Online advertisers launch sweeping rules over data privacy

The digital ad industry will announce Thursday sweeping new self-policing guidelines aimed at providing consumers with options for how they want to interact with online ad businesses that gather data about them.

The $8.5 billion ad industry is hoping to ease consumer privacy concerns and give people more choices, including an "opt-out," about what is known as behavioral advertising. It's the practice of designing and delivering ads to people based on their Web usage. Advertisers wanted to take the lead before the government responds to concerns with regulation.

"We wanted to put the tools of control with the consumer, not with government, not with companies," says Randall Rothenberg, CEO of the Interactive Advertising Bureau trade group.

The group worked with other trade associations, representing more than 5,000 media and advertising companies, and major Internet media companies such as Googlegoog, Microsoftmsft and Yahooyhoo to develop seven main principles.

Says Rothenberg, "Member companies should pick this is up with the understanding that we should communicate with consumers, always be transparent and never hide behind legalese when clear English should be our default position."

The measures are in response to a mandate two years ago from the Federal Trade Commission, which has been trying to address growing privacy concerns over data collection as advertisers try to target consumers based on their Web habits.

"Businesses are using information to deliver ads more relevant to consumers," says Stu Ingis, an industry attorney and partner at Venable. "This will make it a more efficient process to deliver content and services that consumers want. And it provides transparency for consumers to know how this information is being used."

Among the most important aspect of the guidelines is consumer control — letting people choose whether data are collected and used for ad purposes. They call for the choice to be available via a link from the privacy notice on the Web page where data are collected. Additional principles address: an aggressive consumer education campaign, transparency through clear and easily accessible disclosures, data security and collection of sensitive material, especially as it relates to data from children.

The guidelines, co-developed by the American Association of Advertising Agencies, Association of National Advertisers, Council of Better Business Bureaus and Direct Marketing Association, also call for the establishment of a review and compliance division specifically for digital advertising. The Better Business Bureau, which already monitors truth in advertising for traditional ads, will operate the division with the Direct Marketing Association starting at the beginning of 2010.

"We support the core principles set forth in this new industry initiative, and believe it represents a meaningful step toward effective industry self-regulation," says Anne Toth, Yahoo vice president of policy and head of privacy.