FTC: Policing online ads is 'daunting task'

Commissioner J. Thomas Rosch predicted that the next decade will bring concerns the FTC could never have foreseen in the early 1970s, when the agency made it a top priority to clamp down on pitches laced with false or unsubstantiated claims.

"Monitoring advertising and marketing is a bread-and-butter investigative technique used by FTC staff," Rosch, who was sworn in as a commissioner in January, said at the second day of FTC hearings here on Internet consumer challenges. "In a growing media universe, that's a daunting task."

Federal regulators won't shy away from using their existing law enforcement powers on Internet Age rule breakers, but companies also have an important role to play, Rosch said.

"Some of these emerging consumer protection issues will best be addressed through self-regulatory initiatives or by private-sector participation in our educational efforts," Rosch said, echoing the hands-off sentiments voiced by FTC Chairman Deborah Platt Majoras during her opening remarks Monday.

The FTC is in the midst of a three-day series of public hearings, called "Protecting Consumers in the Next Tech-Ade," at George Washington University.

Rosch's remarks, delivered via a video feed, preceded a 90-minute panel focused on advertising and marketing techniques of the future. Representatives from advertising and marketing firms expressed agreement on one thing: Companies will be seeking increasingly sophisticated ways of getting their messages across, and techniques like behavioral targeting will grow in sophistication.

Advocates of behavioral targeting say the technique enables advertisers and marketers to use analysis of "anonymous" Web-browsing behavior to more precisely tailor messages to specific audiences.

"For example, if you buy a car, in the (following) 10 days, you might receive a lot of automotive ads," said Dave Morgan, founder and chairman of Tacoda, a New York-based company that specializes in profiling Web users so that online companies can theoretically target ads more efficiently.

But skeptics fear that the ability for companies to compile detailed profiles of consumers, regardless of whether they contain what would traditionally be considered "personally identifiable information," presents privacy concerns.

Two advocacy groups late last week asked the FTC to study that issue and to develop sweeping new rules requiring companies to obtain explicit consumer consent before collecting any information about them. Last fall, a family advocacy group asked the agency to investigate the practices of nontraditional buzz and word-of-mouth marketers that don't always readily identify the company for whom they're working.

"All of the market incentives go toward collecting that data and analyzing it to the greatest capability, but there are few market incentives to actually protect consumer privacy," said Marcia Hofmann, staff attorney at the Electronic Frontier Foundation, which did not participate in last week's FTC complaint. "Consumers need to be empowered to make their own choices, in terms of how marketing comes to them."

As the sophistication of online-marketing techniques escalates, companies will have to be more sensitive than ever to consumer concerns, said Jennifer Barrett, global privacy officer at Acxiom. Considered the world's largest repository of consumer data, the company drew widespread scrutiny when a spammer in 2003 managed to download more than a billion customer records from its servers.

"The companies that succeed will be those who use data responsibly, protect consumers who want to be anonymous, provide consumers choices about uses of their data and safeguard data appropriately," Barrett said.