Privacy Debate Swirls Around iTV Advertising

As interactive TV firms beef up their efforts to develop advertising on the new medium, one consumer group is voicing concerns about the privacy ramifications.

On Tuesday, the Washington, D.C.-based Center for Digital Democracy released a report criticizing iTV providers’ targeted marketing efforts.

The nonprofit’s report, entitled “TV That Watches You: The Prying Eyes of Interactive Television,” maintains that through tracked, addressable set-top boxes, personal video recorders and other devices, consumers will be as traceable as they are on the Internet — and perhaps more so.

According to the report — which is based on publicly accessible documents — iTV marketers will not only be able to track programming, but typically will also be able to collect information ranging from age, vocation, discretionary income and parental status to more detailed psychographic and demographic data.

“Through the development of hardware and software, these and other companies are creating a new TV infrastructure in the US that will engage in unprecedented data collection, along with new — and potentially deceptive — marketing practices,” said Jeff Chester, executive director of the Center for Digital Democracy. “The American public is not being given an opportunity to decide whether such technology and interactive advertising campaigns should be permitted to enter their homes. In the face of industry opposition to any meaningful privacy safeguards, coupled with the obvious need for comprehensive protections, iTV poses a major threat.”

Chester said that federal and state authorities ought to enact safeguards — including expansion of the seven-year-old Cable Communications Policy Act — to stem alleged illegal collection and use of consumer data by cable providers.

“The massive data collection practices of these systems show the need for better legal protections for consumers,” said David Banisar, who is deputy directory of consumer advocate Privacy International and who participated in the study. “The [CCPA] needs to cover all interactive television technologies and have better enforcement mechanisms.”

But opponents of outside regulation of the industry contend the study is groundless, and say that iTV firms will collect data in accordance with the law.

Most of the report is pretty baseless, and the report doesn’t really take into consideration that Cable Communications Policy Act is still as relevant today as it was in 1984,” said Ben Isaacson, executive director of the New York-based Association for Interactive Media, which oversees an iTV industry consortium. “It certainly isn’t based on any companies illegally collecting data — that’s not happening … The fact is, there have not been any egregious violations of data collection on the Internet, and certainly there aren’t going to be in the interactive TV space because there are laws on the books.”

While the arguments are fresh, it’s the same debate that’s raged in the Internet space. On one hand are marketers who maintain that by using demographic information to target ads, they’re providing a service by giving consumers relevant information while their ads foot much of the bill for TV’s production costs.

On the other, privacy advocates urge federal regulation to ensure that consumers are given choice over whether marketers can use their information. Marketers, however, fire back by saying that consumers rarely willingly opt-in to advertising, and that the practice would be harmful not only because it would make consumers less informed, but because it would hurt iTV providers’ revenues as well — jacking up the price for subscribers.

“It’s 1995, all over again … and privacy advocates are going to continue to have concerns about this,” Isaacson said. “As long as companies are being responsible on about data use, and sharing only the information that’s been collected with the consensus of the audience, things will be okay and the industry will grow.”

“There are some amazing technologies coming, some really great ones that can create more relevant, targeting advertising opportunities,” he added. “That’s what we’re hoping to happen.”

While foes and supporters of iTV advertising continue to debate, two of the largest players in the space are moving forward with their plan to hammer out the bugs in their technology pact.

Through a deal with set-top box software firm OpenTV, Alley-based ACTV, which makes the technology for targeted iTV advertising, will gain access to some 16 million homes worldwide. Specifically, Mountain View, Calif.-based OpenTV will support the firm’s SpotOn ad technology, which was jointly developed with Motorola.

In announcing the deal, OpenTV chief executive James Ackerman called it a win for subscribers, with the SpotOn rollout as a way to “quickly create greater value for OpenTV customers.”