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Featured Post | Perspectives | Policy

The Midterms are over: Sizing up what it means for big tech

For the last two years, Congress has increasingly focused on big tech platforms. Lawmakers have summoned executives, consumer advocates, and academics for hearings on consumer privacy, market dominance, data breach scandals and perceived political bias. However, with the exception of a bill to amend Section 230 of the Communications Decency Act to clarify  companies’ liability for facilitating  sex trafficking on their sites, Congress has not yet moved significant legislation to regulate the tech industry.

Some are wondering whether a new Democratic majority in the House means Congress will start legislating, particularly with the President saying that he is interested in discussing with Democrats whether or how to regulate the technology industry. Let’s take a look at how the 2018 midterm election results might impact a few high-profile tech issues.

Market Dominance of Big Platforms

Even before the elections, Democrats and Republicans raised concerns about the outsized influence of Google, Facebook, and Amazon – albeit for different reasons. Many Democrats are concerned about the data surveillance business models of big tech companies. Republicans, on the other hand, distrust social media algorithms, which they believe favor liberal points of view over conservative voices.

I expect both parties’ concerns will only grow, especially as we get closer to the 2020 Presidential election. And those concerns might fuel action on other issues. Congress is not likely to do anything to directly address the dominance of the big technology platforms. The expectation is that the Department of Justice and the Federal Trade Commission will work with Congress to provide guidance on what, if anything, lawmakers should do. Thus far, discussions have focused on how various digital business models function and what remedies or regulations would be needed to enhance consumer experiences.

Net Neutrality

Over the past decade, Congress and the Federal Communications Commission (FCC) have been bickering about net neutrality without final resolution. Most recently, the Republican-controlled FCC rolled back net neutrality regulations promulgated by President Obama’s FCC.

With Democrats set to take the reins in the House, they are more likely to move a bill to reinstate those Obama-era net neutrality rules. But the Republican-controlled Senate is likely to completely ignore any bill sent over by the House. That dynamic could change if the courts rule on the pending challenges to the FCC’s rollback. Until the incessant shouting stops, this is likely an insular technology discussion and fodder for future campaigns.

Consumer Privacy

Congress has held dozens of hearings on consumer privacy over the years. This year was no different. However, the tone of the conversation has changed dramatically just in the past few months. As mentioned before, many Democrats have long advocated for a consumer privacy bill of rights, saying that Congress needs to step in to protect consumers. Now, a few key Republicans agree. Many in the industry are calling for the same as the California Consumer Privacy Act and the EU’s General Data Protection Regulation go into effect.

Just last month, Senate Commerce Committee Chairman John Thune (R-SD) stated, “It is increasingly clear that industry self regulation in this area is not sufficient.” Clearly momentum was building on this issue before the midterm elections and there is reason to believe it will continue. Senator Thune is likely to move into a leadership position in the Senate, thus relinquishing his position as Chairman of the Senate Commerce Committee.

However, the next likely chairman is Senator Roger Wicker (R-MS), who signed a bipartisan letter with three other key senators in September saying they want to work with the Administration to “provide consumers with more transparency and control over the collection and use of (consumers’) personal data while preserving the innovation at the heart of the internet.” The House Energy and Commerce Committee is likely to be chaired by Representative Frank Pallone (D-NJ), who included consumer privacy legislation on his agenda for 2019. On top of that, a host of other policymakers, including Senators Wyden (D-OR), Blumenthal (D-CT), and Markey (D-MA), have recently introduced their own legislative proposals. Comprehensive consumer privacy legislation appears to have early bipartisan and bicameral support.

All that said, our nations’ founders intentionally made it difficult to pass legislation. And, 2019 will be no different. For any meaningful legislation to advance through both chambers of Congress, Democrats and Republicans will have to put aside partisan differences long enough to find middle ground. That will be hard for elected officials to do in the current highly polarized political environment. Odds-makers would say the chances are slim that Congress can enact comprehensive consumer privacy legislation, but it’s got a better chance than most.

Featured Post | Perspectives | Policy

Has Google outgrown democracy?

Last week, the Senate Intelligence Committee held a hearing to examine the extent to which foreign actors manipulated digital platforms to meddle in the 2016 elections. To their credit, Committee Chairman Richard Burr (R-NC) and Ranking Member Mark Warner (D-VA) side-stepped the partisan wrangling and focused on how these bad actors attempted to undermine our democracy. And, for the first time, Senators Burr and Warner insisted the top executives from the big tech platforms testify in person. Given the dysfunctional state of the American political discourse, it’s especially remarkable that a group of Senators agreed to tackle an issue in a bipartisan fashion. Facebook agreed to send COO Sheryl Sandberg (Facebook CEO Mark Zuckerberg already testified in the spring). Twitter sent its CEO, Jack Dorsey. Remarkably Google declined to send Alphabet CEO Larry Page.

