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The Impact of Privacy on the Future of Wireless Advertising
The Impact of Privacy on the Future of Wireless Advertising

It's not a question of whether wireless advertising is coming to the U.S. market, but whether consumers will be too unhappy with privacy issues to see the value...

Yogi Berra once said "You got to be very careful if you don't know where you're going, because you might not get there." This is a good quote to describe the initiatives being undertaken by the proponents of wireless advertising around the world. They're beginning the task of bringing wireless advertising to your mobile phone or other wireless device. If they do their jobs right, within a couple of years wireless ads will be part of our daily lives - even here in the U.S.

Who is doing this? Well, we in the U.S. can thank, in part, a number of organizations ranging from the Wireless Advertising Association (WAA) to the Federal Trade Commission (FTC). Let's hope that, in getting us down the road to ads pushed to wireless devices, we'll see a lot of real value via this new medium and only a small amount of annoyance.

It's fair to say that these organizations have no simple task ahead of them. The path to striking the right balance between delivering value, trust, and privacy all at the same time seems like it will be a tricky one. It makes you wonder what the WAA's general meetings are like. To be sure, they must contain active discussions centered on topics such as privacy, location-based information, and wireless text messaging "spam." As they struggle with these issues, while trying to move wireless advertising toward becoming mainstream, you can bet that there will be a number of lessons learned along the way.

The Privacy Lesson
In fact, each country or market has its own particular cross to bear when it comes to wireless privacy issues. The UK and European Union have already started down their "regulatory road" and have some government- and industry-backed initiatives on the books to secure the privacy of mobile phone users - both for voice and SMS messaging. As a rule, the UK gives a great deal of scrutiny to these types of issues, and is likely to heavily regulate SMS-based marketing. For instance, the UK Data Protection Commission is likely to make it illegal to use wireless location technology for advertising purposes, even if customers have opted in.

On the American side of the Atlantic, there has been some saber rattling in Congress to the point where this year there was talk of making it a criminal act to send a solicitation to a wireless device without that individual's express permission. But, of the legislation that has been introduced, only one piece from the U.S. House of Representatives has made it to committee hearings. Specifically, House of Representatives Bill 113 - the Wireless Telephone Spam Protection Act - seeks to amend the Communications Act of 1934. This bill would "prohibit the use of the text, graphic, or image messaging systems of wireless telephone companies that want to transmit unsolicited commercial messages." The bill's sponsor Rep. Rush Holt (D-NJ) wants to at least safeguard the "rights of mobile phone users" as far as wireless spam goes. On the whole it seems that the U.S. government has not yet fully taken the complex "wireless privacy" bull by the horns.

Many feel that significant government oversight of wireless privacy issues will not likely occur, and that the wireless advertising industry will be self-regulated. Such self-regulation is the standard "market-driven" approach to handling the majority of the regulatory issues in wireless telecom. Wait, isn't that the approach that got the U.S. wireless industry where it is today? Hmm...

What Will Self-Regulation Really Mean?
What will all this mean to the constituent companies in organizations such as the WAA? How will they manage self-regulation of the still germinal wireless advertising industry? They've started with a set of guidelines that any member company must adhere to. With these guidelines in place, they hope to create a climate of trust and control for the end user (to learn more about the WAA, go to www.waaglobal.org/).

Other details of the WAA guidelines include:

  • Subscriber permission is not transferable to third parties without explicit permission from the subscriber
  • Clear instructions should be provided to the receivers of wireless message ads (via e-mail or other means) so they can opt out of future wireless push advertising
  • These instructions must be readily available to all wireless ad recipients
  • All opt-out requests generated by these instructions must be honored
The WAA has also identified other "illegal" practices including forging message originators, online research that obscures the true purpose of research, chain letters, "fake" voice calls, malicious wireless push (e.g., "mailbombing") by using number blocks to spam SMS messages, and misleading subscribers about content.

There are other groups that are also interested in the outcome of wireless advertising; the handset-centric group called IMPS, which stands for Instant Messaging & Presence Services, is one. The group consists of the largest players in the mobile handset market - Nokia, Ericsson, and Motorola. IMPS wants to ensure interoperability of the messaging involved, whatever standards emerge from the melee of wireless advertising.

If groups such as these will both set up a standard for member companies to abide by, and submit to the "governmental will" of organizations such as the Federal Trade Commission (FTC) or the Federal Communications Commission (FCC), then self-regulation of wireless advertising will likely succeed.

It also can't hurt that the WAA has hired a Washington, DC, firm to act as their lobbyists to help them support and educate the government about the adoption of standards they've been drafting.

What Will Wireless Advertising Look Like?
Before we delve too deeply into the issues associated with wireless privacy, it would help to touch on exactly what the face of wireless advertising could be. Here are some scenarios. Wireless advertising will look very similar to permission-based e-mail. An advertiser will need to get your permission to send you a wireless message. Opt-in, or opt-out. So for example, when you visit your neighborhood video store and tell them "yes" I would like to be notified on my mobile device when new release "X" is in, in the sign-up process for that service you would (or would not) give them permission to also offer you coupons and other incentives you might like as a customer.

