The Internet advertising industry appears to be in denial about the growing momentum behind Internet privacy — and it should start to prepare for more protection of data through global privacy legislation.
As I noted last week, the European Union is moving toward privacy policies, most notably with the “cookie directive” which would require all advertisers to obtain opt-in to place cookies in user browsers. In addition, we are in the early stages of new privacy legislation in the United States which would introduce tighter Internet privacy.
All of these powerful new regulations are likely to put signficant pressure on Internet media, most notably the ecosystem of ad networks and data exchanges.
“Ad networks, data providers, and behavioral advertising companies should be worried,” says Mark Kapczynski, CEO of Kontrol Media, an advisory firm for technology and interactive media companies. “They are definitely in denial. If [the cookie directive] happens in the U.S., all of the behavioral advertising and ad networks will struggle.”
Lawyers appear to concur. A number of law firms have issued briefs in the past few months as the EU efforts have picked up steam.
“U.S. companies should watch for regulatory and technical developments in response to the EU Directive’s restrictions on ‘cookies,’ says a law brief issued earlier in the year by Amy Worlton at Wiley Rein LLP.
Some sort of global “cookie directive” could have a massive impact on the online ad market. Right now, the online ad market is a free-for-all in which dozens ad networks and the many ad data exchanges such as BlueKai, Exelate, and others can exchange transparent data on Internet users which is retrieved from cookies which can pretty much be implanted in any browser that cruises the Internet.
The introduction of stricter cookies laws and more privacy would instantly shrink this market for data, withdrawing data from millions of Internet users from the market. With data being the fuel that drives this market, it could be severely hampered overnight.
Here are just several moves lately that should have ad data players worried:
The European Union group called “Article 29 Working Party” has introduced new privacy rules, including Article 5(3), the “Cookie Directive” which will require all advertising companies to obtain opt-in from consumers to insert a tracking cookie on their browser.
The U.S. Senate is putting together a new Internet privacy bill. Who knew?
U.S. Lawmakers Ed Markey (D-Mass.) and Joe Barton (R-Texas) have been issuing statements expressing “concern” about Internet privacy. Both of them are behind the new drumbeat in Washington to introduce new privacy legislation.
Bottom line: Big changes are likely coming in Internet privacy. The Internet media business, interactive agencies, and behavioral advertising companies had better start paying attention.