NAI to Develop “Web Bug” Standard

The Network Advertising Initiative, a collective of some of the largest online ad networks, said this week that it plans to develop industry standards governing the use of so-called “Web bugs.”

“Web bugs,” which the NAI prefers to call “Web beacons,” are graphics files embedded in a page’s or e-mail’s HTML content. The files enable marketers and publishers to better track user movement through a Web site. Often, the graphics are invisible, and, by definition, they’re not apparent to the user.

Now, the Cleveland-based industry group — whose membership includes Avenue A, 24/7 Media, DoubleClick, and L90, which earlier this week sold DoubleClick its technology business — said that it wants to address consumer privacy issues, and proposes that its membership gets to work on hammering out standards that will take those concerns into consideration.

“The use of Web beacons is critical to the continued growth and success of the online economy,” said NAI executive director Trevor Hughes. “Web beacons allow us to provide, among other things, more relevant offers to consumers and anonymous reporting to advertisers on the effectiveness of online ad campaigns.”

Hughes said that because the effort had just been started, it was difficult to come up with a timeline or a strict agenda. Still, he said that the effort was geared toward addressing privacy concerns over Web bugs.

“What we’re trying to do is respond to the concern that’s been addressed in the consumer advocacy community and regulatory community about the use of Web beacons, and at the end of the day, many Web beacons, are entirely benign and serve very important purposes,” he said. “We’re doing this to make sure we understand entirely what’s happening with Web beacons, and based on what’s actually happening with them, determine what standards should be set for their use.”

For example, Hughes said that if a site was using Web bugs “merely … for unique visitor counts, being done by a service provider, but only for that Web site,” the practice might require just notice of that fact in the site’s privacy policy. Whereas, if a Web bug is attached to personally identifiable information, like name, address, phone number, health or financial information, “that might have choice conditions attached to it.”

Whatever standards the company comes up with are unlikely to appease privacy advocates. The NAI said that the effort to create standards would build on “the successful development and implementation of the NAI self-regulatory principles for Online Preference Marketing.”

Those principles — which, among other things, assert that “opt-out” is the default practice for network profiling — found their way into Federal Trade Commission and Department of Commerce recommendations regarding online privacy last May, much to consumer advocates’ chagrin.

“The NAI principles, which fall far short of providing any privacy, were always a shameful capitulation by the FTC and DoC,” said Junkbusters president Jason Catlett, who also is a Fellow of Harvard University’s Kennedy School of Government.

The non-profit, Washington, D.C.-based Privacy Foundation earlier proposed several guidelines that it would like to see marketers adopt. Among those suggestions are proposals to make Web bugs both visible and click-able, so that a user clicking on one could find out what information is being collected, and what it will be used for.

But Richard Smith, the Foundation’s chief technical officer, said this was unlikely.

“They’re not really interested in letting consumers know what’s going on,” Smith said. “Yes, they may have ‘opt-out’ but they’ve never really told anyone about it. That’s the problem with most opt-outs — the general philosophy is it’s hard to know how to do it. Like the telephone preference lists that direct marketers use — most people would spend a little time to not be on those lists, but you have to know what your options are to do that.”

Additionally, both Smith and Catlett pointed to the online advertising industry’s troubles as a sign that it perhaps should reconsider some of its practices.

“The NAI can now more clearly be seen as a DoubleClick front, since most of the other members have gone out of business or been acquired by DoubleClick,” said Catlett, referring to MatchLogic, AdForce and Engage, which exited the media business earlier this year. “How much more of this grossly unfair surveillance do American surfers have to put up with in support of a financially discredited business model? Spying on consumers just isn’t good business and it’s very bad for public confidence.”

Added Smith, “In the Internet ad space, there’s way too much emphasis on measurement, and not enough on making compelling ads that people want to respond to. It seems like it’s driven too much by technology, and not enough by advertising creativity. The fact is that they standardized on these little banner ads … and they’re trying to address it now. So I think this whole issue of online profiling and Web bugs … just totally misses the bus on what advertisers want.

“There was so much controversy about online profiling … but so few ads are targeted that way,” Smith said. “So much effort was put into this idea of online profiling being something good, and it’s not really being used.”

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