In the beginning, this type of wireless advertising will largely consist of SMS text messages that are independent of location, and will focus mostly on "couponing" types of applications. There will not be much to write home about at first - it will be somewhat novel and will likely provide some value to the user.

Soon after that though, the character of wireless advertising will change. Within a year or two, you'll begin to see some location-based wireless advertising - advertising that's relevant to where you are. Location-based advertising will be a big opportunity for brick-and-mortar establishments to generate more foot traffic and customer loyalty, and to see metrics associated with both.

By that time, the actual content picture could be much different too. There will likely be more interesting and eye-catching messages pushed to mobile phones and devices - SMS text messages will seem boring. You'll get things such as picture messages, small animations, and sound bytes or other creative marketing content (see Figure 1). You'll also see the carrier market (i.e., AT&T, Verizon, and Sprint) trying to stake a claim in the revenues being generated by these types of ser-vices, or possibly, they'll be the originators of them.

All this said, it seems true that consumers will have to become adept at managing this new channel of advertising coming at them. With the experience they have with Internet, print, and TV advertising, and spam e-mail campaigns, you might guess that wireless consumers are well-conditioned to manage. There is evidence to that effect too. In a recent wireless advertising study done by SkyGo in Boulder, CO, on the heels of a nonlocation-based wireless ad trial, the resulting feedback was:

  • 64% of all ad alerts were opened (the consumer clicks on the ad title to view the ad)
  • 3% of participants made a purchase as a result of viewing an ad
  • 31% of consumers used "search all ads"
  • 7% of consumers said they would use wireless coupons at the point of purchase
Is There a Problem Here?
Why should anyone worry about wireless advertising and the privacy issues that they create - in the U.S. or other markets for that matter? Well, there are a number of subtle issues with wireless advertising that are not immediately apparent. Until now, advertisers have arguably not been able to effectively execute focused personal profiling and targeting - even with all the energy behind Internet advertising. In the very near future of wireless advertising, the U.S. seems ready to change that picture.

The wireless messaging "channel," thanks in part to the U.S. wireless operator and other permissioning efforts, will offer advertisers the chance to finally deliver on the promise that Internet advertising wanted: to make an advertised message more timely, focused, and personalized than ever before, and to do so with an amazing amount of feedback about the delivery of the message.

As marketing messages are delivered and tailored according to location and the vendors around you, advertising will be driven by the fundamental that anything that can target or tailor a message more effectively to an audience is a valuable tool.

But as with many things wireless, it may not be as easy as it looks. Advertisers are not going to be able to take, for instance, an Internet-like ad campaign and quickly and easily force it down the new wireless channel to consumers. There are a host of issues to contend with first - most of which have to do with keeping the "value focus" for any ads being delivered, lest the wireless advertising channel be degraded.

Wireless Advertising: Not Like E-Mail
One of the attributes of the U.S. market, thanks to fairly easy access to the Internet, is that the U.S. is very e-mail centric. The U.S. is also, as a result, targeted by a lot of marketers out there with e-mail of little or no value - better known as spam. Very few of us that use e-mail can avoid being "spammed" with unwanted or unvalued information or offers.

For the purveyors of wireless advertising, a very careful hand will be required to control wireless advertising delivery to devices. It will not be the same old stuff we endure from other advertising channels. Trying to overlay Internet advertising on top of a wireless delivery channel, though technically simple, will just make people unhappy and create lawsuits.

Add to this that as of late, the "value proposition" of Internet banner advertising is hitting the skids. Many analysts also say that blanket-coverage banner advertising techniques will not thrive in the mobile world. Nonetheless, a majority of wireless content providers are looking at including ad-based revenue on their bottom lines. For the U.S. market, advertising is a known quality, and is the "low-hanging fruit" to the early entrants into wireless messaging. This illustrates that it's human nature to try to take one success and replicate it elsewhere - usually with mixed results.

In truth it is a very small leap to compare the online world with a wireless one in many ways. One fundamental difference - both wirelesss and online - is that with online, you can track only just so much information about the user of a service. In the wireless world there's an order of magnitude increase in what can be observed and tracked about a user. Add to this the fact that a wireless phone is a very personal device. We use it to talk to those we want to speak with, and we carry it almost everywhere we go. It seems intuitive that between the smallness of the screen real estate and the very personal nature of the device that advertising entities need to tread carefully with the content that is pushed to these devices.

Fear of 'Spam in the Hand'
Near term, it's shocking to think that SMS text messaging could conceivably be abused in the same way that e-mail advertising is. Imagine your personal communications device, your mobile phone, accosted by information you don't want. We could even see the selling of mobile phone numbers the way we see the selling of e-mail lists. Lucky for us that all the research done by wireless carriers consistently shows that the privacy issues surrounding wireless will be key to the consumers they serve.

