• by Karl Greenberg , November 9, 2011

The Federal Trade Commission’s chairman, Jon Leibowitz, nearly tied himself in knots at Ad:Tech NY, explaining to attendees that the FTC does not want to crash the cyber party, or get in the way of the industry’s own efforts to self-regulate around digital privacy and data mining.

Leibowitz talked about how the FTC noted that from 1999 to 2008, Internet advertising has grown at a 40% compounded rate to something like a $23 billion business.

"The ads you create are picking up the tab for free content; it's high-tech, targeted marketing relying on analysis." So where does the FTC partake of this? He says the commission jumps into the intersection of advertising, technology and media, "not to create a stoplight, but to enforce consumer-protection laws so marketers can continue to make a profit…we are an enforcement agency, not a regulator."

So what's the problem with the current state of consumer privacy and data collection? In the broadest terms, Leibowitz argues that people need to have an easily executed and obviously recognizable means of opting out.

He said that people have already agreed, tacitly, to give up the right to be left alone and in return get personalized ads and open invitations to the "cyber party, but that they need to have control of the firewall between their computers (when it comes to cookies) and their personal information.

“We know Americans expect heavy doses of advertising with entertainment, and most consumers appreciate ads online customized to their interest. But we are concerned that some consumers don't know they have made a deal, and if they do, they don't know the price. Too many consumers don't understand they are trading their privacy and haven't made an informed choice to do so," he said at the conference on Tuesday.

Leibowitz says the foundation for self-regulation has already been laid as the Digital Advertising Alliance (DAA), and industry group, has signed on to the FTC’s "do not track" idea, comprising a visible option to allow consumers to choose to opt out. The opt-out "button," should be easy to find, said Leibowitz, and allow consumers to do more than turn off targeted ads. But he says that unlike the government's successful "do not call" program, the "do not track" effort would be administered by organizations like the DAA.

"Our vision is that it would be like 'do not call,' for which we have gotten more than 200 million registered phone numbers. But we think it should be administered by the industry. The DAA is making progress on this," said Leibowitz. The problem is if there isn't near-universal adoption a rotten-apple model ensues: one cyberazzi will make the system ineffective.

"The party-pooping cyberazzi will keep Congress involved and people shouting on both sides," said Leibowitz. Meanwhile, the FTC strives to keep up with changes in technology. The commission, for example will host workshops this year to explore such new tech as facial recognition technology.

"We at the FTC have no interest in shutting down the cyber party. Our only concern is that all guests understand there could be a cover charge," he said.