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FTC Privacy Report

Last week, the FTC released its long awaited privacy report. Many points covered in the report are not new to the ongoing discussion many of us in the industry have been engaging in regarding online privacy for consumers. For example, the report proposes three main approaches to improve consumer privacy:

1. “Privacy by Design” – the idea that companies should build into their operations privacy protections. This is something that companies like Mediaplex are already doing through opt-out mechanisms, privacy policies, etc.

2. Present privacy choice to consumers in a simple, clear to understand and easy to use format. This is where the Commission suggests the implementation of a “Do Not Track” mechanism for third-party ads, and is basically the same as the shared opt-out mechanism provided by the NAI that Mediaplex currently participates in.

3. Improve transparency – clearer, easier to understand privacy notices. Mediaplex has also been working with the NAI to incorporate concise, consumer-facing summaries of what we do as part of the shared opt-out mechanism.

These three approaches can be summarized as (a) greater consumer education, (b) industry efforts to provide privacy mechanisms, and (c) improving consumer notice and choice. As members of the NAI and IAB, Mediaplex and ValueClick have been actively working toward providing industry self-regulation to address these concerns. In fact, in the Preliminary FTC Staff Privacy Report, Chairman Jon Leibowitz does recognize the online advertising industry’s efforts at self-regulation, and acknowledges this as a viable option for achieving the goal of protecting consumer privacy and rights online. He does, however, comment that “We’re going to give them a little time, but we’d like to see the companies work a lot faster and make consumer choice a lot easier.” Full text can be accessed here: http://www.ftc.gov/speeches/leibowitz/101201privacyreportremarks.pdf

It is important to note that the second approach mentioned above regarding the suggestion from the FTC of a “Do Not Track” mechanism has been contentious and has created some concern in the industry. Following on closely to the privacy report, a “Do Not Track Hearing” was held by the House Commerce Committee (Subcommittee on Consumer Protection) on December 2, 2010. During this hearing a number of different opinions were heard, including the concern about the technical feasibility of implementing such a system, as well as how appropriate it is for the government to make decisions on this and how this would affect advertising subsidized content.

Although there is still more that the online advertising industry can and should do, at this point it is important to also look back and review how much progress has been made, even in just the last year.

- The Network Advertising Industry (‘NAI’ – http://www.networkadvertising.org/) maintains an opt-out mechanism that in a single action allows consumers to opt-out of tracking from over 60 separate online advertising companies.

- The NAI has also released a Firefox add-on designed to work with opt-outs from its member companies: http://www.networkadvertising.org/managing/protector_license.asp

- A group of major media and marketing associations released a Self-Regulatory Program for Online Behavioral Advertising: http://www.aboutads.info/principles/

- As part of this program, the NAI and the Internet Advertising Bureau (‘IAB’ – http://www.iab.net/) – as well as other participating organizations – are collaborating on standardizing an “Advertising Option Icon” as a means for providing enhanced notice of online behavioral advertising practices.

- Companies like Google and Yahoo! have already implemented their own versions of this Enhanced Notice.

The above mentioned points represent both the time and resources that organizations and companies in the online advertising industry have already contributed to improving consumer privacy protection in the online advertising industry.

Overall I believe that the FTC’s Privacy Report demonstrates that the online advertising industry has been moving in the right direction, and that the FTC is willing to give the industry more time to organize solutions to the goals they outline as long as progress continues to be demonstrated.

The following are links to more information on this issue, and related organizations or activities:

- More information on what the NAI is doing can be found here: http://www.networkadvertising.org/managing/.

- More information on the IAB’s public policy efforts can be found here: http://www.iab.net/public_policy, and the IAB review of the FTC’s Privacy Report can be read here: http://www.iab.net/public_policy/1481209

- The FTC press release can be read here:
FTC Staff Issues Privacy Report Offers Framework for Consumers, Businesses, and Policymakers
http://www.ftc.gov/opa/2010/12/privacyreport.shtm

- Full report is accessible here:
http://www.ftc.gov/os/2010/12/101201privacyreport.pdf

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