Industry Embraces Opt-In for ISP Behavioral Targeting

Whatever threat NebuAd’s ISP behavioral ad model posed to consumer privacy may be waning, but Web advertisers are still hustling to limit the damage to their industry.

Last week, the Network Advertising Initiative (NAI), an association of behavioral targeting players that includes Yahoo, Microsoft and Google, came out in favor of an opt-in standard for ISP behavioral targeting (ISP-BT). The move came shortly after three large ISPs sent emissaries to Capitol Hill to ensure lawmakers they’re committed to the same standard. AT&T, Time Warner Cable, and Verizon promised any behavioral targeting using deep packet inspection — that is, comprehensive user tracking at the network level — would require the “affirmative consent” of end users.

In its statement, the NAI said it plans to expand its updated self-regulatory principles to cover the practice.

“The ISP-behavioral model requires enhanced protections to ensure that consumers can maintain appropriate control of their browsing experience,” said NAI Executive Director Trevor Hughes, in the group’s statement. “In light of this fundamental difference between how notice and choice can be offered to consumers, we agree with recent statements from the Federal Trade Commission that ISP-based behavioral advertising is different from publisher-based forms of behavioral advertising.”

“We’re looking forward to working with the ISP-BT providers and the ISPs to set the dials appropriately for this new business model,” Hughes later told ClickZ News. “We think it fits into a spectrum of models in the behavioral targeting space.”

The Federal Trade Commission is also pleased with recent events, according to Jessica Rich, assistant director for its division of privacy and identity protection.

“We’re very delighted to see all the movement that’s happening in the industry,” Rich said. “Depending on the nature of the business model, it may call for different disclosure.”

Behavioral targeting pioneer Dave Morgan hailed the summer’s developments. “I think the ISPs were pretty smart…standing up there and waiving the flag of opt-in,” said Morgan, founder of behavioral ad firm Tacoda, and now chairman of The Tennis Company. Tacoda is now Platform-A’s behavioral targeting unit.

“What we’re finally starting to see is a pretty robust dialog around what is appropriate notice and what is appropriate choice,” Morgan said.

The industry push for an opt-in standard is just one facet of an increasingly coordinated effort to head off privacy legislation that may not distinguish between various types of ad targeting methods. Those methods range widely from simple contextual advertising all the way up to deep packet inspection of the sort used in ISP-BT.

Should any such legislation be surfaced at the Federal or state levels, the worst case would be “a very blunt policy instrument being used to determine best practices for an incredibly broad set of practices,” said Hughes.

“The biggest risk is that, in a rush to respond to something that is new and challenging to think about… we use a one-size fits all approach,” he added.

Morgan agreed: “Any time you pass legislation in a highly technical area, it’s likely to get it wrong. Legislators are the first to say that. They’re not technologists.”

New privacy bills are not likely to come soon. Mike Zaneis, Interactive Advertising Bureau VP public policy, observed Congress is busy with the financial crisis and many states have ended their legislative sessions.

However, he also warned there is an emerging risk that the fiscal meltdown will lead to more Internet regulation.

“In an era when we’re doing massive bailout bills and there’s a real focus to get back to budget restraints, this is an area some members of Congress will see as an easy industry to regulate at low cost.”

The industry is clearly stepping up its self-regulation plans. Zaneis recently indicated to ClickZ the IAB will soon announce a plan to determine data security standards and enforcement in conjunction with groups including the Association of National Advertisers and the American Association of Advertising Agencies. The NAI also plans to release its updated document, with language covering ISP-BT, very soon.

The broad-based support for an opt-in standard for ISP-BT follows the striking events of the summer, when scrutiny from House and Senate members caused numerous ISPs to back away from their relationships with NebuAd. Amid the controversy, NebuAd CEO Bob Dykes stepped down, and the company refocused on “conventional” media channels.

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