Online behavioral tracking at a crossroads: will companies do the right thing?

There are two new vendor systems being introduced in the U.S. that will significantly enhance the type of information that will be made available to advertisers regarding the Web navigation and search behavior of users. 

(Nice place to visit but do you really want to answer questions there?) 

NebuAd and Phorm, are promising the first “consumer-centric behavioral targeting network.”  If their business model looks promising, expect to see similar systems put in place soon by old standbys like DoubleClick as well.  Essentially, these firms will be working with ISPs to track sites visited and searches performed by their customers and provide this information to advertisers in order for them to customize their ad pitches accordingly.

While these firms are poised to deliver the kind of contextual advertising experience long promised by the interactive properties of the Web, they are entering into some very dangerous territory when it comes to compromising the privacy of its users.  According to The New York Times, at least one of these firms, NebuAd, is being cagey about what and how it is going to alert the people it is monitoring, leaving it up to the individual ISPs to alert their users.  NebuAd has also so far refused to share information about its ISP partnerships.

Whatever side you might be on re: the privacy issues and relative merits of the different technologies used by these companies, their failure to act in a responsible way should be cause for concern: if these firms drop the ball on effectively notifying users they may be shooting themselves — and their advertising clients — in the foot.  And the wounds could be deep.

Already Phorm is under fire from advocacy groups in the UK for behaving like big brother.  Here is an example of what a viral video campaign could do to set off alarms in the U.S.:

There have been too many instances in which the failure of an industry to police itself of potential abuses (see our current mortgage crisis) has resulted in serious blowback from consumer groups and the general public.  These behavioral tracking firms, which are currently flying under the radar for the most part, may be in for some serious heat if they don’t take pains to police themselves.  This means coming up with a workable system for notifying Web users and providing them with a simple way for them to opt out of having their online behavior tracked (what some ad executives are calling “unavoidable notice”).

Rather than each company coming up with its own rules for disclosure, they should be establishing a consistent system with the help of a reputable third party non-profit oversight firm, similar to what Icann does with the contentious issue of Internet addresses. 

The NAI (Network Advertising Initiative), made up of several companies with interests in the online ad space, including Google, AOL and Yahoo, has committed itself to self-regulation of online data mining practices.  However, so far their consumer protections  don’t appear to go far enough, especially around the definition of “Robust Notice.”  The problem may be that they have too much of an interest in making these types of systems work to provide truly enforceable oversight.

Without stricter oversight, these firms and their advertising clients may find one of their worst nightmares coming true: sitting in Congressional hearings and having to answer questions to House members that barely understand how to send email, let alone the difference between a “cookie” and Internet protocol addresses (two of the ways that these companies are tracking information).

This should be enough of a disincentive for these firms to act now.  Advertisers, who will likely be an easy target if any potential abuses of this information become widely known, would do well to help pay for oversight if the tracking firms are unwilling to foot the bill.

Additional video:
Behavioral targeting 101 with Darren Johnson:
http://youtube.com/watch?v=PTyHM0SvAK8&feature=related