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Privacy Concerns Limit Online Ads, Study Says

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Privacy advocates have had an impact on Madison Avenue after all, according to a new study.

Among marketers, privacy groups are often portrayed as scare mongers out of touch with ordinary consumers, who overstate the privacy perils of data collection online. Still, the privacy advocates seem to be making a difference.

Privacy issues have prompted marketers to use online behavioral advertising--based on tracking a user’s Web browsing habits--75 percent less than they would otherwise, according to a report by the Ponemon Institute, a privacy research group.

The 90 companies and organizations surveyed curtailed their behavioral advertising, even though they estimated the tracking-based ads were 50 percent more efficient in generating sales than conventional online display ads.

“Privacy fears are definitely having an economic impact,” said Larry Ponemon, chairman of the privacy and security research group. (The Ponemon Institute conducts both sponsored and independent research. The current study, Mr. Ponemon said, was an independent project.)

The markets are holding back, Mr. Ponemon says, because of the uncertain legal and regulatory environment. Congress and the Federal Trade Commission are mulling tighter restrictions on online data collection, disclosure and use.

From The New York Times
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