DMN3 Blog

If you buy, sell, use or even view online advertising, your experience is about to change…

Online tracking of browsing habits of Internet users is getting increasingly sophisticated with advancing technology. Companies use the data to make Inferences about consumer interests and preferences based on their online behaviors. Online Behavioral Advertising uses these inferences to target Internet users with online advertising based on their profile of past behaviors. In today's environment, the online behavior data can also be aggregated with other online and offline data to form a more complete profile of a computer or device user.

In most cases, consumers are not aware of the data being collected or how it is being used. Website Privacy Policy statements are often vague and do not fully disclose this information. Americans are not happy about their browsing habits being tracked. See my post on this subject: Do You Know How Americans Feel About Behavioral Tracking?

This recent online survey of Americans has added fuel to the cry for increasing federal and state privacy regulation to address tracking of online consumers. The Federal Trade Commission (FTC), which has jurisdiction in privacy matters is aware of the problem. In February, the FTC issued its Staff Report: Self Regulatory Principles for Online Behavioral Advertising.

Responding to the Report, and in an effort to head off federal and state legislation and regulation, industry trade groups are working together. Their efforts culminated with the July 2nd release of Self Regulatory Principles for Online Behavioral Advertising. The groups involved are the American Association of Advertising Agencies (4A’s), the Association of National Advertisers (ANA), the Direct Marketing Association (DMA), and the Interactive Advertising Bureau (IAB). The Council of Better Business Bureaus (BBB), a leading organization dedicated to advancing marketplace trust, is also part of the effort. The Principles have been approved by each group and will take effect in 2010.

The trade groups' Principles are an attempt to regulate “online behavioral advertising” and will apply across the entire Internet. Online behavioral advertising is defined in the document as “the collection of data from a particular computer or device regarding Web viewing behaviors over time and across non-Affiliate Websites for the purpose of using such data to predict user preferences or interests to deliver advertising to that computer based on the preferences or interests inferred from such Web viewing behaviors."

Let's dissect the language and the definitions provided in the document to determine who is affected.Most organizations that track online behaviors are excluded from these self-imposed industry regulations.

You do not need to worry if:

• You do not use the tracking data acquired to deliver advertising based on web viewing behaviors. Data collected and used for other purposes falls outside of the definition of Online Behavioral Advertising and these Principles.
• You utilize online tracking for contextual advertising.Contextual advertising is advertising based on the contents of a Web page being visited, a consumer’s current visit to a web page, or a search query. Contextual advertising is also outside of the scope of these Principles. Keyword advertising is the best example of contextual advertising.
• You're a “First Party or a First Party Affiliate.” A First Party is defined as the entity that is the owner of the website or has Control over the website with which the consumer interacts and its Affiliates. An Affiliate is defined as an entity that Controls, is Controlled by, or is under common Control with, another entity.In addition, each Affiliate entity must have materially consistent online behavioral advertising policies with their other affiliates.This combination of “Control and Consistent Policies" renders the entities' Affiliates of each other. What this means is entities that control or own multiple websites can track online behavior data over time without falling under the scope of these regulations. The key point here is that the data is being collected and used solely among the Affiliates.

Third Parties: A Third Party is defined as an entity that engages in Online Behavioral Advertising at a non-Affiliate website. These entities are the group for which the Principles apply. Typically these would be ad networks and web portals. It should be noted that search engines, e.g., Google’s AdSense, would also be a third party if they utilize behavioral advertising techniques.

Whether you fall under these regulations or not, your online Privacy Policy should delineate what data you are collecting and how it is going to be protected and used.

Remember that a strong privacy policy is a major factor in building trust between you and those who visit your site.