It’s anyone’s guess as to why Google didn’t feel it needed to participate. Its dominant role in the distribution and monetization of content, through its search and advertising platforms respectively, certainly would have been relevant to the Committee’s work. And that is before you even get to YouTube, which helped make Russia Today its #2 news property through much of 2017 and spread of misinformation in Chemnitz last week. Google certainly has enough lobbyists on retainer to fully prepare. Whatever the reason, the fact that “declining” was even an option demonstrates just how big Google has become.

Data Wars

One area not well understood in Washington is the relationship between data collection and the incentives that allow foreign actors to manipulate them. Damian Collins, the Tory MP of UK Parliament, has led a brilliant multi-party effort to document its findings in this area. Other policy experts have also begun to explore how data protection may help curb disinformation.

Again, this is where Google’s role as the company that collects enormous amounts of data on the public needs to be more clearly explored. A few weeks ago, we distributed research entitled Google Data Collection, by Vanderbilt Professor Douglas Schmidt which, for the first time, cataloged the expansiveness of Google’s data collection machine. Google owns the #1 browser (Chrome), the #1 mobile platform (Android), and the #1 search engine (Google Search). On top of that, Google’s analytics and advertising tools are impossible for consumers or publishers to avoid. All of these touchpoints allow Google to conduct a massive surveillance operation on consumers who have no way to avoid it.

Professor Schmidt’s research shows that a dormant, stationary Android phone (with the Chrome browser active in the background) communicated location information to Google 340 times during a 24-hour period. That’s an average of 14 data communications per hour – with location information constituting 35% of all the data samples sent to Google.

When an iOS device was running Safari in the background, but not Chrome, Google could not collect any appreciable data unless a user was interacting with the device. Conversely, an idle Android phone running the Chrome browser sends back to Google nearly 50 times as many data requests per hour as an idle iOS phone running Safari.

Perhaps the most striking revelation in Professor Schmidt’s research is that approximately two-thirds of the data that Google collects about consumers is collected in passive ways. That’s an incredible amount of information being gathered in the background, where consumers wouldn’t expect it.

Power Play

Google’s pervasive surveillance have enabled the company to rake in massive profits and squash competition in a variety of ways. However, there probably is no surer sign of their dominant position than their ability to decline – with no worry for the consequences – a bipartisan request to testify from the Senate Intelligence Committee.

At the same time they declined to participate in this hearing, rumors began to circulate that Google is creating a search engine just for the Chinese market that will allow Communist leaders to block access to content they don’t like. Google appears to be a willing participant in the suppression of over 1 billion people.

Is it time to start asking whether Google has outgrown democracy?

Featured Post | Industry-Research | Policy

Google data collection research

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While the public has been focused on the ongoing Facebook and Cambridge Analytica scandal, Google has largely avoided public scrutiny about its data collection practices despite having the ability to collect far more personal data about consumers across a variety of touchpoints. There have been efforts to document individual practices by Google such as their efforts to circumvent controls on Safari.  More recently, an investigation by the Associated Press revealed that Google continues to track location data even after a consumer has turned off the setting.  While these research efforts have been important to the public policy dialogue, no research exists which looks at the breadth and depth of data collected by Google.

In “Google Data Collection,” Douglas C. Schmidt, Professor of Computer Science at Vanderbilt University, catalogs how much data Google is collecting about consumers and their most personal habits across all of its products and how that data is being tied together.

The key findings include:
  • A dormant, stationary Android phone (with the Chrome browser active in the background) communicated location information to Google 340 times during a 24-hour period, or at an average of 14 data communications per hour. In fact, location information constituted 35 percent of all the data samples sent to Google.
  • For comparison’s sake, a similar experiment found that on an iOS device with Safari but not Chrome, Google could not collect any appreciable data unless a user was interacting with the device. Moreover, an idle Android phone running the Chrome browser sends back to Google nearly fifty times as many data requests per hour as an idle iOS phone running Safari.
  • An idle Android device communicates with Google nearly 10 times more frequently as an Apple device communicates with Apple servers. These results highlighted the fact that Android and Chrome platforms are critical vehicles for Google’s data collection.  Again, these experiments were done on stationary phones with no user interactions. If you actually use your phone the information collection increases with Google.
  • Google has the ability to associate anonymous data collected through passive means with the personal information of the user. Google makes this association largely through advertising technologies, many of which Google controls. Advertising identifiers—which are purportedly “user anonymous” and collect activity data on apps and third-party webpage visits—can get associated with a user’s real Google identity through passing of device-level identification information to Google servers by an Android device.
  • Likewise, the DoubleClick cookie ID—which tracks a user’s activity on the third-party webpages—is another purportedly “user anonymous” identifier that Google can associate to a user’s Google account. It works when a user accesses a Google application in the same browser in which a third-party webpage was accessed previously.
  • A major part of Google’s data collection occurs while a user is not directly engaged with any of its products. The magnitude of such collection is significant, especially on Android mobile devices, arguably the most popular personal accessory now carried 24/7 by more than 2 billion people.

