Little kids. Big bucks.

In 2006 children and young people in the UK up to the age of 19 spent £12 billion out of their own pocket money or earnings derived from part-time jobs. If you add the amounts spent by parents, over which in varying degrees children and young people have some influence, in the same year the total value of the potential market increased to almost £100 billion. 

In 2009 children aged 7-16 spent £448 million online. That seems quite low in comparison to the total. I suppose it gives some indication of what is to play for through drawing an increasing proportion towards the online space.  “It can’t all be going on gob stoppers in the tuck shop, can it Bunters?”

Seemingly of the £448 million, £64 million was spent without parents’ knowledge, typically through surreptitious use of a PayPal account or credit card. That was one in seven of all online transactions undertaken by youngsters in that age group.

In February 2010 it was estimated that on average it costs a British family in excess of £200,000 to see each child through to their 21st birthday. I am sure that in many developed countries numbers could be produced showing similar patterns.

Children and young people are therefore very obviously major economic actors. This makes them an immediate target for a wide range of businesses. Many companies also want to reach out to youngsters to recruit them to their brand in the expectation of developing a longer-term commercial relationship.

Policy challenges

Online retailing is on a long upward curve. Children’s and young people’s participation in it is travelling in the same direction. However, several of the rules and practices which have been established to protect children and young people from unfair commercial practices in the real world do not yet seem to have been fully translated into the virtual space or to have found an online equivalent or proxy.

Welcome to the Court of the King 

Advertising reigns supreme. Although it was not their original mission, one way of thinking about Google, Facebook, Yahoo and several other big online players is as marketing companies that use technology as their hook. 

We should all be very grateful for that. Advertising revenues have provided the wherewithal which allowed them to deliver all the wonders they offer free at the point of use. However, we also have to acknowledge that many internet companies’ almost total dependency on advertising revenues has had a profound impact on their corporate attitudes and policies.

The world of online behavioural advertising

Internet companies have come to rely on what has become known as “online behavioural advertising”, often abbreviated to “OBA”. One estimate suggested that in 2009 80% of all online advertising campaigns were of this type. I’m guessing today it is closer to 100%.

OBA is personalized advertising. It is meant to reflect your tastes and interests. How do the advertisers know what your tastes and interests are? You tell them through the web sites you visit, the things you post, what you list or discuss as your interests.

If you give cycling as a hobby as part of your profile on Facebook, expect to receive ads from Raleigh. If you search on Google for salsa dancing classes get ready for missives from the masters of the Macarena.

The more internet companies know about you the richer their dataset, the more valuable it is to advertisers. Remember that the next time you hear someone tell you privacy is dead. And check out who’s pushing the patient towards the edge of the cliff.

Actually, in principle I don’t have any problem at all with behavioural advertising. It really makes a great deal of sense. I am never going to buy scuba diving equipment so why would I ever want to see ads for new, improved, lighter, cheaper, oxygen tanks? On the other hand my regular searches for obscure Tamla Motown tracks are starting to produce behaviourally-assisted dividends.

Yet there is a big “but” that needs to be inserted somewhere.

Informed consent is a sine qua non

In both the offline and the online worlds data collection should be based on the informed consent of the data subject. That’s you and me in plainspeak. However sensible behavioural advertising is, nobody has the right to collect or enrich themselves on data about my online habits without my agreement. People might, just might, sometimes allow the Nanny State to presume to know what’s best  for them, but not Mammon.

There are continuing suspicions that many online companies are failing to discharge properly their obligations to obtain informed consent from adults from whom they extract this kind of personal data. This raises grave doubts that they are doing so at all satisfactorily in relation to children and young people where the burden is heavier.

In fact off the top of my head as far as I know every web site presents their information about data collection, retention and use policies in a uniform way. So 13 year olds get the same as 39 year olds. Something potentially not quite right there, depending on which way the language tilts.

Children and online advertising

Direct evidence of the importance attached by internet companies to children and young people in the economic space emerged in a recent article in the “Wall Street Journal”. The Journal’s investigation revealed that “popular children’s websites install more tracking technologies on personal computers than do the top websites aimed at adults.” Tracking  lies at the heart of behavioural advertising. “Cookies” are the best known exemplar.

The article looked at 50 sites that were popular with American “teens and children”. Eight of them were associated with Nickleodeon TV, a channel aimed squarely at younger children. The Journal also looked at 50 of the most popular US sites which were principally aimed at adults.

4,123

The children’s sites placed 4,123 tracking devices on to the computers which had accessed them. This was 30% more than were found on the computers which accessed the adults’ sites. Google seemed to be the single most active company in relation to placing tracking tools on sites principally used by kids.

A specific example cited in the Journal article concerned a 10 year old child who reported that Google consistently presented her with ads for “pets… ‘virtual worlds’ and ‘online goodies’ such as little animated graphics to decorate a website”.

Many companies say they make no attempt to collect data which is solely about or of interest to children. I have little doubt that is true. I accept in good faith that in the above illustration Google did not knowingly target the child, did not engage in intentional behavioural advertising aimed at children. I am sure they did not deliberately collect data which was only likely to be of interest to a child. But Google might as well have done. The end result was the same.

