FC: The high cost of Net privacy, oped by DoubleClick CEO

[Declan McCullagh <declan () well com>]

Wall Street Journal
March 7, 2000
Editorial Page

The High Cost of Net Privacy
By Kevin O'Connor, chairman and CEO of DoubleClick.

> A fair amount of controversy has been swirling around the online
> advertising
> industry recently. Critics have taken issue with DoubleClick's plans to
> match
> consumers' names with anonymous online activity across Web sites. As a
> result
> we've put these plans on hold in the absence of government and industry
> privacy
> standards.
>
> In setting standards we all must remember one important thing: The future
> of a
> free Internet must involve both the protection of individual online
> privacy and the
> ability of online advertisers to compete and deliver effective ads.
>
> Valuable Business Model
>
> Just as off-line retailers target the preferences and habits of consumers,
> online
> marketers seek to target their ads to the right Internet users. Companies
> don't
> want to pay to deliver ads to people who have no interest in their
> products.
> Without some assurance that ads will be effective, advertisers simply
> won't pay
> for online advertising. If that happens, we will lose a valuable Internet
> business
> model. Web sites will have to begin charging consumers.
>
> The vast majority of Web sites today lose money. To offset expenses, many
> of
> these popular but unprofitable sites rely on paid advertising, just as
> television and
> radio stations do. Without ads, neither traditional media nor Web sites
> could
> provide free content.
>
> The need for such Internet advertising has become more accepted. Just a
> few
> years ago, the Internet was squarely headed toward a subscription-only
> model. In
> that scenario we wouldn't have ads, but surfing sites would get
> prohibitively
> expensive. When a few popular Web enterprises -- including Wired magazine
> and the Dilbert Zone -- started running ad copy to pay for their sites,
> consumers
> initially protested. But most came to appreciate their ability to find
> content for
> free.
>
> Indeed, the consumer public has become very sophisticated about Web ads.
> We
> know from recent polls that some 70% of Internet users understand that the
> Internet is free because, like network television, it is driven by
> advertising. More
> important, two-thirds of Internet users understand that advertising lets
> small Web
> sites compete with giants that might otherwise dominate the Web.
>
> They also recognize that ads can be helpful. Most Internet users welcome
> personalized content on the Web. The same recent polls have found that
> two-thirds of Internet users agree that one of the Internet's advantages
> is its
> ability to tailor itself to users -- individual homepages, personal
> accounts at
> shopping sites or scores for someone's favorite sports team. The Internet
> is the
> ultimate tool for such one-to-one communication, allowing for a
> customization that
> can't be duplicated in any other medium.
>
> This also applies to ads. The Internet exposes more people to different
> companies, allowing consumers to comparison-shop and get the best prices
> possible. The more information people have about products and services,
> the
> more efficient the marketplace. Targeted advertising allows consumers to
> receive
> information that is timely and relevant. It eliminates the clutter of
> unwanted ads
> and solicitations. Most important, targeted advertising helps keep the
> Internet free
> for consumers.
>
> All this brings us back to our current situation. We at DoubleClick
> understand the
> importance of online privacy, and are committed to being the industry
> leader in
> privacy protection and in giving consumers real notice and choice.
>
> No Sensitive Data
>
> In keeping with this philosophy, we've launched a public-education
> campaign so
> that Internet users will know how easily they can "opt out" of online
> profiling. We
> do not use sensitive data -- such as individual medical or detailed
> financial
> information -- for profiling. In the future we won't do business with U.S.
> Web
> publishers lacking privacy policies. We are hiring an executive-level
> chief privacy
> officer, and we are appointing an outside board of experts to review our
> privacy
> policies and procedures. Finally, we are undergoing an exhaustive
> independent
> audit to make sure we are living up to stated privacy policies.
>
> The Internet is a uniquely fluid medium. It was built by consumers, and it
> is
> reinvented and refined every day. Internet users today demand information
> that is
> vibrant, free and tailored to their specific interests. They also insist
> on privacy,
> honesty and choice. We think they're right on all fronts and are doing
> everything
> we can to meet all of these demands.
>


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