Online Advertisers Pledge Transparency on Tracking

Online advertisers are promising to be more transparent about how they track Internet users and even let people opt out...all in an effort to avoid being regulated.

In a move to avoid having their industry subject to more regulation and legislation, a coalition of online advertisers have pledged to support a set of “self-regulatory principles” that will offer greater transparency to consumers about what information in collected about their online activities and how that information is used; the participants also pledged greater transparency and protections for information about children and data that could be used to identify individuals. The broad industry pledge is in part an effort to stave off criticism from privacy advocates, government regulators, and legislators who have criticized the amount of information the industry gathers and shares about Internet users, as well as how long that information is retained.

The transparency principles were put forward by trade associations like the Direct Marketing Association, the Association of National Advertisers, the American Association of Advertising Agencies, and the Interactive Advertising Bureau that represent some 5,000 companies.

Under the principles, no information would knowingly be collected about children under the age of 13 for use in online behavioral advertising; the principles would also require informed consent for collection of financial information, social security numbers, or medical data for use in online behavioral advertising. Perhaps most significantly, the principles call for advertisers to settle on an icon or link phrase that all participating Web sites would use so Internet users can find out what information is being collected about them—and maybe (just maybe) opt out of the process.

The industry also pledged to create a Web site to educate consumers about how the Internet is monetized through advertising and the collection of personal information. For instance, many “free” services are provided in exchange for collecting information about a user or their online activities.

Enforcement of the principles would be handled by the Better Business Bureau and the DMA, which would publicly report firms that do not comply. Participants expect the principles to go into effect by early 2010.

Already privacy advocates are criticizing the self-regulatory principles as mere lip service, predicting government regulators will step in to mandate how online behavioral advertising may operate. Some industry watchers, however, note that with some 5,000 companies pledging to support the new guidelines, the industry may have enough internal momentum add transparency and opt-out capabilities to its processes without getting governments involved.