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First, let’s look at the privacy concerns raised by online advertising and retargeting. The best companies are embracing complete transparency when it comes to consumers’ privacy concerns and online advertising.

Zappos, the shoe retailer, is an example of how companies can be completely transparent about retargeted advertising. Some Internet usersfind the practice of retargeting disturbing (“creepy”

seems to be most the commonly used adjective by detractors) and view it as an invasion of privacy. In its retargeting ads, Zappos addresses consumer concerns head-on with remarkable candor. The online shoe retailer recognizes that consumers have differing perspectives on retargeting, so it uses its advertising to help viewers understand what is happening and allows them to opt out of this kind of marketing.

Here’s how Zappos does it. The company’s retargeted ads include text that reads, “Why am I seeing this ad?” If consumers click on that text, they are taken to a page that explains retargeting and allows them to opt out. “Some people prefer rainbows. And other people prefer unicorns. If you prefer not to see personalized ads, we totally get it. OPT OUT HERE.” The page goes on to reassure the consumer that none of his or her personal information has been shared with anyone. The process is entirely anonymous,

and the ad was served solely based on the Zappos pages the consumer visited and an algorithm that determined which shoes the company could advertise that would most often lead to more sales.

The data that determines what ad you are served when you arrive at a particular website is often determined by the data contained in cookies that various websites and companies have placed on your web browser. These cookies give a digital picture of your browsing habits. Plus, if you have login information stored on particular sites, cookies can also provide information such as your name, address, and e-mail account. There are laws that place limits on how marketers can use this information. The more sensitive the information, the more heavily regulated its use becomes. For example, the use of financial data about a consumer is regulated by multiple laws such as the Fair Credit Reporting Act. The use of highly sensitive health data is regulated by the Health Insurance Portability and Accountability Act (HIPAA).

Despite these laws in place to regulate use of the underlying information stored in cookies about consumers, a battle about how businesses should use cookies continues. Some companies and organizations have advocated for the elimination of the third-party cookie—or at least they aim to marginalize the technology. Many privacy advocates have supported“do not track”(DNT), which is a tool that enables consumers to signal to websites that they do not want their actions and browsing habits to be tracked as they surf the web.

But arguments focused solely on cookies are a red herring. The issue isn’t the cookie. The cookie is just a technology. There are other tracking technologies out there, such as statistical ID, a locally shared object (which is also known as a Flash cookie), the AdID reportedly being developed by Google, or a similar technology Microsoft is said to be creating. Cookies or any of these technologies are just tools. They can be used for good, safe, and effective advertising within the laws that currently exist on the books. Or those who don’t care about laws can use them for bad purposes.

To get at the solution, we believe that the industry needs to focus on the actual problem it is trying to solve: that malevolent parties could take advantage of technologies such as cookies for their gain at the expense of our privacy as consumers. The solution could easily be accomplished through screening for enforcement of the rules to govern the use of information and through technical capabilities to block those that don’t follow the rules.

As a result, only companies that pass this screening will have the privilege of targeting consumers, and for those that pass initial screening, any future misuse of this targeting information would have a penalty so severe—the inability to target most consumers online—that marketers won’t be able to take the risk of noncompliance.

Ultimately, the core principles of good, effective ad targeting coexisting with consumer privacy must remain intact regardless of the cookie or other technologies being used to actually target the marketing messages. Any set of rules governing the Internet and how consumers interact with corporations—and vice versa—must acknowledge the following.

Tracking is a fact.Consumers will be tracked. Whether it’s the

cookie or some other technology, businesses will track consumers on the Internet. From a business standpoint, the capability to customize and personalize content and advertising is a key element separating the Internet from other media.

Transparency is essential.Businesses must be completely trans-

parent about how they use tracking technology. Most reputable businesses post privacy policies on their websites, but few consum- ers read them. The best businesses should be more proactive and up front about informing consumers what information they’re collect- ing from, for example, visitors to their website. American businesses would be well advised to follow their British counterparts, who use pop-up windows to inform new website visitors that the site is using cookies and visitors have the option to turn them off.

Users must have control.Users should have the ability to turn

simply don’t want to be tracked on the Internet and no amount of explaining how the tracking is anonymous and depersonalized will convince them otherwise. “The message should be:‘You guys are in control, and here are simple and easy ways to opt out,’” said Scott Meyer, Ghostery CEO. Marketers and publishers on the web should focus on the nearly 7 in 10 Internet users who never or rarely turn on the “do not track” setting in their browsers.

Content and advertising must be targeted, relevant, and con- venient.Delivering content that is extremely targeted, relentlessly

relevant, and instantaneously convenient is the essence of pub- lishing on the Internet. For marketers and consumers alike to get the most value from the web, and to ensure that they continue to drive competition and underwrite Internet content, the advertising must also be targeted and relevant. Tracking is what enables that for both publishers and marketers.

Online data must be secured. Businesses need to have a more

urgent recognition that the data they have access to can harm consumers in certain situations. The publishers, the marketers, and the companies that build the advertising exchanges that make programmatic advertising possible must make sure the data they use to target customers is non–personally identifiable information (non-PII) and protected and secure from the malevolent parties and hackers who would use that data for theft, blackmail, and other crimes.