Behavioral Targeting Firms to Reassess Self-Regulation Rules

  |  January 4, 2008   |  Comments

Members of the Network Advertising Initiative will soon update the group's seven-year-old behavioral targeting principles and respond to the FTC's proposed self-regulatory guidelines.

The Network Advertising Initiative (NAI), a consortium of behavioral targeting stakeholders that includes AOL, Yahoo and, soon, Google, is preparing to update its aging behavioral ad targeting principles. The refresh is in part a response to the Federal Trade Commission's (FTC) recently proposed self-regulatory guidelines for firms and Web sites engaged in behavioral targeting and in part a predictable result of the technology's evolution. The NAI expects to release new self-regulatory guidelines in the first half of 2008.

As it gathers input from members for the revision, the NAI will also respond formally to the FTC's industry proposal. Additionally, it may decide to expand its membership to include a larger number of firms with an interest in behavior-based ad targeting.

"The NAI principles were created seven years ago to respond to concerns associated with profiling, which was our word for behavioral targeting way back when," said Trevor Hughes, executive director for the NAI. "It's reasonable to say that since the NAI principles were created the market has changed pretty drastically."

For one thing it's grown in scope. In the darkest hour of the dot-com fallout, Hughes said the NAI's ranks shrank to fewer than four members. Today they number above ten, and dozens more may be added in 2008 as members consider whether to expand the group's mandate.

"There's some recognition that... standards for newer practices and more novel business models should bear some scrutiny to determine whether they deserve treatment under a self-regulatory program," said Hughes. "In terms of percentage of the marketplace we feel pretty good [about our representation]... That said there are probably dozens of smaller companies that should belong to the NAI."

Hughes estimates membership could grow to include more than a hundred members should the organization choose to widen its scope. In one scenario, the NAI could assign membership to companies that "gather data in one place for use in another for advertising purposes," he said. That would cover practices such as single-site advertising, and could result in a much broader member base.

With the 2008 initiative, the NAI has entered an active process of meeting with members, conducting multiple calls per week to revise its principles.

As it does so, the group is also preparing to comment on the FTC's recently proposed self-regulation guidelines. The guidelines document suggests a general framework for how Web sites and other stakeholders in the behavioral ad space should communicate with Web users, gather data about their online activities and treat that data once they've collected it. With the release, the FTC opened a two-month comment period, after which the FTC may release formal guidelines.

"The FTC document is notable for its lack of granularity and its lack of specificity with regards to implementation," Hughes said. "The devil is in the details with self-regulatory principles."

Separately, Hughes noted Google has recently applied for membership in the NAI, but declined to elaborate on the company's reasons for joining. Regardless of that application process, the search giant may automatically become a member in the near future should its pending acquisition of longest-standing NAI member DoubleClick close.

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ABOUT THE AUTHOR

Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

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