Self Regulation: Online Behavioral Advertising

DMA members understand that success in all marketing depends on consumer trust, and DMA has a long history of leading the marketing community in the development of self-regulatory guidelines that build consumer confidence in the interactive and online marketplace.  

In February 2009, the Federal Trade Commission (FTC) called for more robust and effective self-regulation of OBA, releasing a staff report outlining several self-regulatory principles for OBA.  The FTC has been explicit in stating that the agency will be monitoring the marketing community, and if self-regulation is not effective, new rules are next which will stifle innovation and growth.  

The fact that regulators are focusing on OBA is significant, as behavioral advertising continues to fuel the growth of rich online content choices and more effective, relevant advertising based on consumer interest and preferences.  

DMA Answers FTC’s Call for Industry Self-Regulation

In January 2009, DMA partnered with the American Association of Advertising Agencies (4A’s), Association of National Advertisers (ANA), Interactive Advertising Bureau (IAB), and Council of Better Business Bureaus (BBB) to answer the FTC’s calls for the business community to develop new self-regulatory models based on advertising practices that foster transparency, knowledge and choice for consumers.

In July 2009, the coalition released seven Self-Regulatory Principles for Online Behavioral Advertising designed to protect consumer privacy in ad-supported interactive media that will require advertisers and Web sites to clearly inform consumers about data collection practices and enable them to exercise control over that information.  (Click here to read DMA’s related press release.)

This same group is now working to ensure that the Principles are translated into a fully-developed and effective self-regulatory program, in order to avoid potentially onerous and costly regulations that will stifle innovation online. 

What is OBA Anyway?

OBA is the collection of information about online activities and Web-viewing behaviors, over time and across non-affiliate websites, to deliver tailored ads.  In a nutshell, OBA allows companies to match ads to a consumer's interests, determined over time.  For example, imagine that you are online browsing the Internet to find a travel deal to London across various websites.  You might then notice that you received an ad for London hotels served to you on your computer the next time you visit a website.  This demonstrates that the ad is being served to you because your browsing behavior suggests that you have an interest or a need to travel to London.  OBA, however, does not include “first party advertising,” in which no data is shared with third parties, or contextual advertising, where an ad is based on a single visit to a Web page or a single search query. 

Behavioral advertising and related uses of OBA information are important.  OBA allows for more effective, relevant advertising through analysis of consumers’ behavior, a common model used in other marketing channels that benefits both consumers and businesses.  And the differences in pricing and effectiveness between OBA and non-behavioral advertising are significant.  A recent study by the Network Advertising Initiative found that OBA secured an average of 2.68 times the revenue per ad as non-OBA ads or “run of network” ads.  Based on proprietary data provided by twelve major advertising networks, the study found that, in 2009, OBA ads were more than twice as effective at converting users who click on ads into buyers (6.8 percent conversion vs.  2.8 percent for run-of network ads) and that BT accounted for approximately 18 percent of advertising revenue.  

Next Steps for Implementation and Enforcement

The collective self-regulatory effort being undertaken by the DMA and other associations has several additional components to assist the business community in adhering to the Principles, as well as DMA’s own related Guidelines:

• OBA Technical Specs: Technical specifications for the implementation of the self-regulatory principles are currently in development.  These “Control Links for Education and Advertising Responsibility” (CLEAR) Standards were released in mid-April.
• OBA Icon: A trademarked icon and accompanying language will give organizations engaged in OBA a standardized way to provide consumers with both notice and choice in or near to any OBA advertisement (i.e., clicking on the icon to reach information about the advertiser and learn how to opt-out).  This will also enable organizations to easily demonstrate compliance with the Principles to consumers.
• OBA Compliance Monitoring: Service providers will monitor compliance and assist with resolution of complaints sent to the BBB and DMA.  
• Enforcement: DMA will begin reviewing complaints regarding OBA practices and taking appropriate enforcement action in June 2010.  The DMA membership is urged to review the revised DMA Guidelines to ensure that if a company is engaged in OBA, it adheres to the new requirements in the Guidelines.  DMA’s Corporate & Social Responsibility staff is ready to assist with questions or concerns in the meantime. 

What Does This Mean for Your Business Practices?

After the Self-Regulatory Principles for Online Behavioral Advertising were released in July 2009, DMA’s Ethics Policy Committee revised and updated DMA’s Guidelines for Ethical Business Practice to include a section specifically addressing the use of OBA (Article #38).  The Guidelines were approved by the DMA Board in October of 2009.

DMA members engaged in OBA should familiarize themselves with the updated Guidelines to ensure that their business practices comply with requirements including:

• When information is collected from or used on a website for online behavioral advertising purposes, visitors should be provided with notice (easy to find, read, and understand) about the third party’s policies for online behavioral advertising. 
• Third parties (not publishers themselves) should provide notice in one of the following ways:
• through a clear, meaningful, and prominent link described in or proximate to the advertisement delivered on the Web page where information is collected;
• on DMA’s approved website(s), such as DMAchoice.org or another comprehensive industry-developed website(s), that is linked from the disclosure that describes the fact that information is being collected for online behavioral advertising purposes;
• on the Web page where the information is collected if there is an arrangement with the website operator for the provision of such notice; or
• if agreed to by the operator of the website(s) on its Webpage disclosing notice and choice regarding information collected for online behavioral advertising purposes.
• OBA service providers (i.e., Internet-access service providers and providers of desktop application software, such as Web browser tool bars) who collect and use information across the Internet should not collect and use information for OBA purposes without consent, and should provide an easy method to withdraw consent for consumers.  
• Members should have meaningful, timely, and effective ways to demonstrate adherence to online information practices via a third party verification and monitoring system, compliant resolution, education and outreach.  This can be accomplished through an auditor, a self-certification, or membership in an organization such as DMA, which has a self-regulatory program.

The Guidelines also include provisions for information security and the protection of children, health and financial information, among other things.  Additionally, they include an important requirement that marketing data (such as the information collected using OBA) can only be used for marketing purposes, addressing the concerns of privacy advocates who believe such information could be misused for nefarious or harmful activities.

For questions or comments regarding self-regulation for online behavioral advertising, please contact DMA’s Government Affairs Team.