DCN is grateful to support Professor Schmidt in distributing this research. We offer it to the public with the permission of Professor Schmidt.

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Policy

DCN Comments on Hearings on Competition and Consumer Protection in the 21st Century

 

 

Before the
Federal Trade Commission
Washington, D.C.

Competition and Consumer Protection Docket Header

COMMENTS OF DIGITAL CONTENT NEXT

I. Introduction

Digital Content Next (DCN) appreciates the opportunity to submit comments in the above-captioned proceeding.[1]  Founded in 2001, DCN is the only trade organization dedicated to serving the unique and diverse needs of high-quality digital content companies which enjoy trusted, direct relationships with consumers and marketers. DCN’s members are some of the most trusted and well-respected media brands that, together, have an unduplicated audience of 223,098 million unique visitors or 100 percent reach of the U.S. online population.

II. Consumer Expectations and Trust

As the FTC considers the complex public policy issues related to the digital ecosystem, we encourage you to view each issue from the perspective of the consumer. Consumers have a wide variety of places where they can find quality investigative reporting, breaking news, sports, entertainment or comedy. When they visit a site or app, they expect their data may be collected to ensure the service works properly, combat fraud, authorize subscriptions, personalize content or advertising, and recognize a return visitor among other things. These data collection and use cases tend to meet consumer expectations because there is a direct benefit to the consumer experience and because the consumer’s data is collected and used transparently within the same context. If the consumer does not like how their data is being used, the consumer can communicate their dissatisfaction or they can choose to visit a competing site or app. Given the plethora of choices for consumers, publishers are acutely aware that preserving consumer trust is key to building a relationship with the consumer.

Consumer trust can be eroded when their data is collected in one context but used in another without transparency or an opportunity for the consumer to exercise choice. The ongoing scandal involving Facebook and Cambridge Analytica is a good example. In this case, Facebook allowed an outside company to collect data about Facebook users and their friends for what consumers expected was a benign purpose and solely within the confines of the Facebook service. However, the data was ultimately shared with multiple parties and used for unexpected purposes. Also, it is important to note that the data collection provided no benefit to the consumer.

In June, DCN commissioned[2] a survey of consumers to better understand consumer expectations with regard to how Facebook collects and uses data. The results underscore that consumers generally expect their data to be collected and used within the same context. However, our survey found that 72% of consumers do not expect Facebook to collect data about a person’s online activities on a non-Facebook webpage if a person does NOT click the ‘Like’ button.

Similarly, Google collects massive amounts of data about consumers. In some cases, consumers expect this data collection in order to facilitate the use of a service such as Google Maps. However, consumers are not likely to expect that Google collects and merges data about consumers from every consumer-facing and non-consumer-facing digital service they operate.

While these examples highlight data collection that does not meet consumer expectations, it is also important to note that consumers have no way to avoid this data collection or to exercise meaningful choice over how their data is used.

III. Competition

DCN is concerned that the current digital marketplace is unfairly tilted in favor of two companies – Google and Facebook. Combined, these two companies account[3] for 73% of digital advertising dollars and 90% of all growth[4] in the market. This revenue is generated by selling advertising on their platforms but also selling taking a cut of the growing advertising technology services used by publishers to sell advertising on their own websites. The revenue gained from their dominant advertising businesses allows them to offer “free” services. What makes these two companies so dominant is their ability to collect data about consumers at an unmatched scale and to use that data to sell targeted advertising against publishers’ content without paying a fair share.

While they offer “free” services such as Facebook, Instagram, Gmail, Google Maps and Android devices, the scale of their data collection is broadened by their ability to collect data as the provider of non-transparent 3rd party services such as social media widgets (e.g. the “like” button) and ad serving technologies. According to 2016 research[5] by Steven Englehardt and Arvind Narayanan over 70% of the top 1 million websites included Google code on their sites which allows Google to track users browsing history. Facebook recently disclosed to UK Parliament, it can track consumers across an estimated 8.4 million websites. As a result, it is impossible for consumers or publishers to avoid interacting with Facebook and Google.

