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Industry Unites to Salvage Battered Behavioral Ad Market


Saving the day

A constellation of marketing and ad associations are partnering with the Council of Better Business Bureaus to address user privacy and ethical data collection practices in behavioral advertising.

Behavioral targeting — the process of serving ads to users based on their search and web-surfing behavior — took a beating in 2008. Congress held hearings where the business practices of behavioral ad firms were tried for breaches of user privacy. And privacy advocates painted a villainous picture of the industry, presenting evidence that compared behavioral ad practices to browser hijacks and other forms of malware.

By 2008's end, two major behavioral ad firms, NebuAd and Phorm, lost their respective company and UK CEOs. NebuAd also faces a class action lawsuit.

NebuAd and Phorm partner with internet service providers (ISPs) to sell advertising based on the web-surfing activity of their clients. A handful of ISPs, including Embarq and UK-based BT, ran pilots of their technology without expressly informing users — fueling the resulting privacy backlash.

Some privacy concerns are valid. If all user activity is tracked, for example, what happens if the government requests that data from tech firms and uses it to persecute consumers?

But behavioral advertising isn't entirely anti-consumer. An ad model that tracks consumer activity across-the-board means users only see the most relevant ads, businesses profit from higher conversions, and content publishers can stop selling ad space based on generalized demographics. At least one behavioral ad firm, Phorm, also claimed to have built-in measures that prevent user data from being adversely manipulated.

To protect the industry from another uprising, the American Association of Advertising Agencies (AAAA), the Association of National Advertisers (ANA), the Direct Marketing Association (DMA), and the Interactive Advertising Bureau (IAB) joined the BBB to develop strict self-regulatory principles for online behavioral ad practitioners.

The goal is to "address privacy concerns and to increase consumers' trust and confidence in how online information is gathered and used." This initiative also represents the first time "the entire marketing-media ecosystem" has united to create guidelines for interactive advertising, according to a statement from the IAB.

Other participants in the task force include policymakers, businesses and select consumers. The Federal Trade Commission, which in the past has advocated that the industry police itself, will also be involved.

"Behavioral marketing provides enormous benefits to consumers, but it is our responsibility as marketers to ensure […] privacy interests remain protected," said President/CEO Bob Liodice of the ANA.

"Strong and comprehensive self-regulation strikes a balance that both protects the public interest and allows marketers to provide relevant advertising, which is particularly critical during this period of economic downturn."

The IAB's Randall Rothenberg agreed. "Effective self-regulation […] will help ensure that [the interactive ad] industry can continue to evolve and innovate, offering consumers what they want when they want it," he waxed.

If the coalition plays its cards right, the benefits may be far-reaching. Surveys have shown consumers generally don't mind behavioral targeting, as long as clear and transparent security safeguards are instituted.

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