Privacy Legislation’s Potential Impact on Online Media

Last week, the bipartisan Kerry-McCain bill proposed legislation on a Commercial Privacy Bill of Rights that would put the Federal Trade Commission in charge of policing the online collection, sharing and use of personal information. Because the legislation is watered down relative to prior proposals, the Kerry-McCain bill will face the least industry resistance and is more likely to be passed this year. That has far-reaching implications for the online media business, as I detail over at GigaOM Pro (subscription required).
The proposed bill is relatively business-friendly, so much so that it’s drawing criticism from privacy rights activists. Although advertising industry groups are predictably resistant to any kind of regulation, their initial reactions to Kerry-McCain seem more muted than concerns they had prior to the bill’s introduction. Big tech companies like Facebook, Microsoft, eBay, Hewlett-Packard and Intel, for example, have already expressed support for the bill.
The real promise of online advertising is that it holds the potential combination of television-like reach with the ability to very precisely target audiences. But passage of the Kerry-McCain bill — or even something similar — could shift some power in online media and force changes in the way online ad networks and other targeters work with content sites. Here are two of the effects the bill could have on the online world:

  • Online content sites: Some traditional publishers might be perfectly happy without web-wide behavioral targeting. They could tout the value of their online/offline audience and promote contextual targeting and sponsorships. The bill lets publishers follow and target a user within their own site, which would benefit portals like Yahoo and AOL with their huge audiences and broad variety of content.
  • Online advertising ecosystem: The bill’s restrictive approach to behavioral targeting favors search advertising over display ad formats. The data sharing guidelines could force data miners (Experian, Audience Science, BlueKai) and ad networks (DoubleClick, ValueClick, 24/7 Real Media) to secure more formal contractual relationships with content sites that have registered users. And the legislation seems to leave room for third parties to take user info and create anonymized groups of targetable customer “types” based on demographics and behavior.

For other potential effects on the rest of the online ad ecosystem and social media targeting, as well as a more in-depth look at what does — and does not — focus on, read my weekly update at GigaOM Pro (subscription required).
Image courtesy of: flicker user tristanf