Five Minutes With: Marc Roth on Mobile Tracking, Compliance, and Self-Regulation

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Marc Roth
Marc Roth

What are the biggest opportunities & challenges in mobile tracking and targeting for next 1-2 years?

Mobile tracking provides advertisers and marketers with extraordinary information about how and where consumers shop, travel and spend leisure time.  This information can be extremely powerful when developing a targeted consumer campaign since ads and messaging can be tailored to individual's specific needs and interests, not to mention the real-time delivery of the perfect message at the perfect time.  But with such benefits come pitfalls and risks, such as violating consumer privacy by collecting information without their knowledge and using the information to develop individual profiles and draw conclusions based on where consumers go, how long they stay, and where they continue on.

In addition to privacy advocates that claim that these collection practices and uses of information are inherently unfair and at a minimum may only be conducted with express affirmative consumer opt-in, regulators such as the FTC have an interest in how these technologies work and ensuring that consumers know that they are being tracked and how collected information is used.  There is no doubt that the combination of emerging and more refined technology with advertisers' insatiable appetite for data will continue to clash with consumer and regulatory privacy concerns.

Explain the recent FTC settlement with InMobi? At what point do you think the company went wrong?

The FTC charged InMobi with engaging in deceptive data collection practices and violating the Children's Online Privacy Protection Act by tracking hundreds of millions of consumers without their knowledge. Specifically, the FTC charged InMobi with stating that its advertising software would only track consumer's locations after they had opted-in to such tracking and in accordance with their device's privacy settings.  In fact, the FTC charged, the company tracked consumers' locations whether or not they opted-in, and even where tracking permission was denied.

At its core, this was a traditional FTC deception case since the agency charged InMobi with misrepresenting its data collection capabilities and practices.  If the company had been truthful and transparent about what it was doing in a meaningful way, such as disclosing that it would track consumers' devices regardless of whether or not they opted-in, it is questionable whether the case would have been brought under a deception theory, though the COPPA allegation would have still applied. FTC lesson 101:  If you make a public statement about your privacy practices and policies, ensure it is accurate, and live by it.

What's the hardest thing to educate clients about when it comes to mobile tracking?

Having them understand that the benefits of tracking comes with significant risks.  There is so much pressure on advertisers to reach consumers as efficiently and effectively as possible.  Geo-location information provides advertisers with rich, valuable and accurate information about consumers since the data is based on actual consumer behavior rather than self-reporting   responses to surveys.  As the long-standing direct marketing adage goes, “the data don't lie.”

When clients see the power and value of this information, they often times become blind to the risks.  Companies that don't have in-house legal or compliance departments effectively don't have a built-in watch dog to ensure that legal concerns are being identified and addressed. This is where companies get in trouble.  Before engaging in any data collection and use practices that may in any way raise questions about consumer knowledge and expectations, companies need to consult with counsel well versed in these areas.

What are some unmet needs in the mobile marketing landscape?

As a start:  industry education, best practices and self-regulation.  As new marketing channels emerge and mature, it is incumbent upon market leaders to ensure that the entire ecosystem complies with basic consumer protection principles such as transparency and fairness to consumers. Ignoring these issues will inevitably lead to regulator inquiry, or worse, class action law suits that result in multi-million dollar settlements and verdicts, or bankruptcy for smaller companies incapable of assuming crushing legal fees in defending such actions.

In the absence of laws and regulations that are directly applicable to mobile tracking, industry leaders need to identify what issues are raised by the channel and develop best practices for its members.  Engaging with regulators such as the FTC and the privacy offices of state Attorneys General will also provide important insights as to how the practices are viewed by those across the table.  Many established and mature marketing organizations, such as the DMA and ERA, have benefitted from developing best practices, setting up self-regulatory review and enforcement processes, and engaging with regulators.

How do you view the future of mobile tracking from a legal perspective?

One fact is certain: technology will continue to grow and outpace laws exponentially. Tracking ability will become more robust and ubiquitous.  Huge amounts of data from various passive and active sources will be combined to form incredibly precise and detailed consumer profiles.  And, if conducted in full transparency to consumers, all of this can be accomplished legally.  As consumers continue to use and carry their mobile devices everywhere they go, the mobile tracking, and by extension, mobile ad serving industry will explode over the next year and beyond.

Its viability and recognition as a legitimate marketing channel will depend largely on how serious the industry adopts compliance measures and appreciates the risks associated with offending consumer and regulator sensitivities.

Marc Roth, partner in the Advertising, Marketing & Media division of law firm Manatt, Phelps & Phillips, LLP

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