Can Online Behavioral Advertising Self-Regulate?

Online behavioral advertising is a hot topic among both advertising companies and privacy advocates. Also known as interest-based advertising, ad targeting, or simply OBA, online behavioral advertising provides targeted ads based on a user’s website activity.

The technique gets results: consumer conversion for OBA campaigns runs high. So too does the ire of government regulators and privacy advocates, who have legitimate concerns with the massive amounts of user information gathered by OBA.

If the industry does not self-regulate and deal with privacy and opt-out issues, it’s likely the government will step in with its own regulations. We’re seeing signs of just such activity: in December 2012 the Federal Trade Commission prohibited the use of behavioral advertising and data collection on websites aimed at children less than thirteen years of age.

How OBA Works                 

Let’s assume I want to train for legal transcription jobs. I do some research online, checking out different job opportunities and training courses. When I’m done, I visit a cooking site, where I find an ad for a legal transcription course. What a happy coincidence!

Except, of course, it’s not. OBA advertisers have tracked my website usage. Complex software algorithms determine I’m looking at websites related to legal transcription, and craft an ad appropriate to my viewing history.

The Problem with OBA

The problem with OBA should be apparent. Most consumers are unaware their behavior is being tracked and don’t understand the ads they see are targeted specifically at them. Nor does the general public have any idea how to opt out of the process.

As a result, when people discover they’re the target of OBA practices, they get upset. The idea of OBA has people imagining Big Brother-like scenarios. The fact few consumers know how to opt-out of OBA campaigns only increases confusion and suspicion.

The Self-Regulation Movement

The OBA industry has self-regulatory guidelines. The Self-Regulatory Principles for Online Behavioral Advertising was published in 2010. The brainchild of multiple trade associations and the Council of Better Business Bureaus, the Principles encourage transparency in OBA.

The Principles suggest the use of a small blue icon to identify ads generated using targeted advertising. Clicking the icon takes users to a site explaining OBA and providing details on how to opt-out of targeted campaigns.

Once educated on the nature of behaviorally advertising, consumers are generally comfortable with the idea. The difficult lies in educating them. You may notice few targeted ads carry the blue logo, and most people don’t know the logo’s significance anyway.

Online behavioral advertising stands at a pivotal point in its development. Self-regulation would provide the industry with the ability to respond to technology and social changes quickly, while educating and informing users about targeted ads. If the industry doesn’t produce comprehensive and widespread self-regulation soon, however, the FTC is going to produce regulations of its own, which could severely limit OBA effectiveness.

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