As the mobile advertising industry begins to capture more share of the marketing mix, it is also working aggressively to put in place privacy policies and guidelines to keep Washington from adopting stringent privacy laws that would crimp future revenues. The growth of the business—projected to top $2.6 billion this year, according to eMarketer, and climbing to more than $10 billion in five years—may depend on it.
Among the more than a dozen privacy bills that are making the legislative rounds on Capitol Hill, two are aimed specifically at mobile privacy. Also in the wings are two privacy reports due out soon from the Federal Trade Commission and the Commerce Department.
“If bills go too far, they might restrict promising services for consumers before those services get a chance to mature,” said Stu Ingis, partner with Venable, the law firm representing the Digital Advertising Alliance, Direct Marketing Association and the Interactive Advertising Bureau.
The question is where regulators and legislators will draw the line, especially around location data, a desirable targeting component that differentiates mobile from online and is also the biggest catalyst driving mobile’s ad growth. By 2015, location-targeted mobile ads are expected to make up two-thirds of all spending in the space, according to a BIA/Kelsey forecast. The appeal to advertisers is simple: Location-targeted ads get higher click-through rates, about 10 times more, according to data from xAD.
Though the odds of any bills or new regulations passing in an election year are low, sometimes all it takes are threats of reports, hearings or a bill to energize an industry.
Since last May, when Sen. Al Franken (D-Minn.) hauled in Google and Apple execs for a hearing, the Mobile Marketing Association has made a lot of progress toward establishing mobile privacy guidelines. Two weeks ago, the MMA released privacy policy guidelines for mobile apps. As soon as June, MMA is set to unveil the mobile version of the DAA’s advertising privacy icon, the self-regulatory program that gives consumers the opportunity to opt-out of behaviorally targeted advertising.
“If we don’t write the policy, Congress and the regulators will fill the need,” said Greg Stuart, the global CEO of the MMA. “It’s one of the things that has to happen for mobile to take its rightful place.”
Agencies, not waiting for the industry to craft policy, are taking matters into their own hands. GroupM last May adopted its own mobile privacy policy addressing some of the thorny issues that lawmakers have tried to address. The policy directs GroupM’s vendors not to use controversial technologies for targeting purposes, including unique device identifiers (UDIDs) and keystroke tracking that may share personally identifiable information.
“We wanted to fix it before the government got too involved,” said John Montgomery, COO of GroupM Interaction. “All our vendors agreed.”
In the absence of guidelines or regulation, “you have to police it yourself,” said Joao Machado, director of mobile for Airwave, OMD’s mobile consultancy. “If we hear that a third party is asking for UDIDs, we just walk away. We don’t want the growth of mobile to be compromised by some less-than- upstanding players.”
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