However, what is perhaps most striking about the Journal’s research is the way it provides confirmation of the lengths to which companies will go to obtain data from web sites most commonly frequented by minors.

Public anxiety

In research carried out for the UK’s Office of Fair Trading it was revealed that 37% of the sample were either “very concerned” or “somewhat concerned” about cookies. That is a big number. If the survey was repeated, only this time respondents were asked what they thought about the use of cookies on children’s web sites, it is likely the percentage would be even higher.

True, it is possible to block cookies but companies that deploy them vary enormously in the amount of time, energy and resources they devote to ensuring their users know how. Not everyone makes it easy.

New code of practice on online advertising

From 1st March, 2011 the Advertising Standards Authority (ASA) went operational with its new code on online advertising. This is very important in the context of the concerns raised in this blog. The ASA has teeth. It sets the rules for everyone who engages in paid for advertising, including the agencies that produce and place the copy.

The ASA defines a child as anyone below the age of 16. It has rules about collecting data from children. For example, companies cannot collect information from anyone below the age of 12  without first obtaining parental consent. In effect this means, aside from those services which are specifically aimed at very young children e.g. Moshi Monsters, Club Penguin and the like, nobody will solicit anything from under 12s. Too messy.

I am not quite sure why the ASA does not take 18 as their benchmark, not least because there are a range of products and services which ought not to be promoted to persons under that age as they cannot legally be sold to them. There are specific references to some of them in the ASA code e.g. alcohol and tobacco, but I would have thought the same or broadly similar rules should be applied to any and all products reserved for over 18s. 

How deep the ASA’s teeth will be able to sink, and in to what or whom, remains to be seen, but I wish them well.

Internet Advertising Bureau

The Internet Advertising Bureau (IAB) is the trade body for online advertisers. Its recently adopted code is in line with the ASA’s but, given its constituency, it takes things a little further. The IAB code says none of its members may create behavioural “segments”  (marketing categories) for the “sole purpose” of targeting children under the age of 13.

I am trying to think what sort of limitation that is. Referring back to the Wall Street Journal article would it cover glittery pink ponies? What categories of items would be only of interest to sub-13 year olds?

I guess the IAB rule also leaves British 12 year olds a little high and dry. Here they are apparently ready willing and able to surrender their data to anyone who will ask them for it, but no IAB members may do so. Ah well.

I imagine few people will complain because the IAB’s rule is more conservative than the ASA’s but I suspect the dichotomy is easy to explain. The Bureau is dominated by US companies. They insisted on the US standard of 13, dictated by the COPPA laws. The ASA, being British, opted for the advice of the UK’s Information Commissioner. About which more in a future blog.

Direct Marketing Association

Then there’s the fine fellows at the Direct Marketing Association (DMA). It too has a code. The DMA code defines a child as someone under the age of 18. To me that makes more sense. It has a clear legal base.

Like the ASA, the DMA says data from sub-12 year olds may only be collected if prior consent has been obtained from a parent. However, here the DMA is much clearer than the ASA. The DMA says the consent must be “verifiable and explicit”. Bravo. It also talks at length about and prohibits the promotion of age restricted products and services to minors. Double bravo.

Recognition

The fact that children and young people are economic actors and targets on the internet ought to be recognized. This knowledge should be incorporated into all future policy making, both generally but also specifically in relation to online advertising and data collection practices. 

Media literacy and competency

Apart from anything else this might help prompt more media literacy initiatives. Inter alia these should give a focus to the key role of data collection and advertising in making the internet’s wheels go round. In a survey nearly 40% of young people said they trusted most of the information on the internet. Only a third said they had been taught how to judge the reliability of online information. Must do better.

Definition of a children’s web site needed?

A definition and method of determining what constitutes a children’s web site or other area of online activity perhaps needs to be agreed. Maybe the Wall Street Journal has already done the groundwork for us.

Specific rules governing advertising and data collection on or from such children’s and young people’s web sites may need to be developed. For example, should such sites be encouraged to develop a system of easily understood icons to complement or overlay the site’s fuller data collection and data usage polices?

What should we do about mixed environments? These would be web sites or online services that are not intended or predominantly for children and young people, but they are nonetheless used by very large numbers of them.

Some of this is not going to be easy

If resolving all these issues was a walk in the park I probably would not have bothered writing a blog about it. But as the internet matures and becomes ever more deeply integrated into our everyday lives the companies that dominate it need to get a grip.  Pleading the urgency of youth starts to wear a bit thin when you hit your mid-twenties. You are really only mature when you start acting like it.

About John Carr

John Carr is a member of the Executive Board of the UK Council on Child Internet Safety, the British Government's principal advisory body for online safety and security for children and young people. In the summer of 2013 he was appointed as an adviser to Bangkok-based ECPAT International. Amongst other things John is or has been a Senior Expert Adviser to the United Nations, ITU, the European Union, a member of the Executive Board of the European NGO Alliance for Child Safety Online, Secretary of the UK's Children's Charities' Coalition on Internet Safety. John has advised many of the world's largest internet companies on online child safety. In June, 2012, John was appointed a Visiting Senior Fellow at the London School of Economics and Political Science. More: http://johncarrcv.blogspot.com
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