By Sara Jerome - 06/09/11 04:18 PM EDT
A Federal Communications Commission (FCC) report released Thursday encourages policymakers to see the benefits in behavioral advertising as a debate rages in Washington on how to regulate online tracking to protect the personal data of consumers.
The report on the media landscape found huge challenges to the future of the local news business and described behavioral advertising — which tracks the Web habits of consumers in order to better target ads to their personal preferences — as an important way to make hometown journalism more profitable.
The privacy debate has prompted reports and recommendations from the Obama administration and legislation on Capitol Hill aimed at restricting the leeway of advertisers to grab consumer data as users browse the Web.
The FCC report weighed in on that debate by saying policymakers should consider the "positive benefits of ad targeting" to promote sustainable business models for local news operations.
"When considering privacy rules, the policymakers should therefore also consider the positive benefits of ad targeting for local news and journalism operations," the report said.
The recommendation marks one of the first times the FCC has expressed a policy perspective on behavioral advertising. The FCC will begin later this month to play a greater role in the mobile privacy debate, holding a public forum on June 28 where staff will discuss privacy issues with tech companies, consumer advocates and wireless providers.
The FCC report also notes that policymakers have a "legitimate concern" about online tracking.
"Regulators and consumers have an extremely legitimate concern that targeted advertising might invade the privacy of Internet users," it says.
Privacy advocate Jeffrey Chester, the executive director of the Center for Digital Democracy, has strong reservations about the FCC's view on behavioral tracking.
"The FCC is increasingly out of touch with what's really transforming the U.S. media system, and what the key consumer protection issues are in the digital era. The FCC has become a digital media policy backwater. What Americans need is a more thoughtful and informed analysis of how the impact of digital media data collection impacts news and information," he said.
He cited problems with behavioral advertising not just for consumer protection, but also questioned the method as a plausible foundation of a successful business model in journalism.
"Privacy issues aside, the growth of data driven news content will also usher in new barriers to the production of in-depth news and information. Through behavioral targeting and other digital marketing tactics, editorial content will be created that can sell more personalized ads. That will likely create an even larger gap between content the public requires for a democracy and what is produced in the marketplace. It will also further increase the divide between who has access to quality content and those who are deemed — through real-time, 24 hours a day data mining — not worth targeting," he said.
Harlan Yu, a researcher at the Center for Information Technology Policy at Princeton University, has also cited a possibility of behavioral tracking leading to a divided Web when it comes to content delivery.
"One issue is bifurcation: Nothing would prevent sites from offering limited content or features to users who choose to opt-out of tracking," Yu said.
The result could be a "divided Web" where a user who turns on the "no track" option on their browser "would essentially turn off many of the useful features on the Web," he said.
The behavioral tracking note in the report is one recommendation in a sweeping report on the media landscape that paints an image of the challenges to the news business and the delivery of local content while making a handful of recommendations on how the government can help promote a healthy news environment.
The entire report can be viewed here. The behavioral tracking discussion is page 352.