By Ed Kats | President
While not ideal, DNT legislation could foster improved media integration
Proposed do-not-track (DNT) legislation will create numerous barriers for advertisers, brands and agencies. The ability to track consumers’ online purchasing habits and deliver targeted ads based on data collected is a cornerstone of e-commerce.
DNT legislation will make online ads less relevant, forcing potentially unforeseeable changes — not to mention increased costs — into the digital ecosystem. This will adversely affect consumers’ online experiences in a manner few proponents are willing to admit.
Despite these issues, the enactment of DNT legislation will not destroy online advertising.
While we do not wish to see this legislation passed we believe it would force marketers to be more creative in their campaigns. It may foster the development of closer connections and opt-ins between brands and consumers. This, in turn, will deliver more detailed customer data and more successful purchase paths.
Numerous products and services exist that help agencies and advertisers target consumers and collect publicly available data. If advertisers are compelled to collect that information offline (as would be the case if DNT legislation is passed), those capabilities will still remain.
The two behemoths of online advertising — Google and Facebook — offer examples of how DNT legislation could imperil future growth and innovation of online advertising but won’t dampen the industry’s prospects.
Google’s bread-and-butter of search and its emerging display network are being augmented by new forms of digital media integration. Google’s goal of combining publicly available consumer data from its Google+ social network with users’ search terms to deliver more targeted and relevant searches is delivering richer search results that benefit consumers.
Likewise, Facebook allows marketers to segment their ads based on the content users place on the social network via its “Sponsored Stories” ads.
These companies have built their businesses and are planning for growth around the ability to track consumers’ online behaviors. It is unlikely they will sit idle while legislators try to rewire online advertising.
If DNT legislation is passed, the focus of online marketing will shift to consumers’ direct and personal interactions with brands. It will require a reassessment by brands of their online marketing efforts but it won’t kill online advertising. New technology will emerge, enabling marketers to better target consumers with or without online tracking capabilities.
An industry that generates $31 billion in annual revenue is well positioned to adapt should anti-tracking legislation be passed. Digital marketers should respect, not fear, calls for DNT.
Take the recent well-publicized example from The Wall Street Journal of online travel booking company Orbitz targeting Mac users with higher-priced hotel listings than similar searches made on PCs. While skeptics may complain that it’s an unfair form of targeting — going after the seemingly higher end Mac users — Mac users quoted by The Journal indicated they found the concept “clever” and savvy.
Without the ability to track consumers’ online purchasing habits, the very nature of online commerce will need to evolve. While consumer advocate groups and some lawmakers may not be fans of online tracking, the fact remains that consumers largely do not seem to care and when they do have the ability the opt out. According to a 2011 article on PaidContent.org, less than 1 percent of users of Firefox 4 have adopted the browser’s DNT option.
This point is further solidified by an apparent softening of its viewpoint on the effects of online tracking by the Federal Trade Commission. Recently, J. Thomas Rosch, an FTC commissioner, blasted Microsoft’s attempt to make do-no-track the default setting of its IE8 browser. He lent his support to the online advertising community’s assertion that the feature departs from industry consensus and limits consumer choice.
DNT legislation isn’t ideal but it won’t kill online advertising.