Ad industry crafts web privacy standards

The internet advertising landscape is expected to change by 2010 following the new standards released by the industry. Trade groups will now be required to properly inform web users if their surfing habits are being tracked for advertising purposes.

The voluntary effort was to thwart government intervention which Congress had warned about if advertisers and publishers did not enforce self-regulating practices to secure the privacy of web users.

If the plan—already expected to get the nod of Congress and consumer groups—pushes through, online surfers would no longer feel that their privacy is being violated every time they check out a particular website or shop online.

Website visitors will be informed via a text or a link informing them that their data is being collected for further targeted advertising. This gives them an opportunity to opt out if they don’t want their web activities tracked.

So far, the Federal Trade Commission is happy about the idea. FTC member Pamela Jones Harbour hailed the move as a significant step to securing the privacy of online users.

“I am gratified that a group of influential associations — representing a significant component of the Internet community — has responded to so many of the privacy concerns raised by my colleagues and myself,” Harbour said in a statement.

The principle giving users the choice whether to opt in or out is among seven advertising standards jointly pushed by a group of media and marketing trade associations. These are the Association of National Advertisers, the American Association of Advertising Agencies, the Interactive Advertising Bureau, the Council Direct Marketing Association, and the Better Business Bureaus.

Regulation in behavioral advertising has long been the outcry of the members of Congress, the FTC, and consumer groups. A report was released in February calling for concerned agencies to update their standards on web advertising. In June, Congress asked Google, Yahoo and Facebook executives to testify how they track user data.

Virginia Democrat Rep. Rick Boucher, chairman of the House Energy and Commerce Internet subcommittee, said last month that the committee was looking into crafting a legislation to ensure online user privacy. Boucher maintained that the move would boost, not hinder, e-commerce.

Advertisers and publishers, however, maintained that there was no need for government intervention, saying that they can regulate their own practices.

Behavioral advertising is widely used on the web and on television. By using computer intelligence to get information as to what particular products might be of interest to consumers, behavioural advertising helps filter out undesirable ads for TV viewers and online surfers.  Trade groups insisted that a possible prohibition of this practice is not the solution to the issue of protecting consumer privacy.

The new standards incorporate some of the FTC’s suggestions that were made in February. Also included were many of the ideas presented by consumer advocacy watchdogs. The move will affect over 5,000 companies including Google, Yahoo, and Microsoft when it takes effect in 2010 as planned.

Yahoo welcomed the move. “Interest-based advertising supports our ability to deliver world-class products and services for free to users, and we earn the trust of our users each and every day by respecting and protecting their privacy,” says Anne Toth, head of privacy and vice president of policy at Yahoo.