With Inquiry of AT&T, Lawmakers Confuse Behavioral Ad Types

Cookie-based forms of behavioral targeting are commonly used by advertisers and Web site publishers — even some political candidates running for office. Yet, some lawmakers are apparently confusing those accepted industry practices with far more controversial technologies. That could lead to poorly crafted legislation and possible damage to a form of advertising that’s become pervasive on the Web.

During a House Subcommittee on Communications, Technology, and the Internet hearing last week, lawmakers indicated they plan to draft new legislation regarding online privacy which could affect behavioral targeting. An exchange between Rep. Anna Eshoo and AT&T Chief Privacy Officer and SVP Public Policy Dorothy Attwood during the hearing prompted Eshoo, who represents California’s 14th district including Silicon Valley, to send the telecom a follow-up letter Friday. In the missive, she asked AT&T to respond to a series of questions regarding its behavioral targeting practices.

Exactly what type of behavioral ad practices Eshoo and other Members of Congress are concerned about isn’t entirely clear. And, whether Eshoo is interested in AT&T’s practices as a marketer or as an ISP — or both — is also unclear.

Thursday’s hearing and previous online privacy hearings involving ISPs as witnesses have focused mainly on the subject of deep packet inspection or ISP-level targeting, a highly-controversial type of behavioral tracking technology that has attracted government scrutiny in the U.S., U.K., and Europe, and has essentially been stalled in this country. In August 2008, the same House Energy and Commerce Subcommittee asked around 30 ISPs and Web firms including Cablevision, Time Warner Cable, and AT&T about their online ad targeting practices.

AT&T’s response to that inquiry has been construed by some as an attempt to deflect government attention from ISP-based ad targeting toward more common cookie-based ad targeting. Because AT&T does use behavioral targeting to market its phone services, the company has been perceived as hypocritical.

In her exchange Thursday with Attwood, Eshoo asked specifically about AT&T’s relationship with AudienceScience, a behavioral targeting network, referring to the firm as “AudioScience.” The company has been in existence since 2000, and provides the very common cookie-based form of behavioral targeting which allows advertisers to target ads to people based on their interactions on Web sites that partner with AudienceScience. Eshoo’s brief hearing discussion with Attwood is indicative of the confusion surrounding the behavioral targeting technologies Congress may attempt to legislate:

Eshoo: “Has AT&T used AudioScience.com to place ads on the Web?”

Attwood: “Not to my knowledge. If you’re asking AudioSilence…AudioScience with respect to DPI solutions, is that what you’re asking?”

Eshoo: “Well it’s my understanding that that’s the case. Is it?”

Attwood: “No.”

Eshoo: “Has AT&T used AudioScience?”

Attwood: “We do not use a DPI solution to place ads on [the] Web, no.”

Eshoo: “Does AudioScience.com notify customers when data is collected? Or you don’t deal with them at all?”

Attwood: “I’m not familiar with the dealings with AudioScience. I’m happy to get back to you with respect to that particular vendor.”

Eshoo: “O.K. I’d appreciate that.”

AT&T shares some of the blame for the Congressional confusion. For instance, the firm employs the use of an unfamiliar phrase, “overall behavioral ad targeting,”to refer to various forms of behavioral targeting, including ISP-level and ad network related ad targeting.

“When did AT&T begin advertising to consumers using behavioral targeting practices and does it continue to engage in behaviorally targeted advertising?” inquired Eshoo in her letter. Eshoo’s office told ClickZ Tuesday afternoon it had yet to receive a response from AT&T.

“We look forward to answering the Congresswoman’s questions, and to point out that we have consistently and repeatedly said that in our role as a publisher and advertiser, we in fact do use ad networks, just like many other companies do. We’ve always made that clear to Congress, policymakers and other stakeholders,” noted AT&T spokesman Michael Balmoris in a statement sent to ClickZ News.

AudienceScience CEO Jeff Hirsch confirmed “AT&T has been an advertiser of ours,” and added, “we do not support deep packet inspection, ISP-level in any way.”

The use of behavioral targeting is a very common practice enabled by many ad networks and publishers and used by many advertisers, while deep packet inspection of the sort tested last year by numerous ISPs is highly controversial. Telecom firms like AT&T use the old-fashioned variety both to target consumers who have indicated they are in the market for phone or Internet services, and to re-target them with ads if they visit their Web sites but don’t make a purchase.

“Almost every single publisher out there offers some level of behavioral targeting,” said Razorfish VP Media Sarah Baehr, who said the current confusion over behavioral technologies reminds her of past misunderstandings involving the differences between spyware and adware. “I hope as an industry that we’re active in educating our legislators about the positives of digital marketing,” she added.

Even political advertisers have used behavioral targeting and re-targeting. Both Barack Obama’s and John McCain’s 2008 presidential campaigns employed re-targeting, enabling them to target ads through ad networks to people who had visited their Web sites.

Legislation that fails to distinguish between ISP-based behavioral targeting and the far more standard method of cookie-based behavioral targeting could have a significant impact on online advertisers, publishers, and technology firms. Eshoo herself has expressed concern regarding overreaching government intervention in the rapidly changing digital ad marketplace. Along with 10 other California Democrats, she signed a letter last year in response to a threatened Department of Justice suit against Google and Yahoo over the companies’ now-moribund search advertising deal.

“If such action were taken, we believe such an unprecedented suit could detrimentally affect the online advertising market and electronic commerce,” noted the letter. Both Google and Yahoo enable cookie-based behavioral ad targeting and are headquartered in Eshoo’s district.

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