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FTC studies technology, privacy issues

WASHINGTON — As the sophistication of online marketing techniques escalates, marketers must be more sensitive than ever to consumer concerns.

That was a finding from a panel at “Protecting Consumers in the Next Tech-ade,” a Federal Trade Commission public hearing held here Nov. 6-8 at George Washington University. The conference examined the technological and business developments that will shape consumers’ experiences in the coming 10 years.

“The [online] medium allows for a greater opportunity for the consumer to remain anonymous, and we must, I repeat must, respect this,” said Jennifer Barrett, global privacy officer of database marketing firm Acxiom, Little Rock, AR. “The medium also offers risks such as spyware or other clandestine activities that the consumer may be unaware of. Consumers can also be flooded with spam because it is inexpensive to send. These issues have to be dealt with for the marketers in the online world to enjoy some of the benefits that marketers in the offline world have enjoyed for many years.”

The marketing and advertising panel Ms. Barrett spoke on was moderated by Brian Weiser, director of industry analysis at MAGNA Global USA, a media services firm that works on behalf of Interpublic Group of Companies’ media specialists, including Universal McCann and Initiative Media.

The panel also included Direct Marketing Association president/CEO John A. Greco, who said that to protect consumers “we need to determine from what we want to protect them beyond the areas upon which everyone agrees.” He urged reaching a consensus on issues in the areas of identify theft, fraud and child exploitation.

So, how can consumer trust be kept? Adhere to the same principles preached offline, Ms. Barrett said.

“This means data collection should be appropriate for the use to which it is put,” she said. “If the data is being shared with other parties or used for other purposes, it must be disclosed. The consumer should have some easy to execute choices regarding the use of their data and the sharing, and the information should be appropriately safeguarded against loss and unauthorized use.”

Ms. Barrett said the FTC has championed these principles for years, as have trade associations like the DMA, yet “the next decade will see more sophisticated integrated marketing programs. And it is my belief that some companies will fail — not because of the technology or the use of data, but because they don’t maintain the trust of the consumer. The companies that will succeed will be those that use data responsibly, respect consumers who desire to remain anonymous … and safeguard the data properly.”

Dave Morgan, founder and chairman of Tacoda Inc., a behavioral targeting and ad network based in New York, also discussed privacy. His company is working with industry trade groups to better codify best practices as they relate to privacy, such as requiring that companies use only anonymous information and make disclosures involving the use of cookies, he said.

Behavioral targeting lets advertisers and marketers use analysis of anonymous Web browsing behavior to tailor messages to specific audiences more precisely.

But Marcia Hoffmann, staff attorney for The Electronic Frontier Foundation, said it is inevitable that as more data are collected about consumers by advertisers, marketers will benefit and there will be fewer market incentives to protect the privacy of consumers.

“Consumers need to be empowered to make their own choices in terms of how their data is used,” she said.

FTC commissioner J. Thomas Rosch spoke on the panel via a video feed. He expressed concern about consumer privacy and data security given the new technologies available to them.

“Things like chat rooms, message boards, blogs and social networking sites have all affected the way people communicate with each other and share thoughts,” Mr. Rosch said. “Broadband and high-speed Internet access allow people to share digital photographs and videos to an extent and in ways that were almost unimaginable almost 15 years ago. But these technology advances might come with a price tag: privacy implications and copyright issues, just to name a few.”

Mr. Rosch said the FTC is eyeing these technologies and monitoring companies engaging in things like Internet fraud and deception and privacy and data security, even though this means new challenges for the agency.

“Last but not least, it’s important to realize that these consumer protection issues will be best addressed by self-regulatory initiatives or by private sector initiatives,” he said.

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