Behavioral advertisers discover the self-regulation gospel

July 2, 2009

Behavioral advertising, in which users are fed ads based on the interests revealed by their Web browsing habits, has an obvious appeal to advertisers, as it will ostensibly allow them to serve ads to the most relevant audiences. It also raises a host of privacy concerns—to work effectively, the Web surfing histories of consumers have to be aggregated and analyzed by those providing the ads.

Both the Federal Trade Commission and Congress have asked questions about whether advertisers were doing enough to protect and inform consumers, raising the prospect that regulation of behavioral advertising was only a matter of time. In an attempt to head off the government, a coalition of advertising groups that includes Google has now issued a series of principles that will guide their self-regulation.

The industry didn't need to look far to see the downsides of a failure to respond to public concerns. One of the more aggressive approaches to behavioral advertising, the deep packet inspection used by NebuAd, saw the company's CEO dragged before Congress, and the resulting bad publicity turned the company into a pariah. It ultimately closed its doors last month.