Thursday, July 22, 2010
IAB Tells Congress that Privacy Bills May Harm Business and Consumers

Testifies on Privacy Legislative Drafts, Champions Industry Self-Regulation, Raises Serious Concerns About Current Proposals

WASHINGTON, D.C. (JULY 22, 2010) — The Interactive Advertising Bureau’s Mike Zaneis, Vice President of Public Policy, testifies before the U.S. Congress today to express the advertising industry’s serious reservations about two legislative proposals that jeopardize the Internet and the interactive advertising that has made possible an explosion of new information, communications and entertainment. On July 19, Illinois Representative Bobby Rush, Chairman of the Subcommittee on Commerce Trade and Consumer Protection, introduced HR 5777, the Best Practices Act. It followed the release of a discussion draft of privacy legislation made last May by U.S. Representatives Rick Boucher, Chairman of the Subcommittee on Communications, Technology, and the Internet, and Cliff Stearns, Ranking Member of the Subcommittee. Today’s hearing covers both proposals.

“The interactive advertising industry has a long and successful history of protecting consumers’ privacy rights through effective self-regulation,” said Mike Zaneis, who applauded Chairman Bobby Rush for recognizing that achievement in his bill. “Given the free content and services that consumers enjoy because of advertising revenue, it is imperative that any new laws be carefully tailored.”

“We look forward to working with Congress to ensure we strike the right balance and avoid unintended consequences,” said Zaneis. “But we are concerned that, as currently drafted, both proposals would unduly hinder online advertising and the Internet, which are dynamic engines of innovation and job creation in the U.S. economy.”

Randall Rothenberg, President and CEO, IAB, said: “These legislative proposals highlight the critical role the Internet plays in the economy and in transforming consumers’ experience of information and entertainment. However, they both still threaten to seriously impact—and even shut down—a multitude of products and services that consumers have come to depend on in their daily lives.” A full copy of today’s IAB testimony is available at: http://www.iab.net/media/file/Zaneis_ConsumerProtectionSubcommittee.pdf

Specifically, the IAB supports: 

  • Chairman Rush recognizes the value and importance of strong industry self-regulation. HR 5777 creates a safe harbor for companies participating in self-regulatory programs and the IAB stands ready to work with the Chairman and staff to ensure the hard work of the Federal Trade Commission (FTC) and the industry in this area is accurately incorporated into this provision.
  • HR 5777 recognizes the need for flexibility in the way consumers receive notice about data collection practices. The IAB supports an approach that allows for innovation in this area to determine the most effective means of providing information to consumers.

Specifically, the IAB opposes:

  • HR 5777 contains provisions that would interfere with the relationship between first-party publishers and their customers. First party data practices should be exempt from opt out requirements, similar to the approach the FTC has taken.
  • Legislation should follow the FTC and self-regulatory framework to third-party data transfers, providing an opt-out standard, not an unworkable opt-in approach.
  • The scope of “sensitive data” in these proposals is overly broad. This approach could constrain multicultural marketing and media. Certain websites that cater to these audiences would be unable to customize content or even advertise on behalf of the agencies that place ads on their sites. These types of services provide great benefits to their audiences and the proposed restrictions would actually harm the very group of people they seek to protect.

According to a groundbreaking study commissioned by the IAB in 2009 and conducted by Harvard Business School Professors John Deighton and John Quelch, the advertising-supported Internet is responsible for $300 billion of economic activity in the U.S and represents 2.1% of the total U.S. gross domestic product. In addition, the advertising-supported Internet directly employs more than 1.2 million Americans with above-average wages in jobs that did not exist two decades ago. Another 1.9 million people work to support those jobs. In an IAB survey of ad agencies conducted earlier this year, we found that 80% or more of digital advertising campaigns were touched by behavioral targeting in some way. The creation of new data restrictions could negatively impact the vast majority of the interactive advertising marketplace.

The IAB has taken a lead role in an ongoing, industry-wide effort designed to develop robust and effective self-regulation of online behavioral advertising practices. In July 2009, the IAB joined the nation's largest media and marketing trade associations—the American Association of Advertising Agencies (4A’s), the Association of National Advertisers (ANA), the Direct Marketing Association (DMA) and the Council of Better Business Bureaus (BBB)—to  issue Self-Regulatory Principles for Online Behavioral Advertising that protect consumer privacy in ad-supported interactive media.

As soon as the Principles were made public, FTC Commissioner Pamela Jones Harbour said, “I am gratified that a group of influential associations—representing a significant component of the Internet community—has responded to so many of the privacy concerns raised by my colleagues and myself. These associations have invested substantial efforts to actually deliver a draft set of privacy principles, which have the potential to dramatically advance the cause of consumer privacy. I commend these organizations for taking this important first step.” FTC Chair Jon Leibowitz praised the initiative as well: “Behavioral advertising raises a number of serious privacy concerns, and these guidelines are a direct response to the call by the FTC and consumer groups for improved practices, including increased transparency and consumer control over the collection and use of data.”

The coalition’s Education Principle calls for organizations to participate in efforts to educate consumers and businesses about online behavioral advertising. In December 2009, the IAB launched “Privacy Matters,” the interactive advertising industry’s first educational campaign about online privacy. The campaign has already delivered nearly half a billion online impressions, all donated by a broad cross-section of media outlets.

About the IAB:
The Interactive Advertising Bureau (IAB) is comprised of more than 460 leading media and technology companies who are responsible for selling 86% of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive advertising marketplace, of interactive’s share of total marketing spend, and of its members’ share of total marketing spend. The IAB educates marketers, agencies, media companies and the wider business community about the value of interactive advertising. Working with its member companies, the IAB evaluates and recommends standards and practices and fields critical research on interactive advertising. Founded in 1996, the IAB is headquartered in New York City with a Public Policy office in Washington, D.C.  For more information, please visit www.iab.net.

IAB Contact:
Shira Orbach
Marketing & PR Coordinator
212-380-4736
[email protected]