However, given the asymmetry of market power, it is very difficult for any company to negotiate fair terms or to pull their content from these aggregators. For example, with only a few weeks before European regulators began to enforce the General Data Protection Regulation (GDPR), Google notified[6] the industry of the legal terms that companies would need to accept in order to continue using Google services. The non-negotiable terms asserted broad control over all data on a publisher’s site, assigned all liability for data misuse (even by Google) to the publisher and required the publisher to gain consumer consent for Google’s data collection and use activities. While other companies in the ecosystem deployed similar terms, it is notable that only Google has refused to negotiate or even engage in a meaningful conversation.

Another example is Google’s Accelerated Mobile Pages (AMP), which is a set of code and guidelines developed by Google to improve the load times of webpages. Essentially, AMP pages are copies of a webpage that have been automatically pre-loaded on Google’s servers, which enables these pages to be shown much more quickly. However, the code and guidelines for AMP restrict some types of display advertisements and rely heavily on standardized banner ad units, which is a core offering of Google. In addition, while AMP is voluntary, Google prioritizes AMP pages in search results for all users and without giving a choice; Google also only includes AMP pages in the carousel at the top of the mobile search page. As a result, publishers must use AMP if they simply want to maintain their search traffic. Finally, because the AMP pages are loaded on Google’s servers, Google gains access to first party data, which further cements their ability to collect massive amounts of consumer data to sell targeted advertising.

We are concerned about the impact these dominant companies are having on the digital ecosystem and we urge the FTC to investigate how best to ensure the marketplace is healthy and competitive.

IV. Conclusion

We appreciate the FTC’s leadership on public policy issues of importance to consumers. Thank you for the opportunity to submit these comments and we look forward to participating in the proposed workshops.

Sincerely,

Jason Kint Signoff
Jason Kint
CEO
Digital Content Next

Chris Pedigo Signature
Chris Pedigo
SVP, Government Affairs
Digital Content Next

 

 

[1] Hearings on Competition and Consumer Protection in the 21st Century, Docket ID: FTC-2018-0048

[2] http://www.niemanlab.org/2018/04/jason-kint-here-are-5-ways-facebook-violates-consumer-expectations-to-maximize-its-profits/

[3] https://www.cnbc.com/2017/12/20/google-facebook-digital-ad-marketshare-growth-pivotal.html

[4] http://adage.com/article/digital/iab-digital-ad-revenue-catapulted-88-billion-2017/313464/

[5] http://randomwalker.info/publications/OpenWPM_1_million_site_tracking_measurement.pdf

[6] https://digiday.com/media/googles-gdpr-approach-raises-publisher-concerns/

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Policy

DCN analysis of the California Consumer Privacy Act of 2018

Important Note: If you are a DCN publisher member, please be sure to log in or register to access this special members-only document, which will appear once you have logged in.

Janet Peyton and Bethany Gayle Lukitsch, partners at McGuireWoods LLP, prepared an analysis of The California Consumer Privacy Act of 2018 (AB 375) for Digital Content Next.  The bill, which was was recently approved by the California Legislature and signed by Governor Jerry Brown, provides consumers with significant controls over how their personal information is collected and disseminated by businesses.

Perspectives | Policy

Why the IAB GDPR Transparency and Consent Framework is a non-starter for publishers

The most significant opportunity in more than a decade to steer value towards our members is playing out now in Europe.

It is DCN’s role to help shape the future of the digital ecosystem to bend towards the interests of trusted content companies while your team focuses on the day-to-day operations. We work every day to do this and to raise the bar of trust with both advertisers and consumers.  Unlike other parts of the web media industry, we’re fortunate these efforts often align.  That is, by increasing trust for consumers and advertisers, the brands of DCN will prosper in the long-term. We are starting to see the pendulum swing in our favor – both in consumer subscriptions and the trust and transparency of the advertising market – and are working hard to accelerate it.

Since DCN exclusively represents content companies, we occasionally have a different point of view from other parts of the media ecosystem including intermediaries (e.g. ad tech companies, Google, Facebook). The business model of these intermediaries has for many years relied on harvesting the data generated from advertiser and consumer relationships with our members’ websites and apps. Right now, there is significant debate over how to best participate in the General Data Protection Regulation (GDPR) in the EU and what the effects of the roll-out of will be.  The rules of GDPR, which set a new bar for consumer privacy, were finalized years ago and since that time have inspired a rich amount of misinformation, disagreement and fear, only increasing as the GDPR enforcement date of May 25, 2018 approaches.

The IAB and IAB Europe, which are charged with representing a much broader set of stakeholders including hundreds of ad tech companies, Google, Facebook, Oath, and many others with significant intermediary interests, has released its plan to handle the GDPR roll-out.  The IAB framework, which was submitted for industry commenting, was clearly designed by ad tech companies and included endorsement from 23 ad tech companies and, most notably, zero publishers.