An example that the carriers take this seriously can be found in the suit brought by Verizon Wireless against Acacia National Mortgage. The suit, which was brought after Acacia's unsolicited text messaging campaign spammed Verizon customers in Arizona and Colorado, has recently been settled out of court. The Verizon customers were also issued credits for the unwanted text messages.

Location-Based Services Create New Privacy Questions
Location-based services (LBS) will bring a new wrinkle to the mix when it comes to privacy issues. Services that provide answers to questions such as, "Where is the closest cash machine to me?" or "Where is the closest Fedex drop box?" or even "Hey, that pub we just walked by has pints for half price!" give rise to a host of privacy issues.

For instance, imagine you're walking down the street and you pass your neighborhood grocery store. If you've permissioned that store to send you messages, they might hit you with a coupon for some amount as an incentive to stop in. That's a fairly tame scenario. But such a scenario is a first step down a path that we might not want to go. How about this one? You're walking by your town hall and you get an SMS message reminding you to pay your parking ticket that you got two weeks ago. What would we all think of this type of SMS use? Or maybe a warning that your car will be "booted" shortly for nonpayment of parking tickets. (And yes, they will know exactly where your car is parked as it will likely have a telematics link that uses GPS.)

Another example of how this might shake out is in mobile-initiated financial transactions. When and if your phone company starts hooking up with your credit card company, what kind of controls will you want in place to assure that both industries are not looking over your shoulder with impunity?

To protect our individual right to privacy, in addition to some laws on the books, it seems that tools will be needed to maintain control over a number of areas - for instance, the disclosure of location-based information, such as the periodicity at which your mobile phone is "pinged" for location data or transaction privacy (what you purchased, when and where, etc.) and any number of other metrics. Most agree that a fairly significant user profiling initiative will be needed to build these kinds of "walls" effectively. And of course, once these tools are built, you must ask the question "Who watches the watchers?"

Assuming that such issues will get sorted out, there are a small number of startups developing "personal location profiles" services that will help carriers and companies build these profiles. These companies, and the tools they create and provide, will be repositories for your "location privacy profile." What is a "location privacy requirement?" How will we figure out, during business hours, if a given individual might choose to have a position report made available once every 10 minutes, but after business hours, no position reports are allowed? How individuals (and companies for that matter) are going to deal with the nitty-gritty of regulating these requirements remains to be seen. The profile management tools will be there to do so.

The Wireless Advertising Privacy Picture
In fact, if you examine the issue of privacy closely, it appears to be quite a tricky balancing act between how to provide all that good personalized content while maintaining anonymity for the customer.

Consider all the parties involved in this potentially complex content interaction (see Figure 3).

The picture implies the potential for some complex flows of private information. To illustrate a simple one, let's look at the following wireless privacy issue. With wireless E-911, (or, how your wireless phone company will keep you safe by providing emergency services folk with location information from your mobile phone) technically, the same location-based services used to keep you safe will likely be used by third parties to provide you with location-centric products and services. How will a wireless carrier like Sprint or Cingular walk the line between safety and generating profits (the word carefully does jump to mind)? Will conducting this balancing act be hard for the carriers? No one knows yet.

Privacy Assurance
Intuitively, as wireless ads progress, consumers will require "privacy assurances" from the companies that are holding their personal information - wireless privacy statements, if you will. Consumers will need to get the following from such statements to make a long-term future for wireless advertising viable:

  1. Complete control of their phone's "permissioned" content (control over what messages they get and from whom).
  2. Good perceived and actual value in the information that they do receive.
  3. An ironclad way to protect their right to privacy both in location services and content.
On the other side, wireless advertisers face the following challenges:
  1. Build and maintain a level of trust in their customer ranks.
  2. Do this by delivering relevant, valued information to a user that has given permission.
  3. Provide simple tools and easy-to-access profiles to their targeted customers to allow them to manage and stay informed about the usage of their PII information on a period basis - much like a consumer might do when requesting a credit report.
Bottom Line
Today, realistically, we can only take a "wait and see" approach given the relative infancy of wireless advertising products and services. (Of course, thinking through those same new products and services and how they impact privacy issues certainly couldn't hurt.)

Short term, SMS "push" marketing and location-based services are the kind of things that, unless done with restraint and focus, will likely "pollute" the wireless messaging communications channel. All parties concerned will need to carefully guide wireless ads by making sure they create real value, while keeping the privacy of their customers intact.

Long term, if self-regulated wireless advertising is to be successful, it will need to have privacy as a cornerstone component. It also seems clear that as wireless advertising gets delivered to more mobile users, it is in everyone's best interest that a proactive approach be taken to champion effective and easy-to-maintain wireless privacy standards. Doing so will keep the significant issue of privacy from becoming the problem that it could be.

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