CDD urges Consumer Regulators at ICPEN 2015 to tackle Data Driven Digital Marketing

CDD’s executive director Jeff Chester called on regulators representing dozens of nations to address the role that today’s data collection complex plays in consumer transactions and services. Speaking at the 2015 annual meeting of the International Consumer Protection and Enforcement Network (ICPEN), Chester said that in order to protect consumes today’s regulatory agencies—such as the FTC—must understand how data issues are integrally a part of consumer services, including in the financial, health, and retail marketplace. A modified version of the presentation is attached, minus the videos shown that illustrated the cross-device tracking and Big Data Management Platforms that are just the latest developments in digital targeting of individuals. There were also video presentations on how programmatic advertising works (targeting junk food to kids); the role that measurement plays (continually analyzing how we respond to a range of applications and interactions); and the growing use of neuromarketing (fMRI’s, facial coding, etc.) is shaping digital marketing and other communications so that it operates at the subconscious and emotional level of individuals. The “story” the slides tell is that to protect consumers in the 21st Century, consumer regulatory agencies need to address how digital marketing actually operates, which is, of course, through a system that integrates data collection with a range of online advertising applications (to “immerse” users in the interactive content, through social media surveillance, neuromarketing, geo-location, etc.). Consumer agencies should tackle the “path-to-purchase” paradigm, supported by Google and others, that continually targets an individual to influence their purchasing behaviors both online and offline. Digital marketing is really a powerful system designed to promote the influence of brands and products, including through ways designed to change how an individual thinks, feels and acts. We explained that this was a global system, with the same set of marketing and data gathering practices being used in SE Asia, Middle East, Latin America, EU, U.S., etc. So here’s a quick run-down of the slides attached, minus the videos. Slide 1: 21st Century Consumer protection must address the role that data collecting and its use play with the marketing and provision of services, including financial and health. Slide 2: Scholars, such as Prof. Frank Pasquale, are raising concerns about the role that complex data analysis plays in decision-making on individuals. They have called for regulators to address how the “Black Box” of algorithms and related predictive analytic tools is used in the marketplace. Slide 3: This slide from Adobe illustrates one of my points, that the “Black Box” reflects deliberately chosen business practices used to target individuals. The so-called “secret sauce” is often visible by examining how the businesses use their data and marketing to sell or promote to consumers. Slide 4: What safeguards are required today. Slide 5: Our work since the early 1990’s to address the role that data plays in the commercial marketplace, including our leading campaign to enact the Children’s Online Privacy Protection Act (COPPA) in 1998. We explained we fought for privacy rules that would protect everyone back in the 1990’s, but the industry opposition then—as today—was too strong to get anything except for children. Slide 6: Explained that the basic business model for online was articulated back in the early 1990’s in the book “One-to-One Future.” At that time, it was about tracking an individual across a single website; today includes omnipresent tracking across devices and applications. The picture on the right is Facebook’s new data center in Sweden, the largest one it has built in the EU. Slide 7: Illustrates the role that online data collection, through lead generation, played in the global financial crisis. Online lead gen used to sell subprime loans in the U.S. Message was there are vast international consequences—to people, families, and nations—with how the online marketing system operates. Slide 8: Our recent FTC complaint on Google’s YouTube Kids unfair and deceptive ad practices that target the youngest children. Slide 9: It’s a global system and an international problem. Slide 10: What’s been created in a commercial surveillance system of individuals, groups, and communities. Slide 11: The path-to-purchase paradigm and need for regulators to understand and address the continual monitoring and targeting of consumers. Slide 12: The role that contemporary “Big Data” practices play in marketing. Slide 13: The mobile device’s critical role in digital marketing, including how quickly it achieved mass use (compared with other media). Slide 14: The complex of data companies, often working closely together, that assembles profiles of an individual. Slide 15: It’s not anonymous. It’s about an individual. Slide 16: To address today’s consumer practices, you need to analyze how both data and digital marketing applications are used. Slide 17: The intent is to understand and “manage” a person’s identity, for commercial (and also political) purposes. Slide 18: Facebook sells itself to advertisers by saying they know the “identity” of the user. Slides: 19-20: A person is sold in real-time, milliseconds, to marketers via so-called programmatic buying (ad exchanges, etc.). Gave example from McDonald’s in Denmark. Slides: 21-23. Features of contemporary digital marketing. Slides 24-25: Companies are engaged in social media surveillance, including through the monitoring and analysis of blogs, posts, etc. They are now social media “command centers” engaging in such practices 24/7. Slides 26-28: Examples of digital marketing of loans to low-income consumers, health products and alcoholic beverages. Slide 29: Real-time data targeting and sells of a user/household coming to TV. Slide 30: Teens require safeguards. Role of junk food companies using digital marketing, despite global youth obesity epidemic. Slide 31: Problems will grow, with Internet of Things, mobile payments, wearable’s, etc. Final Slide: Need to proactively act. Regulators should be concerned that trade deals, such as TPP and TTIP, will restrict their ability to act on the future. PS: FTC Commissioner Julie Brill gave a terrific presentation on these issues, raising many key concerns (attached).