On December 1, 2010, the Federal Trade Commission (FTC) issued a report that offers a framework for consumers, businesses, and policy makers aimed at balancing the privacy interests of consumers with advertising innovation reliant upon consumer data.
The report was issued based on what they feel is slow progress in self-regulation and standardization. However, organizations like the Network Advertising Initiative (NAI) have made progress over the past few years in addressing opt-out advertising solutions for consumers. Clearly, differences in opinion on speed of adoption and standardization are key themes that lead to FTC involvement.
What is the scope of the “Do Not Track” initiative?
The “Do Not Track” initiative is designed to allow internet users to choose whether their web activity can be monitored. Advertising companies would be responsible for ensuring that ads are not personalized to consumers based on that web activity data collected.
The “Do Not Track” proposal suggests the following:
1. Privacy by design, which consists of reasonable security for consumer data, limited collection and retention of data, and reasonable procedures to ensure data accuracy by companies.
2. Consumers should have a choice about collection and sharing of data.
3. Companies should not have to gain acceptance for commonly accepted practices, such as product and service fulfillment, first party marketing, fraud protection, and legal compliance.
4. Promoting simple transparency of data collection practices amongst different companies to consumers.
5. Increased consumer education programs about commercial data practices and the choices available to them.
Why propose a “Do Not Track” initiative?
The FTC fears that online advertising companies have not done enough to protect privacy of users online. The report states that industry efforts to address privacy through self-regulation “have been too slow, and up to now have failed to provide adequate and meaningful protection.”
What is the NAI?
The Network Advertising Initiative is an association of advertising networks, data exchanges, and marketing analytics services providers developing educational and opt-out mechanisms for targeted advertising from its members.
Here is a brief overview from the NAI website:
The NAI Principles: How they help protect your privacy
Most of the advertising online today is provided by 3rd party ad networks. These networks use tools such as cookies to track your Web preferences and usage patterns in order to tailor advertising content to your interests. What you may not realize is that information gathered at one Website may be used to direct ad content on another site.
“The NAI Principles, a set of self-regulatory measures first adopted by the NAI in 2000 and updated in 2008, require NAI member companies to post a notice on all websites served by their networks. This notice informs you that:
1. The advertising networks may place a 3rd party cookie on your computer;
2. Such a cookie may be used to tailor ad content both on the site you are visiting as well as other sites within that network that you may visit in the future.
In addition to requiring notice to consumers about the use of 3rd party cookies, the NAI mandates that member advertising networks provide an “opt-out” mechanism for the targeted ad programs they provide. The NAI opt-out tool is a simple Web-based utility that allows you to opt out of receiving targeted ads from member ad networks.
Finally, the NAI Principles provide an enforcement mechanism to ensure that members are complying with the requirements of the Principles.”
Who are the participating advertising companies in the NAI?
The complete list includes many Comscore top-50 Ad Networks such as, Google, Yahoo, Microsoft, Advertising.com, ValueClick, Fox Audience Network, Collective Media, Specific Media, and BlueKai.
The FTC is asking for stakeholders to submit comments on the plan by January and is expected to release a revision of its proposal thereafter (no hard date or timeline indicated but believe to be next year). The FTC said its ideas could be used as best practices as Congress considers online privacy legislation.
For consumers, personalization of content via cookie tracking is a feature that some may not be willing to sacrifice. However, when providing consumers with the ability to manage their level of personalization, they ultimately need transparency and clarity to inform their decision about the pros and cons of the various options.
The fragmented ad space, availability of multiple browser solutions, and implementation challenges will be key factors that affect the impact of any government action. While this type of regulation will directly impact online advertisers as well as online advertising companies like Google, Yahoo, etc., there could also be a measurable impact on browser providers like Mozilla, and security companies like Symantec.
Ultimately, standardization and enforcement could be the FTC’s biggest challenges as a Do Not Track program could never operate in the same way as the Do Not Call program in that there is no static identifier (IP Addresses can change). The recommendation of a browser based add-on could act as the mechanism for implementation, yet nothing formal has been proposed.
What are your thoughts on the proposed Do Not Track regulations? Does this pose a serious threat to online marketers? Will the average web user see this as a valuable form of privacy protection? Leave a comment and let us know.