Targeting, Smartphones & Privacy

The complaint filed earlier this year by privacy advocates with the US Federal Trade Commission takes aim at ad targeting capabilities in mobile. Precisely those rich targeting capabilities that the mobile device brings to advertisers are decried by critics who object and would like to blunt data collection and tracking on the mobile Internet.

That broadside against mobile marketing is an extension of a similar complaint filed against behavioral targeting practices online. The FTC declined to regulate BT online for now but says it's keeping a watchful eye open.

An article in today's NY Times summarizes the battle lines between privacy advocates and mobile marketers who want to be able to tap the various layers and flavors of mobile targeting: demo, location, dayparting, etc. The central issue is awareness and consent from users: how explicit is it? While the MMA advocates "best practices" around opt-in and consent, these policies have not mollified mobile marketing critics. 

I wrote before, in the context of a discussion about Smaato, about how express consent and explicit opt-in practices may help resolve the issue (and even benefit mobile marketing):

The MMA has promulgated best practices around opt-in for mobile marketers. But there's a difference between pure mechanics and what I believe [Smaato co-founder and CEO Ragnar] Kruse is arguing for -- a philosophical orientation to mobile marketing.

Opt-in makes mobile marketing more like search, where people indicate preferences and intentions through keyword queries. There are questions of mechanics and user experience -- how would all this be presented? -- but theoretically I would indicate my interest in seeing selected categories of ads and offers (much like opting in to email newsletters). I might also be inclined to share additional information about myself to maximize the relevance of those ads.

What it's really about is creating a more personalized culture of mobile advertising than what currently exists online, despite behavioral targeting. That might not be able to develop if the current online ad culture quickly and entirely transfers over to mobile. 

Google today introduced a beta program that implements behavioral targeting. What's interesting about the program for purposes of this post is that it allows users to state category and subject preferences that will impact the ads they later see. (They're calling it not "behavioral targeting" but the more consumer and regulator-friendly "interest-based advertising.") This preferences dimension of the program goes beyond pure consent to an affirmative statement of interests by users. (Getting them to do this as a practical matter might be challenging.)

 Ad preferences

Yet there's something potentially very important for mobile marketing in this experiment. 

Citigroup analyst Mark Mahaney recently summarized in a research note some of Nielsen's data around consumer attitudes and resistance toward mobile advertising:

We believe there are roadblocks to the adoption of Mobile Advertising, including user skepticism, and privacy concerns. In the U.S. 68% of mobile data users are opposed to mobile Internet ads, even if those ads subsidize a portion of their mobile bills. Only 8% feel mobile ads are trustworthy, and 87% are not open to mobile ads even if those ads are relevant to their interests. However, in Europe, users are more open to mobile ads – In France, Italy and Spain, 41%, 52% and 54% would be receptive to mobile ads if they lowered their bills.

We've written at length before about consumer acceptance of mobile marketing, which is growing and exists more at the high-end of the market -- the more engaged and sophisticated mobile users are the more interested they are in advertising on their mobile devices.

The statement that a majority of consumers simply object to mobile ads is too broad. Yes there is considerable resistance; however it also depends on the context and presentation of the ads. For example when we framed a question in a way that conveyed both a sense of the benefits and user control, responses were generally favorable:

Appetite for mobile offers
Source: Opus Research (2008), n=789

There is a potential resolution of privacy and targeting objectives that involves user education, consent and/or affirmative requests for ad categories and types (e.g., coupons). The Google example will be one to watch accordingly.