind of watered-down version of FetchBack's transparency. Each has an 'Ads by Yahoo!' or 'Ads by Google' notice on their adverts, but I don't think this signals clearly to web users that this is a link that should be clicked on to find out about the mechanics of the advert. As a user, I assume these links will take me to Yahoo.com or Google.com or to a page that will tell me how I can get their ads displayed on my site.

Another company has shown that clear ad labeling can not only encourage trust with web users without scaring them off, it can even be turned into a further marketing opportunity.

In an advert on the Times Online website for cycling and running gear seller Wiggle, Criteo used its information button to remind users of what they might like to buy. Here is an excerpt from that ad:

Hover your mouse over the "i" in the corner and you get this:

Click that link and you get a fabulous fusion of privacy protection and marketing:

I love Criteo's approach. My only criticism is that the "i" in the corner of the ad is too subtle. I'd advocate "Ad info" – I'm not sure the question mark that FetchBack adds is necessary. The best wording to balance disclosure and brevity can perhaps be determined by a user study. Perhaps such a study has been carried out already.

A higher-profile innovation is Google's Ads Preferences Manager, which can be reached via the landing page for the "Ads by Google" link.  I suspect that relatively few people use it to set their interests because so few people will click that link. If people don't know that ads are based on their preferences, they won't adjust Google's assumptions.

Advertisers and publishers are unlikely to want to act alone, but the situation is growing urgent. In November, Commissioner Kuneva created a Stakeholder Forum on Fair Data Collection at which publishers, advertisers and ad networks will be asked whether or not consumers are told enough about the collection of data and use of it to profile them.

"Stakeholders should agree on better consumer information when profiles are used. In essence, consumers should be informed that ads are based on their profile," she said.

So what is the answer? It has to be action on an industry-wide basis. The IAB should advise members to put clear links on ads based on behavioural analysis. If the IAB doesn't take action, lawmakers and regulators will, and advertisers would be better off coming up with a solution that works for them rather than one imposed by politicians.

Advertisers and site operators will be worried about a surge in opt-outs. FetchBack shows that it is not inevitable, but even if it happens it is a price worth paying. The rise or fall in opt-outs should not be benchmarked against today's opt-out rate. It should be benchmarked against tomorrow's law. I am confident that the future of behavioural advertising will demand greater transparency than exists today. Right now, the ad industry has some control over that future. If it doesn't exercise it wisely, that control will be lost.

By Struan Robertson, editor of OUT-LAW.COM. The views expressed are Struan's and do not necessarily represent those of Pinsent Masons. You can follow Struan at Twitter.com/struan99.