The IAB GDPR Transparency and Consent Framework should be considered a non-starter by all publishers as it fails on several levels and requires significant changes.

Details will be discussed in other forums but can be summarized as it:

  1. relies on cookies which are unreliable in many experiences;
  2. pushes all liability to the publisher without providing any control over the CMPs, SSPs, DSPs, exchanges and how they use this data;
  3. outsources the consent relationship with the user to a “Consent Manager Provider” (CMP) operated by an IAB-friendly;
  4. does not leverage the direct relationship between a publisher and its audience to manage consent and store it persistently in the browser (e.g. DNT);
  5. fails to reduce friction for users giving consent for purposes most important to publishers and most acceptable to users;
  6. unintentionally creates more friction with your audience for editorial and product features for the sake of protecting ad tech vendors.

Thus, it will most likely enable a practical use case where global consent is enacted to protect the status quo of maximum behaviorally-targeted advertising and unbridled data collection. In other words, their goal is to use “free” services to encourage users to click, “Turn All On” and opt back into the status quo.

Please reach out to us directly and make certain your business leaders and partners understand there are serious flaws with the IAB Consent Framework.  We strongly urge publishers to hold off signing up with the 23 companies (and Google and Facebook behind the scenes) to support the framework in its current form.

Once again, there is a window here in which publishers can rebuild consumer and advertiser trust. The most significant advertisers in the world are aligned with us on this as they begin to see their pursuit of truly one-to-one advertising across the wider web as economically and legally challenging.  GDPR will create opportunity for audience selection based on cohorts and context which is a significant risk to Google and Facebook. GDPR moves advertisers away from their current buying habits supported by the myth they can simply harvest demand through microtargeting personal data. Creating new demand through context and true relevance is the sweet spot of trust and true publishers.

And where there is significant risk to Facebook and Google and opportunity for growing consumer trust, you will come out ahead.

Perspectives | Policy

Facebook’s commitment to shareholders trumps democracy

Facebook CEO Mark Zuckerberg has long talked about his company’s goal of “connecting the world.” Clearly, they have succeeded. Families, friends, neighbors, classmates, fans, even employees all around the world connect on Facebook – to the tune of 2.2 billion monthly users at the end of 2017 according to Statista. And more recently, Zuckerberg has attempted to mature this vision with the lofty goal of “building communities.”

But, make no mistake, the platform was also built for advertisers. In exchange for “free” use of the service, people enable Facebook to collect highly personal information about them – information that is used to inform advertising and spread information. As the platform grew in popularity, the tools and information sharing became more innovative – some would even say

When their tools were exploited by foreign agents before and after the 2016 election, Facebook CEO Zuckerberg’s first reaction was denial: “…the idea that fake news on Facebook…influenced the election is a pretty crazy idea.” In hindsight, it’s seems implausible that a company built on data could be so ignorant about the use or abuse of the service. There was evidence that bad actors utilized Facebook to influence the Brexit election just a few months before. Are we to believe that Facebook employees never investigated those activities or considered how the service was being used around elections?

Given that every family has at least one crazy relative posting full time about politics on Facebook, I’m sure there are several teams of Facebook employees dedicated to understanding political discourse on the platform. Yet, ever since it became clear that Russian agents manipulated Facebook to sow discord in the U.S., the company strategy has been mitigation: slow to share data with the public and lawmakers about what happened, slow to roll out changes to prevent future exploitation, slow to take responsibility for what happened on their platform.

Then came Rob Goldman’s epic, Facebook says rogue, tweet storm. Special counsel Mueller’s indictment of 13 Russians for their role in attempting to undermine the 2016 election contains a detailed narrative of how Facebook was manipulated. Goldman’s tweets show that Facebook is STILL in denial. Goldman contends that Russians’ main objective wasn’t to influence the election contrary to Mueller’s indictment and, quite frankly, common sense. 44% of the ads were run before the election. Goldman even admits that the Russian-bought ads were pro-Trump. Worse, Goldman’s defensive tweets focused entirely on advertising, ignoring how foreign actors may have abused other Facebook tools.  All of this bluster is intended to deflect blame, muddy the waters and shield Facebook from taking real responsibility (aka liability).

Ironically, Goldman’s tweet confirms that Russian actors used the Facebook platform to sow discord after the Florida high school shooting. Apparently, the solutions that Facebook has rolled out aren’t working to clean up their platform. One wonders whether the solutions were actually intended to appease lawmakers and regulators as opposed to actually solving the problem. We need to maintain the pressure on Facebook to deliver on it’s lofty rhetoric.

