U.S. Policymakers Give Industry Behavioral Ad Icon Restrained Applause, Not Deference

Avoiding government regulation isn’t the end-all of the Advertising Option Icon, as long as there’s a safe harbor for participants in a program like it, said Stuart Ingis of the Venable law firm. He’s counsel to the Digital Advertising Alliance, the umbrella group of the sponsoring advertising and marketing associations (www.aboutads.info). The others are the American Association of Advertising Agencies, American Advertising Federation and Network Advertising Initiative.

"In an unprecedented way, all of these major associations and companies came together and put forward a very strong program,” Ingis said. The effort, more than a year in the making,

is recruiting participants and plans to start enforcement early next year, he said. “There are potentially thousands of companies that this program could impact,” Ingis said. “This is going to be a big deal for transparency and consumer choice.”

The alliance is widely credited with taking a step in the right direction, including by the subcommittee’s Robinson. But he said: “It’s not a comprehensive step. … It’s half a step,” partly because it doesn’t cover all tracking technologies, “some much more sinister” than cookies.

Responses from other behavioral-ad players ranged from a wait-and-see, expressed by an aide to Democratic federal policymakers, to dismissal by both Marc Rotenberg -- executive director of the Electronic Privacy Information Center and an opt-in advocate -- and Daniel Castro, a senior analyst at the Information Technology & Information Foundation. Castro opposes government regulation and recommends that the industry come out swinging by emphasizing social benefits of behavioral advertising.

"Most consumers are looking for guarantees that their information will not be used in a way that adversely affects them, and no icon’s going to guarantee that,” Castro said. Education efforts by business about behavioral ads will never satisfy a hard core of 5 to 10 percent of consumers, and they may undermine the confidence of others, he said. The Digital Advertising Alliance is “a little bit reactionary, … reacting to what the FTC might do,” Castro said.

House Consumer Protection Subcommittee Chairman Bobby Rush, D-Ill., is “very committed” to enacting his bill, and that will happen, Robinson said. But not necessarily as it’s written. Rush is “committed to going about this in bipartisan fashion so the legislation we come up with is balanced in the interests of consumers and industry, but so it also has the greatest possible chance of getting through the legislative process,” Robinson said. He noted that Rush has held discussions and joint hearings with Communications Subcommittee Chairman Rick Boucher, co-author with Rep. Cliff Stearns, R-Fla., of overlapping draft privacy legislation.

The day of the Advertising Option announcement, Microsoft, eBay and Intel executives sent Rush and the ranking member of his subcommittee, Rep. Ed Whitfield, R-Ky., a letter supporting HR-5777. Robinson wouldn’t discuss the timing of expected action on the bill. Another Rush staffer said time is running short this Congress and no counterpart to the bill has been introduced in the Senate. Rush expects to hold a hearing in November or December on a proposal in his measure for a do-not-track list, Robinson said.

"These bills are clearly going to be in play next year, and what the FTC does will be influential,” said Jules Polonetsky, director of the Future of Privacy Forum. Its design and research work provided the foundation for the Advertising Option Icon, he and Ingis said. The “election results are likely to be irrelevant” to the prospects for privacy legislation, because interest crosses party lines, Polonetsky said.

The Rush and Boucher proposals both have had opt-in provisions at odds with the icon program’s direction, noted the aide to Democratic policymakers, who watches congressional activity closely. “It’s too soon to say” how the effort may influence the chances for legislation, she said. That could be affected by how well consumers are informed about how to make complaints under the program, what their remedies are and how large are the gaps resulting from companies’ participation being voluntary, the aide said.

The Direct Marketing Association makes compliance with its policies a condition of membership, and the other icon groups are looking at similar consequences, Ingis said. Violators will be publicized, whether they've signed up as program participants or not, he said. And noncompliance may violate current law, Ingis said.

FTC Commissioner Julie Brill “would like to see a Do Not Track mechanism” put into use, according to the text of a speech from a conference last week posted on her Web page. She pointed to the Advertising Option announcement as a “positive step,” showing “a substantial segment of the industry making a real effort” to deal with qualms about behavioral advertising. The FTC will watch closely “to see how easy it is for consumers to understand and use,” whether there’s “a robust enforcement mechanism” and “whether less than full participation” throughout the industry “could lead to consumer confusion,” Brill said.

These are the kinds of matters to be treated in an FTC report coming soon about privacy in relation to emerging technologies and business practices, Commissioner Brill said. It will “offer a framework” for “industry to develop best practices and improve self-regulation,” she said.

The icon, a lower-case I in a triangle, is to appear at least 12 pixels square at the top right corner of online ads. Starting “sometime this fall,” consumers will be able to click through successively to information of increasing detail about cookie use and to forms to opt out of the specific use or of broader use by participating companies, Ingis said. He expects 50 to 70 companies to take part at first. They account for “a very large percentage of online behavioral advertising” though only a small proportion of the businesses involved in it, Ingis said. About 500 companies were to have participated in phone briefings about the program through last week, he said.

The program had been working until recently with an icon developed in the privacy forum’s effort -- a small I in a circle, known as the Power I -- but concluded in the end that it was too generic for the alliance to protect against misuse, Ingis said. The alliance has certified a company called Better Advertising as its first approved provider of compliance services, he said. Others including TRUSTe, which previously had promoted a comparable program of its own, have also applied and probably will be approved, Ingis said.

The icon is “a baby step” toward protecting consumers but “a huge psychological step” in getting companies involved to acknowledge and believe that they can inform users about their privacy practices intelligibly without hurting their businesses, Polonetsky said. It’s a shift from seeing online-privacy communications as a “legal disclaimer” toward turning it into “a feature,” he said. The test of the program’s value will be whether in six or 12 months, consumers are significantly more aware of how their online data are used, Polonetsky said.