DMA Politically Direct (Summer 2008): States Focus on Behavioral Marketing

August 27, 2008 — In addition to congressional activity, the consumer privacy debate intensified on the state level for marketers this year, as lawmakers in three states considered legislation that would regulate online behavioral marketing. Online behavioral marketing refers to advertising that is targeted to specific users based on their previous Internet searches or activities.

Massachusetts, Connecticut, and New York considered bills that would require online marketers to comply with codified standards, post detailed notices on their websites, and provide consumers with a way to opt out of their data-collection program.

The Internet Alliance believes that state legislation aimed toward creating mandatory standards for online behavioral marketing is unnecessary and would impose costly and troublesome requirements.

Currently, all major Internet network advertisers are members of the Network Advertising Initiative (NAI), and have publicly agreed to abide by self-regulatory principles that govern collection and use of information about Internet users. These principles are currently being strengthened in response to the FTC’s Behavioral Advertising self-regulation initiative, about which the agency received more than 60 comments in April 2008.

The NAI principles already contain many features, including requirements to post notices, provide consumers with the ability to opt-out of target advertising, and impose restrictions on merging non-personal identifying information with personal identifying information. These principles are similar to the requirements in the state legislation, but are more workable.

To view NAI’s principles, visit www.networkadvertising.org.

The Internet Alliance supports the NAI initiative. However, the Internet marketing community is divided. Some major companies, including Microsoft and Google, are calling for a new federal privacy law.

Congress is not expected to pass an online privacy bill this year. But the Internet marketing community’s divided position makes it certain that the states will revisit behavioral advertising again in 2009, when all 50 legislatures are scheduled to convene.

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