Perhaps we shouldn’t be surprised that Facebook’s first responsibility is to its shareholders, not our democracy. But, with the 2018 elections just around the corner, we need to continue demanding more from the dominant platforms of Facebook, Google and Twitter. At the moment, it seems they’re still playing the PR game when they should be protecting the “community” they have built.

Marketing | Perspectives | Policy

No, Apple isn’t destroying digital advertising. It’s meeting consumer expectations…again

Apple recently announced that iOS 11 will include Intelligent Tracking Prevention (ITP) in Safari. In a nutshell, ITP will go beyond merely blocking 3rd party cookies by segregating any cookie after 24 hours without interactivity on its parent domain’s website. The segregated cookie could still be used for log-ins, but not for tracking and/or retargeting purposes.

Despite a chorus of cries that this move will “sabotage” the current economic model of the internet, I actually think this is just Apple trying to keep up with consumer expectations. For years, Apple has attempted to block 3rd party cookies, although ad tech companies have worked to bypass Apple’s efforts. The thinking has been that consumers only want to be tracked by companies with which they have a relationship. ITP simply ensures that consumers can only be tracked by the companies with which they have a current relationship. There are some kinks, for sure, but overall it makes sense.

After reading some of the reactions to Apple’s move, I had to step outside just to make sure the sky wasn’t actually falling. The response from the ad tech industry has not been surprising. The ad tech lobby has a long track record of protecting legacy models, even when they are probably not the best path for long-term success. However, calling Apple’s move one that will “harm consumers by distorting the digital advertising ecosystem and undermining its operations” seems pretty far off base.

Given the industry’s fear of government regulation, I’m surprised the tech giants aren’t more supportive of private sector moves like Apple’s that seek to address underlying consumer concerns. As we see in the EU’s forthcoming General Data Protection Regulation (GDPR), governments can and will step in if the industry does not demonstrate that it can effectively self-regulate. When our trade bodies fail to step up and put into place strong guidelines that address customer concerns about important issues such as privacy, we put ourselves at risk of increased government scrutiny (many states already have privacy bills in the works.)

Instead, ad tech companies have dedicated massive amounts of capital and resources to developing new ways to track consumers, build larger and more sensitive profiles of consumers and deliver highly targeted ads. For the most part, the returns for investors have been terrific. For consumers – not so much. The well-documented reality is that digital tops the list of consumers’ least favorite forms of advertising. And tracking (aka “targeting”) is one of the aspects of digital advertising cited as particularly irksome.

Think about it: Right now, 67% of digital ads are direct response ads designed to get consumers to click. This is the equivalent of the junk mail cluttering your email inbox and those direct marketing ads that stuff your mailbox and end up in landfills. On top of that, digital ads are often overloaded with calls to unknown 3rd party servers, which dramatically slow the down the page. Worse, on mobile, it not only damages user experience, it soaks up more of a consumer’s data plan.

It’s no wonder consumers are downloading ad blocking software at higher rates each year. It’s no wonder that almost no one ever intentionally clicks on an ad. Suffice it to say that the claim that reducing the persistence of tracking cookies will harm the user experience is absurd. And frankly, a model that relies on these cookies to create an experience that’s driving ad blocker adoption is not one we need to defend.

Contrast that dynamic with Apple. Countless books have been written on how Apple is dialed into the wants and needs of consumers. The company boasts a loyal customer base and for good reason: Consumer experience is the priority. ITP is an extension of Apple’s consumer focus. Given the company’s track record as compared to the current state of digital advertising, ITP is likely to join the long line of successful consumer-friendly features developed by Apple. And if we want to have the same kind of success in the digital ecosystem, respecting the consumer and creating an experience they enjoy must be at the foundation of our advertising efforts.

Perspectives | Policy

Why the GDPR will force you to understand your customers’ needs

When I was 14, I walked door to door selling subscriptions for the local newspaper. It paid a lot better than ditch digger (which I also tried), but it also required thick skin. I quickly learned that I needed a good elevator pitch that captured the essence and value of what I was selling and that helped me make a connection with the person on the other side of the door-frame. If I could do all of that in 10 seconds, then the conversation almost always went well. Sometimes it led to a sale, sometimes it led to “come back later,” and sometimes it just led to a pleasant conversation. All of those outcomes were infinitely better than getting a door slammed in my face. I imagine it was also a much better experience for the prospective subscriber who had just been interrupted by some 14-year-old kid ringing their door bell.

One key to improving my elevator pitch was having a thorough understanding of the product. In this case, the local newspaper. Then I needed to master the value proposition, which meant tuning into the customers’ needs. The key value for most subscribers was the connection to their local community. This was the 1980s, so the paper was the primary way to keep abreast of local politics, sports, events, weather, and to read the classifieds. It was impossible to communicate the value proposition to a prospective subscriber without understanding how a subscription would be helpful to them.

