Definition[edit | edit source]

Online behavioral advertising (also called targeted online advertising and more recently interest-based advertising (IBA)) means

the tracking consumer’s online activities over time — including the searches the consumer has conducted, the web pages visited, and the content viewed — in order to deliver advertising targeted to the individual consumer’s interests. This definition is not intended to include “first party” advertising, where no data is shared with third parties, or contextual advertising, where an ad is based on a single visit to a web page or single search query.[1]

Overview[edit | edit source]

As they browse the web, blog, join social networks and play online games, consumers are providing advertisers with reams of data. Advertisers and marketing firms can generate still more information when consumers sign up for email promotions or buy products online.

Most online activity is monitored via cookies (small text files that can store data), which are placed on that user’s computer when he or she visits a website. The information can be used to create behavioral advertising — targeted ads based on individual information.

Issues[edit | edit source]

First, while behavioral advertising provides benefits to consumers in the form of free web content and personalized ads that many consumers value, the practice itself is largely invisible and unknown to consumers. The benefits include, for example, access to newspapers and information from around the world, provided free because it is subsidized by online advertising; tailored ads that facilitate comparison shopping for the specific products that consumers want; and, potentially, a reduction in ads that are irrelevant to consumers' interests and that may therefore be unwelcome. Although many consumers value these benefits, few appear to understand the role that data collection plays in providing them.

Second, business and consumer groups alike cherish the values of transparency and consumer autonomy, and view them as critical to the development and maintenance of consumer trust in the online marketplace.

Third, regardless of whether one views behavioral advertising as beneficial, benign, or harmful, there are reasonable concerns about the possibility of consumer data collected for this purpose falling into the wrong hands or being used for unanticipated purposes.

FTC Principles[edit | edit source]

Given the importance of these issues, the FTC released a Staff Report titled Self-Regulatory Principles for Online Behavioral Advertising in February 2009. These principles cover only online behavioral advertising, which means “the tracking of a consumer’s online activities over time.” The principles make clear that so-called “first party” advertising (where no information is shared with a third party) and contextual advertising (where the ad is based on a single page visit or search) are not covered by the principles.

Transparency and consumer control[edit | edit source]

To address the need for greater transparency and consumer control regarding privacy issues raised by behavioral advertising, the FTC staff proposes:

Every website where data is collected for behavioral advertising should provide a clear, concise, consumer-friendly, and prominent statement that (1) data about consumers’ activities online is being collected at the site for use in providing advertising about products and services tailored to individual consumers’ interests, and (2) consumers can choose whether or not to have their information collected for such purpose. The website should also provide consumers with a clear, easy-to-use, and accessible method for exercising this option. Where the data collection occurs outside the traditional website context, companies should develop alternative methods of disclosure and consumer choice that meet the standards described above (i.e., clear, prominent, easy-to-use, etc.)

Reasonable security, and limited data retention, for consumer data[edit | edit source]

To address the concern that data collected for behavioral advertising may find its way into the hands of criminals or other wrongdoers, the FTC staff proposes:

Any company that collects and/or stores consumer data for behavioral advertising should provide reasonable security for that data. Consistent with the data security laws and the FTC’s data security enforcement actions, such protections should be based on the sensitivity of the data, the nature of a company’s business operations, the types of risks a company faces, and the reasonable protections available to a company. Companies should also retain data only as long as is necessary to fulfill a legitimate business or law enforcement need.

Limited data retention for consumer data[edit | edit source]

To address concerns about the length of time companies are retaining consumer data, the FTC staff proposes:

Companies should retain data only as long as is necessary to fulfill a legitimate business or law enforcement need. FTC staff commends recent efforts by some industry members to reduce the time period for which they are retaining data. However, FTC staff seeks comment on whether companies can and should reduce their retention periods further.

Affirmative express consent for material changes to existing privacy promises[edit | edit source]

To address the concern that companies may not keep their privacy promises when they change their privacy policies, FTC staff proposes:

A company must keep any promises that it makes with respect to how it will handle or protect consumer data, even if it decides to change its policies at a later date. Therefore, before a company can use data in a manner materially different from promises the company made when it collected the data, it should obtain affirmative express consent from affected consumers. This principle would apply in a corporate merger situation to the extent that the merger creates material changes in the way the companies collect, use, and share data.

Affirmative express consent to (or prohibition against) using sensitive data for behavioral advertising[edit | edit source]

To address the concern that sensitive data — medical information or children’s activities online, for example — may be used in behavioral advertising, FTC staff proposes:

Companies should only collect sensitive data for behavioral advertising if they obtain affirmative express consent from the consumer to receive such advertising. FTC staff seeks specific input on (1) what classes of information should be considered sensitive, and (2) whether using sensitive data for behavioral targeting should not be permitted, rather than subject to consumer choice.

References[edit | edit source]

Source[edit | edit source]

See also[edit | edit source]

External resources[edit | edit source]

  • Rick Boucher, Behavioral Ads: The need for privacy protection, The Hill (Sept. 24, 2009) (full-text).
  • Lori Deschene, What is Behavioral Targeting?, BNET (Apr. 28, 2004) (full-text).
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