Q&A With John Montgomery, GroupM Interaction COO

The FTC’s recent call for a browser-based “do-not-track” mechanism has sent shockwaves through the online ad industry, and has both publishers and marketers concerned about the affects such a development could have on the online ecosystem.

The industry has also spent the past two years working on its own self-regulatory framework, with organizations including the Digital Advertising Alliance and Better Advertising working to provide consumers with ways to control how their data is shared with advertisers.

In light of the FTC proposal, ClickZ spent time gaining some insight into the agency perspective from GroupM Interaction COO, John Montgomery. Below are excerpts from Montgomery’s comments on a range of privacy and regulatory subjects.

On consumer attitudes towards behavioral advertising:

“The worrying thing is that consumers don’t understand tracking and measurement. Right now, because of privacy advocates and the way this issue has been handled in some press groups, consumers are being led to fear behavioral advertising. A lot of the exposure has been about fear and there’s been this connection between behavioral advertising and identity theft.”

“I don’t think consumers are equating behavioral advertising with the benefit that a free Internet can give them. Our real concern is that what drives the Internet is a business model, and the business model is largely based on advertising.”

On the impact of a behavioral advertising opt-out on the Internet economy:

“If we take the ability to monetize the Web away, it will make a lot of very, very useful content sources less profitable, or in fact go away. Because of the fear that’s been created around behavioral advertising, a lot of consumers may decide to [opt out]. If 40 or 50 percent of consumers do so, that reduces the behavioral advertising pool which in turn restricts the ability for publishers to monetize the Web because it becomes less interesting for advertisers.”

On the impact of a behavioral advertising opt-out on innovation:

“The more you think about this, the more serious it becomes. This is going to hit the innovators, and the new people coming into the marketplace that are yet to invent fantastic things that will change our lives. What’s really starting to happen is venture capital companies are saying ‘you know what? We’re not going to pursue [investment in new online services] because the model is dependent on behavioral advertising.”

“At the moment the U.S. is the leader of innovation and thinking in the Internet space, and if we want to stay that way we have to feed it with innovation, we don’t want to restrict it. Sure, consumers have a right to privacy and transparency, but that’s what we’re giving them through the self-regulatory proposal.”

On the industry’s self-regulatory efforts:

“I think we were all taken somewhat by surprise by the FTC’s comments that the industry is not moving fast enough. [The industry] has been spending the last 18 months trying to get the technology in place to give a robust opt-out option to consumers; it’s pretty complicated to get an entire industry aligned behind an approach. We’ve been experimenting with technology [from Better Advertising] for a number of months now, and we’ve done several billion impressions testing it. Our intention is to roll this out in the first quarter of next year.”

“The one good thing about the FTC framework is it has made it much more urgent for us to move now. It was an urgent call for us to get off our asses and make this thing happen as quickly as we possibly could. In reality, we’re ready. We’re actively going to our clients now and saying lets move ahead of the curve [by implementing behavioral opt-out choices within ad creative.]”

On the FTC’s call for a single, unified opt-out mechanism:

“I think we already have single solution in the [Digital Advertising Alliance’s] behavioral advertising icon. Compliance will be run by Better Advertising, so the FTC will have one place to go to see who is compliant. The technology underneath it doesn’t really matter because that’s not visible to the consumer. As long as the consumer has one icon, and as long as there aren’t a dozen different icons that mean a dozen different things.”

“The industry has been amazing at getting behind a single icon, so that it will start meaning something to consumers. When they see the icon they will know they are empowered to opt out, and I think that’s a terrific thing. That’s the single consistent thing the FTC wanted to see – how the technology works behind it I think is less important.”

On the FTC’s concerns around Flash cookies:

“I think that there’s a universal agreement in our business that we shouldn’t be using flash cookies. I think the people that started using them weren’t trying to pull a fast one… I think it was just an easy technology solution. We don’t support flash cookies, and we’ve made it very, very public that we will not deal with anyone that does because it can’t be detected and consumers can’t opt out of it.”

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