Now, we get all this local information in a very different way. But, what’s now often missing in today’s digital ecosystem is the basic communication with consumers. Some companies do it well – see Apple’s just-in-time notices that allow apps and websites to ask consumers for permission to collect and use sensitive data like location and contacts. However, entire categories of companies aren’t communicating with consumers AT ALL. Just look at the thousands of ad tech companies that track unwitting consumers across the web.

Maybe there’s value to data collection in these contexts. But companies that don’t have a solid value proposition on the added value that they can effectively communicate to consumers better be ready for the door to slam.

The coming enforcement of the General Data Protection Regulation (GDPR) and the likely passage of ePrivacy Regulation in Europe will force companies to better explain what they are offering to consumers. In short, they’ll have to develop an elevator pitch.

For years, industry trade groups have heralded the consumer benefits of big data. But these benefits are often articulated in long-winded, research white papers designed to justify unbridled data collection to regulators. The fact is that, like their predecessor, direct mail, these “highly targeted ads” are more often viewed as creepy than carefully customized. Certainly, customers sometimes appreciate experiences tailored to their past behavior and preferences. However, giving them control over what data is collected and telling them why does not negate that possibility. Effectively communicating the “why” is the essence of the elevator pitch after all.

Starting in the spring of 2018, ubiquitous, non-transparent data collection is not going to fly in Europe. And in a global economy, that means marketers and advertisers everywhere need to pay attention. Companies will have to figure out concise and compelling ways to explain their value proposition to consumers in order to get their consent.

As a young newspaper salesman, I had to knock on the door and—if a customer was willing to open it—I had a brief opportunity to demonstrate the value the local newspaper could deliver. Otherwise, that door would close and I might not get another chance.

Based on my experience, the companies that understand why consumers value their product will be the ones that emerge victorious in this new landscape. Along the way, the whole digital experience might be improved for everyone. And the result will certainly be better than a potential customer opting to download an ad blocker instead.

Perspectives | Policy

DCN letter to the NRA

Today DCN sent a letter to The National Rifle Association (NRA), in response to their campaign to attack the press—including our members directly—with incendiary language. We’ve been watching carefully after they released this video and are increasingly disturbed by the transition into a much larger campaign by the NRA and other political actors. As we state in the letter, we respect their right to have a viewpoint and are simply calling out, particularly in a sensitive time, there are lines which shouldn’t be crossed regardless of the side of the debate you’re on. 

CNN’s Brian Stelter broke the news here.

Perspectives | Policy

Discriminatory deals could close the open web

Earlier this week, we filed our formal comments with the FCC detailing DCN’s view on net neutrality. In the comments, we noted the potential hazards associated with allowing ISPs to give preferential treatment to some websites over other, particularly when it comes to those owned by the ISPs themselves.  

 

The issues really come into focus when you consider the case of Verizon. Over the last few years, Verizon has made a series of strategic acquisitions of digital content – first, by purchasing AOL and all its properties and, recently, Yahoo (which have been combined under the Oath brand). 

 

Many have speculated that these purchases were all about Verizon building scale to attract advertising dollars. And, if that was in fact their goal, Verizon is now heavily incentivized to maintain and even grow the audiences and platforms they have acquired. To do so, a natural next step would be for Verizon to provide faster access to its vertically-owned sites.  

 

In addition, Verizon would be disincentivized to allow the same speedy access to websites that compete with, say, Yahoo Finance. It’s not even a matter of whether a competing site could try to pay for preferential access (which on its own makes it hard for smaller content providers to compete). In this case, Verizon would simply want to ensure that Yahoo Finance gets the most traffic. And given its unique ability to control access speeds, it would be in a position to do so.  

 

It’s hard to imagine that a public company with profit motives and shareholder expectations wouldn’t make every effort to drive more traffic to its sites in order to show the value of these acquisitions. However, the larger issue here is that—as an on-ramp to the internet—Verizon could prioritize delivery of its websites, thus ensuring that consumers are more likely to access them. 

 

The same dynamic would play out in any space where Verizon has its own content. It is not a stretch to assume that Verizon’s shareholders would expect Verizon to provide preferential access to Yahoo Tech, Yahoo Beauty, Yahoo Sports, Yahoo Lifestyle, TechCrunch, and HuffPost. In short, other tech review sites, fashion magazines, sports sites, lifestyle publications, and news organizations would lack the ability to compete fairly.  

 

Adding to the problem is that there are only a handful of mobile broadband providers. (And, as we all know, mobile increasingly dominates content consumption.) So, if each of the mobile broadband providers has their own content for a specific vertical, the remaining content creators would be left without a chair in the game. In fact, they would find themselves at a significant competitive disadvantage. Instead of competing on quality of content, publishers would be forced to compete over who can be bought first by a mobile broadband provider.

