IAB Mulls Enforcement Capability in Self-Regulation Push

  |  July 2, 2008   |  Comments

As its chief hits Congressional hearings and its D.C. office adds a new attorney, the IAB determines whether to enforce standards and guidelines.

The Interactive Advertising Bureau appears to be sharpening its self-regulatory fangs.

The association has recently increased its efforts to ward off unwanted government regulation. Specific actions include sending its president and CEO to testify at a Congressional hearing, adding a new attorney in its Washington, D.C. office, and enlisting an army of small publishers to deploy in state battlegrounds.

Arguing against government regulation means making a convincing case that industry self-monitoring is a viable alternative. Now the IAB, which currently has no real policing capabilities, is determining how best to enforce standards for protecting consumer privacy and other guidelines, or whether to do so at all.

"We think it's time to expand some self-regulation," said IAB VP Public Policy Mike Zaneis. "We're still in the research phase.... We're looking to see if we should partner with a third party enforcement group," he continued, noting the trade organization is in regular communication with Web site and application validator Truste, the Media Ratings Council (MRC) and the National Advertising Review Council (NARC).

The IAB has already worked with the MRC in a sense; the council currently oversees audits of audience measurement firms that have been urged by the IAB. Established to investigate complaints against advertisers, NARC is another third party auditor that sets policies for the National Advertising Division of the Council of Better Business Bureaus, Children's Advertising Review Unit, and others.

Girding for Battle

According to IAB President and CEO Randall Rothenberg, "For much of the past year the IAB has been in discussions with several of the major media and trade organizations including the ANA and Four A's [Association of National Advertisers and American Association of Advertising Agencies] to discuss the importance and the feasibility of a broad self-regulatory mechanism to protect consumer privacy rights and expectations in interactive advertising supported media." The goal is to bring "clarity and consistency to self-regulation," he said.

"We have every anticipation that fairly soon we'll be able to announce that kind of agreement," he added.

In defense of behavioral targeting, the IAB, along with the ANA, American Advertising Federation; the four A's, the Direct Marketing Association, and U.S. Chamber of Commerce, filed a joint document to the Federal Trade Commission in April urging the government not to adopt broad regulations on the collection and use of consumer data. Stating the Commission's proposed principles have "significant shortcomings," the groups wrote, "self-regulation and leading business practices comprise the most effective framework to protect consumers and further innovation in the area of privacy and behavioral advertising."

The IAB has also joined the State Privacy and Security Coalition, a collective of companies including Google, Yahoo, AOL and eBay, to fight a stalled New York State bill preventing third parties from using sensitive personally identifiable information for behavioral ad targeting.

"We have a system that ain't broke at all so I'd be very careful of going across that bridge from research, inspection, exploration, into regulation without very careful scrutiny," cautioned Rothenberg last week during a House Small Business Subcommittee hearing on online advertising.

In the face of increasing regulation and proposed state and federal legislation regarding consumer data privacy and security, spyware, ISP ad targeting and e-commerce taxation, the IAB is girding to attack government intervention it deems unwarranted, uninformed or too vague. Plus, some wonder whether legislation is appropriate when it seeks only to quell concerns rather than arresting a practice that can be proven as harmful.

"We saw these bills coming down the pike in the states and what the FTC was doing, and it just didn't look good," Rothenberg told ClickZ News.

At the mandate of its board of directors, the group has hired an attorney to work alongside Zaneis in Washington on state, federal and regulatory matters. It also recently opened its membership to small publishers "To Fend Off Adverse Regulations," according to an IAB statement.

"We're organizing the long tail of the industry," Rothenberg explained, "whether it's bringing them to Washington or organizing them in their state legislatures."

The Long Arm of the IAB

As the IAB urges lawmakers and regulators to keep off its lawn, the fact is the organization currently has no official means of enforcing the guidelines, standards and best practices it has put forth over the years. Some members may prefer to keep it that way.

IAB Mobile Advertising Committee and Search Committee member Michael Winter, director of media at Agency.com in New York, refers to the organization's charter: "It is really to promote the space," he said. "From the committee standpoint that I've sat in on, it's about providing a counter argument to regulators, to protect the market, to allow it to do what it wants to do. I haven't come to any type of crossroads where I've felt as though they need to be more stringent on things."

"I think there's very little concern" about the IAB not being strong enough when it comes to self-regulation, suggested Alan Chapell, president of privacy consulting firm Chapell and Associates, who works with many firms in the online ad industry. Part of the challenge of applying a more stringent process, he added, is "they've got so many different constituencies and those constituencies have so many different interests." Indeed, though the IAB's main membership core consists of Web publishers, its membership runs the gamut from ad tech and services firms, advertising agencies and controversial companies including ISP targeting outfits NebuAd and Phorm.

Jarvis Coffin, CEO of Web publishing company and IAB member firm Burst Media, isn't so sure the trade association should be in the policing business. "I don't think what the industry needs is a long arm of the IAB; what the industry needs to do is act responsibly." He added, "As a member of the IAB I wouldn't vote to make them any sort of paralegal authority either."

The Network Advertising Initiative, for instance, acts as its own auditor for its behavioral ad company members. The self-regulatory program has an enforcement mechanism in place, and reviews its members regularly to ensure compliance to standards, including functionality of opt-in systems. The organization also works with members regarding complaints received from consumers.

Despite potential member backlash against establishing enforcement mechanisms, some believe the only way the IAB will be able to convince the powers that be of its self-regulatory capabilities is to do, well, extend that appendage.

"If the IAB has a set of self-regulatory standards and they're not policing it, and no one else is policing it, then it's not being policed," said Don Mathis, president of Epic Advertising, owner of IAB member firm AzoogleAds. When Epic still went by the Azoogle name last year, the company agreed to pay the Florida Attorney General's Office $1 million following its investigation of the firm for unfair and deceptive trade practices relating to online ringtone offers. Azoogle also agreed to work with the AG's Office to assist in other investigations, and recently hired two former AG Office staffers to serve under its general counsel.

Because of his own experience working closely with government entities, Mathis believes the IAB should do the same, rather than opposing them. "If you're promoting the concept to a legislative body that onerous legislation can slow down the growth of an industry, that's something I can support philosophically," said Mathis. Yet, he continued, "From a pragmatic aspect, the reality is, the ability to police the industry isn't what it should be on either [the industry or government] side, and maybe the right answer is to work with agencies to achieve that."

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ABOUT THE AUTHOR

Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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