Last week, I took a look at why it was fallacy to compare the FTC’s Do Not Track recommendations with Do Not Call. This week, USA Today outlined how this could “revolutionize” the industry. Looks like the issue continues to boil as the Commerce Department is now jumping into the fray with its own recommendations, as reported in WSJ and NY Times. Its call to create a “Privacy Bill of Rights” for online consumers makes a lot of sense because it is centered on transparency, rather than blocking. It’s very similar to how individuals can request credit reports to see what financial companies see about them.
However, what would happen if the FTC succeeds in creating a do-not-track list? What would happen to the $20 billion online ad industry? Here are some predictions:
+ Re-emphasis on big media: Big media companies will be relevant again for their command of their audience. We’d see a shift to more “media” buying instead of audience, where advertisers will go to the people they trust… Gannett, NY Times, Time Warner, Disney… the names we all know and love. This will have resonating effects. Big media will have to adopt measurement practices that were more common in traditional media buying (consumer surveys), and companies that enable this could see more growth.
+ Consolidation of sites and small publishers: Smaller sites that previously had an effective standalone monetization strategy on selling audience could end up partnering with brand name publishers whose sales force can better monetize these sites by selling direct to advertisers. Large publishers will be more willing to paste their name on these small sites because of the need for more direct sales of inventory. Or these small sites could just go out of business.
+ Ad networks will still be around: Considering that very few people opt-out of tracking even when it is presented to them clearly, not everyone will sign up for a Do Not Track list. This list could still narrow the potential for ad network business, but there will still be enough spend in audience targeting that ad networks can still thrive – although there may be less than 300 of them after all is said and done. Additionally, the ones with higher audience reach could command a premium because supply could be scarce.
+ Ad networks get down with The Hill: Legislation is a long process and we could see more ad networks and other targeting companies use more resources for lobbying in order to protect their interests. The IAB is doing a great job representing the industry in DC, and we may see even more support for its efforts in the next couple of years.
+ More new segments: Online advertising will still have inefficiencies and there will continue to be new companies in new segments aiming to improve it. If the industry can’t target audience, it will target something else. We’re already seeing a renewed effort in deep-packet-inspection among cable companies. Content- and semantic-based efforts from folks like ContextWeb, OpenAmplify and Peer39 are continuing to improve.
The online ad industry has constantly proven that smart minds will find opportunities and problems to solve despite the enormous challenges of the business environment. Despite what a Do Not Track list could do, entrepreneurs, technologists, and VCs will find ways to innovate and capitalize. Therefore, we’ll all still have jobs… I hope.