 

We all agree that ISPs should not block or throttle consumers trying to access the plethora of available lawful content. But, we need to be equally careful to ensure that discriminatory deals don’t dramatically limit the number and variety of websites available to consumers. As the internet’s inventor Tim Berners-Lee said, “The important thing is the diversity available on the Web.” The Internet is a wonderfully weird place where innovation is the norm and a cacophony of voices flourish. Let’s keep it that way.

Policy

DCN perspective on ePrivacy regulation

Dear Member(s) of European Parliament,

As you consider updates to the ePrivacy Directive, we are writing to offer the perspective of premium publishers of digital media content. Digital Content Next (DCN) was founded in 2001 and remains the only U.S.-based trade association that exclusively represents premium digital content creators. Several of our members are based in Europe and many more have a substantial presence in Europe.  DCN members include many of the Internet’s most trusted and respected media brands, collectively reaching an unduplicated audience of 230.6 million unique visitors – or 100% of the U.S. online population monthly. Importantly, DCN members maintain direct, trusted relationships with consumers and advertisers.

We agree with the need to update and modernize the ePrivacy Directive to account for new technologies that are employed to track consumers in the digital world and hope to see a text which will more closely harmonize the Directive with the General Data Protection Regulation (GDPR).  As you consider changes to the text of the Draft Regulation, we encourage you to focus on consumer expectations.

Context is Key

Consumers have nearly unlimited choices over where they can find news and entertainment online.  If a consumer does not trust the site or the content, they can and do choose to go elsewhere. This creates a dynamic in which consumer-facing websites and apps must continue to earn the trust of their audiences or risk losing them. A key to maintaining that trust is to collect and use a consumer’s data in ways that meet with the consumer’s expectations.  For example, when consumers visit a premium publisher’s site or app, they expect their data will be collected and used in ways to benefit their experience for purposes such as analytics, fraud protection, personalization, subscriptions and content recommendation.  Consumers also are not likely to be concerned when their data will be used for benign purposes such as audience measurement or other uses where data is aggregated. At the same time, publishers need to be able to monetize their content through advertising in order to minimize costs for consumers. Certainly, there are also societal benefits from properly funded news organizations.

However, most consumers do not approve of their data being collected in one context and then used in a different context.  For instance, absent any transparency, a consumer would not expect or even know that a data broker or a broadband service provider might be tracking their activity across the internet for the purpose of building a profile about them, which could then be used to deliver targeted advertising.  A consumer might see the value in allowing a social media company or a search engine to track their activity while using their website or app, but that consumer would not approve of those companies continuing to track them long after the consumer had left their domain and visited a different website.

Our position is that the ePrivacy Regulation should require transparency and consumer consent in cases where consumer data will be collected and used across multiple contexts.Consumers understand and can see the benefits of the collection and use of their data within a single context. Conversely, collection and use of consumer data across different contexts is far less transparent and  is  much  less  likely  to  result in  direct benefits  for  consumers.  While differentiating between data collection and use within a single context versus data collection and use across multiple contexts would map with an average consumer’s expectation, it would have the additional benefit of avoiding over-notification of consumers.  As the Draft Regulation notes in (22) of the preamble, “end-users are overloaded with requests to provide consent.” When consumers are flooded with notifications in digital media,they tend to become fatigued. They can also become annoyed when notifications cause friction in their digital experience – especially when they are simply attempting to access content from a trusted source.  By focusing consent requirements on non-transparent data collection and use, the ePrivacy Regulation would minimize friction where consumers have trusted relationships while also creating a choice mechanism where a relationship does not exist.

The Role of Browsers

Finally, the current version of the ePrivacy Regulation suggests a central role for browsers in obtaining and storing consumer consent.  While there may be merits to providing clear choices to consumers at the browser level, we are concerned that by making the browsers the sole point of obtaining consent for tracking, there could be an unintended consequence of increasing the leverage of large companies with browsers or platforms in the digital ecosystem, such as Google and Facebook, particularly if their primary business is selling advertising across the web thereby competing with publishers. At the same time, it would not make sense to require publishers to ask consumers for consent to track all of their activity across the internet. Indeed, publishers would likely ask consumers for consent to be tracked by the publisher and their chosen third party partners solely while on the site.  As you consider the role that browsers can and should play, it is important that options are preserved and encouraged for narrow consent required for delivery of the context in which value is being delivered to the consumer.

We appreciate your efforts to protect the rights of European citizens. Please let us know if we can be of assistance.

Sincerely,

Jason Kint Signature

Jason Kint
CEO
Digital Content Next