A Lot Has Changed in Eight Years

By Renee Boucher Ferguson  |  Posted 2008-03-27 Print this article Print

Cooper said the NAI's regulations grew out of an incident in 1999 when DoubleClick-which is in the process of being acquired by Google-wanted to merge with Abacus, a company that tracked offline what DoubleClick tracks online: consumer response to ads.

"That was eight years go," Cooper said. "In those years a lot has changed-the business model, the technology, the players have changed. The whole landscape has changed dramatically. We feel that those eight years of change have caused NAI's standards to not hold up. In some ways [some people] didn't think they were adequate in the first place."

Like Brodsky's bill, the NAI's Self-Regulatory Principals suggest that advertisers not use personally identifiable information-such as medical or financial data or social security numbers-for online preference marketing. In January, NAI, working with the Federal Trade Commission, came out with a proposal to upgrade the regulations. The new rules would cover a number of areas, including: scope and enforcement; sensitive consumer characteristics; choice enabling technologies; consumer education; standards for use of personally identifiable information; and membership outreach.

Membership outreach is a key issue for the CDT's Cooper, who said that legislation-federal rather than state-needs to be in place to protect consumers, rather than relying on self-regulation.

"The [NAI] regulatory body is suggesting [updated] self-regulation, which suggests to us that self-regulation isn't working," she said. "It's only covering a quarter of the industry. There are many more advertisers than there are members of NAI. How can it be enforceable when you can't convince people to join the group?"

Assemblyman Brodsky bristles at the suggestion that his consumer bill of rights amendment mirrors NAI's regulations.

"It's not [like NAI's]. We talked to a lot of people. There are a lot of people with good ideas," he said.

Brodsky said the bill should become a de facto national standard, though he is unsure of the legislation's timeline through Albany's political process. "I've said to the industry that it makes sense to try and turn this into something that other states can do as well," he said.

Mike Zaneis, vice president for public policy for the Interactive Advertising Bureau, an industry group that represents online advertisers like Google and Yahoo, along with a good number of online media companies, said any legislation would be harmful to both online companies and consumers. IAB, which helped draft regulations around decreasing pop-up ads and supported federal legislation to increase enforcement against spyware, said industry self-regulation is the better option.

"We're not averse [to legislation] if we can identify real concerns and come up with real solutions," Zaneis said. "But there are people with ulterior motives that want to regulate advertising because they don't like advertising."

Zanies said the bill introduced by Brodsky is a solution searching for a problem.

"There is no demonstrable consumer harm," he said. "Our customers are not telling us that relevant advertising is bad. Actually it's the opposite. They're telling us it's better than getting random ads."

From the IAB's perspective, there is a tradeoff for a free Internet, with online advertising a by-product of non-subscription based content-news, videos, blogs, search engines and almost anything else-that is supported through advertising revenues.

"There is a direct consumer benefit [to online advertising]," Zaneis said. "What we're not hearing is consumer harm."


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