FTC “No Track” Impact on Affiliate Marketing

Last week I had the privilege of sitting in on a discussion hosted by the Performance Marketing Association (PMA), regarding the recent FTC’s “Do Not Track” Proposal.  I was very impressed by the number of experienced and articulate individuals present in the discussion, and it certainly gave me several things to ponder over for the rest of the afternoon.

It seems that a majority on the call believed these new regulations are highly influenced by recent European regulations, and though I believe there are other domestic players involved, it does seem to be a timely answer to European rulings.  However, United States commerce is fundamentally different to these smaller, less capitalistic economies, and I believe the FTC will see the value of tracking users for the advancement of research, content, news, and even entertainment (the sole income for most of these web entities being advertising).

I don’t think the FTC is really targeting the affiliate marketing industry specifically.  Rather, they are interested in preventing those that control some of the largest distribution channels from mining data and selling it as behavioral user data.  Most user tracking actually makes everything simpler for the user, allowing them to easily navigate between webapps, view enormous bodies of content at no cost, and experience entertainment on demand, which is why a “no track” plugin on a web browser will frustrate users more than protect them.  The FTC is really more concerned about the abuse of behavioral advertising, the sort of data that is sold for the ability to trick users or even steal identities, and I agree that we need to improve regulation to prevent this.

Below I have included a copy of the 7 major areas which the PMA will question/challenge in a response to the FTC. (Minutes compiled by Rebecca Madigan, PMA Executive Director)

1.  Handling of legacy data: the duration of an acceptable archive period, opt-ins regarding storage of data, reasonableness of proposed data security practices

2.  Aggregation of data: 3rd party combining of multiple consumer profiles for behavioral targeting, data passing via APIs

3.  Do-Not-Track options for consumers: viability of the extent of ‘Do-Not-Track’ options, impediments to quality of service and fraud detection

4.  Machine-readable privacy policies: the burden to businesses, particularly small businesses

5.  Designation of affiliates and commonly accepted practices of data collection: viability of consumer opt-in of affiliate links and data sharing with merchants

6.  Anonymity/uniqueness of data versus personally identifiable information (PII): protect information required for cookies, and draw a clear distinction between unique identifiers and PII

7.  Deep packet inspection: giving consumers opt-out capabilities will limit ability to detect fraud (particularly malware and worms)

Next Steps

Why am I writing about this?  For you to get involved.  The PMA is setting up an ongoing discussion group that will tackle some of these issues.  PMA members are urged to examine Exhibit A of the FTC’s proposal to better identify areas of dispute, and these comments will be presented at the PMA Member Meeting on January 10th by Sarah de Diego, taking place at Affiliate Summit West, Las Vegas.  A formal response will be submitted to the FTC before the deadline of January 31, 2011.

What can you do?

If you are already a member of the PMA, please make sure you get involved in this discussion by offering your input.  It not only impacts how the government might possibly regulate our industry, but it may also impact new directions your business should consider for the long term.  If you are not a member, please feel free to email info@hasoffers.com with any input you have on the FTC’s proposal, and we will be sure to include your voice in our discussions.  We value your input because HasOffers is here to help you continue growing your business.

You can read more about this on the PMA blog or in an recent article found on Revenews.com.

Lucas Brown
http://www.HasOffers.com

As the President and Chief Product Officer of HasOffers, the industry leading affiliate tracking software, Lucas specializes in performance based online advertising and has dedicated himself to the development of new and innovative technologies to support this quickly growing revenue model.

  • http://www.lazyprofits.com/ Craig Snyder

    Getting people to install this “opt-out toolbar” isn’t going to be easy even if this thing comes into motion. I don’t see it happening.

    • http://www.hasoffers.com Peter

      I agree that it will be difficult. However, we already know that Microsoft plans to incorporate this toolbar into the next release of IE.

  • JJ

    Thanks, informative. I think the measures seem aimed toward preventing the precedent for a Big Brother approach to governing internet use. Our system of law is all based on what we allowed previously and how it logically applies to the situation at hand. Any time you open the door to regulations or lack of regulations that allow the brilliant to exploit people using long term strategies that are subtle, its important for the government to use their understanding of our legal system to prevent it from happening.

  • Brad White

    Ultimately, what the government wants to do is tax. They create a “regulation” around a “risk” and then insert themselves into a position to tax. The fact is that behavioral data has already gotten to the “six degrees from Kevin Bacon” phenomena. Companies like X+1 have enough data that they can correlate anyone’s data to who they actually are. They may “anonymize” the data, but if you know the person is male, 18-34, lives in 90210, drives a hummer, has an HHI of 50K+, and is married, you can figure out who they are.

    With television, people know that they must endure advertising for the ability to watch television for “free” (DVR is a separate conversation). With internet technology, people enjoy websites like CNN.com in exchange for being advertised to. Behavioral data is an important part of optimizing the experience to the person. In this regard, it is the same and companies should be able to advertise effectively to keep their doors open. Where we get off track is when one behavior reduces “speculation” and people are being monetized “in between.” If your data is being bought and sold as it is with RTB and other data collection and optimization platforms, then the person should A. know; B. have a central source to turn the targeting on or off (government); and C. have a cut of the $$. They are not exchanging a service, entertainment, for the right to advertise to them from site to site. This is where the government can tax and the person would benefit.

  • http://www.bodypiercingsafe.com Russ

    Alot of this sounds like a ‘privacy policy’. I believe this FCC business will insulate the big guys as it progresses. And savvy marketers will find a way in the electronic universe. This will be revised more as it moves forward. Sad to say gov does not do a good job of industry creation. They simply regulate it. Maybe between the PMA reps and gov reps there will be some form of positive outcome that gives them a piece of what they want and allows some smooth transition to take place. Although the ‘devil is usually in the details.’ This will be interesting.

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