Industry Groups Agree on Strict Guidelines for Behavioral Targeting

The Interactive Advertising Bureau, in conjunction with several other organizations, has unveiled its long-awaited principles for behavioral advertising. In crafting the guidelines, several competing online ad industry players, under extreme pressure from government forces, agreed on a set of self-regulations that require big changes for all parties involved in behavioral advertising.

Perhaps most notably, the ad industry task force agreed to subject members of participating trade groups to monitoring and public disclosure of non-compliance, all in the hopes of preserving an increasingly popular form of ad targeting in danger of government regulation.

The IAB and the Direct Marketing Association, worked alongside the American Association of Advertising Agencies, Association of National Advertisers, and the Better Business Bureau over nine months to devise the measures. Each association board voted unanimously to approve the principles, according to Stu Ingis, counsel to the task force and a lawyer at Venable, LLP. The law firm, which shares office space with the IAB in Washington, D.C., was hired to develop the cross-industry accountability framework and privacy principles.

“At various points, we had concerns or companies saying, ‘We don’t want to do this,’ ” said Ingis. However, in the end there was consensus. Advertisers, ad agencies, publishers, ISPs, ad networks, firms providing toolbars or Web browsers, and some search engines could all be affected. A host of companies including Google, Microsoft, WPP, Disney, and Verizon, in addition to organizations such as the behavioral sector’s primary self-regulatory body, the NAI, also participated in crafting the new principles.

The principles call for all entities collecting and using data for behavioral targeting, including Web sites, to disclose the practice in a “clear, prominent, and conveniently located” manner both on their own sites and at the time of data collection.

That second notification might come in the form of a “uniform” icon or text link in the behaviorally-targeted ad themselves. Clicking on the icon or link would take users to information describing details of the behavioral ad practices, and allowing them to choose how or if their data can be collected or employed. Most likely, users will be taken to an industry-wide site or third-party site providing educational information, and data usage options associated with all parties involved in enabling the ads in question.

“This is what the government and consumer groups have been begging for for years,” said Ingis, who is confident advertisers, publishers, and the countless third parties involved will not overload users with too much confusing information.

The industry site or sites will serve as more robust versions of what the Network Advertising Initiative offers. Currently, behavioral industry players and publishers link in their privacy policies to the group’s Web site, which lets users opt-out from behavioral tracking and ad serving conducted by several ad networks. Choice exercised by users would have to be carried through to other entities involved in the ad process, Ingis explained.

At this point, the task force has not determined precisely what that industry-wide icon will be. The organizations involved expect further discussion about such matters; the measures will be put into action in 2010.

Now, disclosure will be “out of the privacy notice, front and center,” said Ingis.

The principles were designed, in part, to satisfy the Federal Trade Commission, which has strongly suggested over the past two years that industry must come up with ways to disclose behavioral ad practices prominently outside of privacy policies. The commission recognized the principles, viewing them in a positive light. “I commend these organizations for taking this important first step. I am hopeful that successful implementation will follow,” said Commissioner Pamela Jones Harbour in a press statement. In the meantime, I encourage the entire privacy community to continue a dialogue that places the interests of consumers first.”

The FTC “laid out a…template,” through its proposed guidelines for behavioral advertising, said Ingis. “We believe this is very responsive to what they set forward.”

Legislators have said they plan to draft privacy legislation that could deal with behavioral ad targeting as early as this year.

The task force established enforcement mechanisms for companies that don’t follow the principles, and will monitor companies accordingly. The DMA, for example, will require its 3,400 member firms to abide by the new guidelines, Ingis said. In addition, he said the Better Business Bureau will “create an entirely new program effectively at the beginning of next year,” to ensure compliance. Reports of violations will be made public and sent to government agencies.

Revised behavioral advertising principles released by the FTC in February signaled that the commission may no longer distinguish between Personally Identifiable Information and Non-Personally Identifiable Information in relation to online data. The new task force principles are in line with that, and apply to PII and non-PII. “We do believe that there should be choice across the board,” Ingis said.

The principles also call for an educational campaign to teach consumers about behavioral targeting and explain their options in managing their online data when it comes to the practice. According to Ingis, companies will devote 500 million ad impressions for the campaign.

Data security and sensitivity guidelines are also included in the document.

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