In Perspective – Consumers Are Very Pragmatic about Relevant Ads Online, It’s Unfortunate Mozilla Isn’t

April 23, 2013

The Digital Advertising Alliance (DAA) strongly believes that providing consumers with transparency and choice are fundamental to Internet privacy protections.  For more than a year, we’ve been providing both transparency and choice in our “Advertising Option” icon program that brings this awareness – 1 trillion times a month – to all corners of the Internet, as it seeks to explain how interest-based ads are served, and the choices consumers have for limiting data collection and use.

 

As it turns out, consumers are very pragmatic about the ad-funded Internet. Their concerns regarding online behavioral profiling for the purpose of serving relevant ads is measured – and is very much lower in context to other privacy concerns regarding digital media. Such is one of the conclusions of a recent Zogby poll we commissioned in early April to gauge American sentiment (see graphic).

Consumer pragmatism will be part of our message this coming week when we testify in Congress regarding the well-established success of our Self-Regulation Principles and Program for Online Behavioral Advertising.

 

We also are relying in part on our most recent polling data, as we navigate recent announcement of technology – by Mozilla – that seeks to block all third-party cookies. Cookies are one of the cornerstone technologies used to serve relevant ads online. Mozilla’s action prompted a response by the head of the Online Publishers Association that seemed to say – so what, Mozilla, there would be no impact on premium publishers and advertisers – but that response chooses to overlook the risk of undercutting the ad-funded, relevant Internet experience from which consumers, advertisers and – yes – even publishers benefit.

 

Interest-based ads – which are generated using third-party cookies – are particularly valuable for publishers and content providers, large and small, because they generate more value for consumers, publishers and service providers alike. Users click on interest-based ads more than twice as much as other forms of display ads, because they reflect user interests. And, this increase in the value of advertising increases the revenue for sites.

 

Perhaps equally as significant, blocking third-party cookies effectively demonizes a useful technology under the veil of privacy – and against the wishes of most consumers (see graphic). Cookies are used for frequency capping, data theft protection, shopping cart functionality, analytics, and, yes, to help advertisers, publishers and service providers grow on the Net.  Established publishers and up-and-comers all use this remarkable, flexible technology to serve consumer interests.

By the way, even the Federal Trade Commission -which has led the government’s effort to strengthen consumer privacy on the Internet -has never recommended something as drastic as what Mozilla is doing. In all of its reports on the subject of third-party cookies, the FTC has recommended tools which do not pick technological winners and losers, but treat technologies neutrally.

 

Online publishers, for one, have built their online businesses by using cookies and digital advertising networks. They have done so by attracting advertising through increased accountability for advertising. Third-party cookies are an essential component of advertising accountability —an economic engine that powers the Internet.  Third-party cookies not only help deliver relevant advertising, they are the fundamental technology used to deliver and measure all online ads.   

 

Without third-party advertising and advertising technologies, advertisers will be forced to concentrate their buys with large players.  This creates a very uneven playing field – a field with restricted access for small- and mid-size publishers.  The unintended consequence of this direction is that consumers will lose.  The absence of third-party technologies will deliver an online experience that has less relevant ads, which many have called “spam”.

 

Today’s diverse advertising ecosystem funds the Internet, levels the playing field and promotes healthy competition.  Needless changes to the current paradigm obscures choice, enables industry sector power grabs, and undermines online advertising which has sustained unprecedented Internet growth.  While it may not “break” the Internet, Mozilla’s approach will certainly alter what has become the preferred user experience, decrease consumer choice, and change the way commerce is conducted online.  These changes will have broad ecosystem effects – influencing the business and financial operations of small and big publishers and service providers. Further, making cookies look like the bad guys in this narrative may actually be counterproductive to managing real threats such as malware, viruses, and other growing consumer dangers such as identity theft and other issues that are much higher on consumers’ minds, and rightly so.

 

Mozilla’s decision to block third-party cookies will jolt the system and harm key players, including smaller brands and start-ups.  DAA knows this because we speak for the entire ecosystem including publishers, agencies and advertisers.  We do so through a highly focused, highly disciplined and extraordinarily effective self-regulatory system. Our approach to self-regulation works because it appropriately balances the desires of consumers to find relevance in the ad-funded Internet and the need to be transparent about the responsible data collection practices which fuel that relevance. The DAA’s AdChoices program provides transparency and choice at a rate of 1 trillion times per month, and allows users to opt-out of third-party, interest-based ads on a company-by-company or across-the-board basis.  The decision by Mozilla to essentially eliminate third-party cookies undermines a successful self-regulatory DAA program that has been praised by both the White House and the Federal Trade Commission.

Those who want a free and innovative Internet that provides consumer transparency and choice should focus on providing tools that enhance the user experience. Let’s continue to advance transparent, on-demand consumer control – and not issue blanket policies that usurp consumer choice and arbitrarily pick marketplace winners and losers.  By contrast, the DAA program allows users to choose how and whether they receive third-party-supported ads, and offers the same experience for users of all browsers, including Mozilla’s.  And, unlike Mozilla’s approach, users’ choices are actually backed up by enforcement.  We believe that the DAA program is exactly the ecosystem-wide approach that the Internet needs – and American consumers want (see graphic).  

We should have a responsible industry wide conversation that spurs innovation, creativity and creates winners on all sides – most especially, our consumers and their expectations of an Internet that continues to be vibrant, transparent and ad-supported.

 

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