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Online Behavioral Advertising: What’s Going on Under the Hood

1/10/2013

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Imagine you’re planning a trip to Hawaii online. You visit several websites about Honolulu sightseeing, price plane tickets and make hotel reservations. Then you visit a news website and a sports page, where you might see an advertisement for tropical cruises or car rentals. Coincidence? No, it’s one of today’s most hotly-debated marketing practices: interest-based advertising, also known as ad targeting or online behavioral advertising (OBA).

Companies participating in interest-based advertising collect information about users’ activity across different websites, delivering ads related to their interests as inferred from their browsing history. These ads have a much higher consumer activity. However, interest-based advertising is increasingly becoming a privacy issue, both to regulators and consumers, says CBBB Vice President Genie Barton. The collection of user information takes place behind the scenes without consumer awareness and consent, and consumers don’t understand how they are being targeted. Now, a voluntary industry program is changing all that.

Recognize This?

In 2010, CBBB and the major advertising trade associations, including National Partners AAAA and ANA, as well as DMA, IAB and AAF, developed the “Self-Regulatory Principles for Online Behavioral Advertising.” The Principles implemented the FTC’s recommendations for improving OBA by providing consumers with real-time notice and choice about the collection and use of their data. The notice was provided through the use of an icon: a blue forward pointing triangle, served in the corner of an interest-based ad. When consumers click on the ad, they are taken to a site with information on OBA and are given the option to opt out of receiving these targeted ads.

The FTC also was concerned that industry be held accountable for following these standards. Because of its proven success in advertising self-regulation, CBBB’s Advertising Self-Regulatory Council (ASRC) was asked to develop a compliance program. That’s how the Online Interest-Based Advertising Accountability Program (Accountability Program) was born.

Online Privacy Builds Consumer Trust

Ms. Barton, Director of the Accountability Program says privacy is a growing issue for consumers and online and mobile advertising have become a lightning rod for the press. The Principles provide a valuable way for the advertising industry to demonstrate that companies respect consumers’ privacy and are willing to give them a choice about receiving interest-based ads.

While ad networks generally provide consumers with information about OBA through the icon, brands have increasingly decided to take over. “Privacy and good citizenship are essential to building trust,” she said. The brand wants to build that trusted relationship directly with its customer and be identified with good privacy practices, says Ms. Barton.

“The Principles are not about dampening innovation; they’re about making sure the customer understands what’s going on under the hood and choosing whether to participate,” she said, and that fosters innovation and trust.

More often than not, consumers simply want to know more about online behavioral advertising. When presented with information and the choice to opt out, Ms. Barton says oftentimes consumers check and correct their interest profile instead.

Why Companies Self-Regulate

The Accountability Program monitors behavioral advertising practices and assists organizations with compliance to the Principles. Under self-regulation, decisions are quicker, more flexible and faster to adapt to the changes in technology than government action. The idea behind the standards for OBA isn’t to punish, but to help companies comply and to support best practices, said Ms. Barton. To date, the OBA program has a 100% record of compliance.

Another key positive of the self-regulatory approach is its adaptability to the quickly moving technology space. “Mobile computing has completely revolutionized the advertising industry, and I think that everyone should be mindful that this is a set of evolving technologies and standards. Only a self-regulatory program can keep pace with the speed of innovation,” she said. New principles are being developed for mobile which will be announced in the first quarter of the year.

Behind the Leadership

Based primarily at CBBB’s Arlington, Va., headquarters, Ms. Barton is uniquely positioned to direct the Accountability Program. An “accidental technology and telecom lawyer” and FCC veteran, Ms. Barton clerked on the DC Circuit, served as an advisor on workplace law compliance on the Hill and General Counsel at US Telecom, she was drawn to online and mobile advertising because of its additional complexity. It “makes spectrum allocation look simple,” she laughed.

For Ms. Barton, the changes in the technology industry are a revolution. She came to law after a first career in dramaturgy with the Shakespeare Theatre Company, and drawing on her classically-rich background, she likened the Bard’s innovative works to today’s quickly-evolving communications platforms and technologies.

“I think what goes on in technology today with development of the Internet and its migration to the mobile environment is as revolutionary for human beings’ relationship to society and each other, as were printing and Shakespeare’s theatre in their days,” she said.

Ms. Barton hopes to bridge the privacy gap between various countries’ approach to advertising privacy. Building interoperable standards would simplify the international landscape and spur commerce, she believes. She recently met with European officials and hopes to create an international set of principles to meet the growing global need of companies.

Education and Consultation Available

“We’re happy to do teaching for National Partners,” said Ms. Barton. Custom webinars, speaking engagements and private consultation about online interest-based advertising, mobile initiatives, privacy and data security are all available as a new benefit of CBBB National Partnership.

For more information, contact Genie Barton at gbarton@council.bbb.org or Elizabeth Holtan at eholtan@council.bbb.org.

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