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Self-regulation to head off Phorm backlash

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Advertisers and agencies in the US have promised to create a code of practice to allay fears about increasingly intrusive forms of online advertising. Four major advertising trade associations said that they will work together on self-regulation.

The American Association of Advertising Agencies (AAAA), the Association of National Advertisers (ANA), the Direct Marketing Association (DMA), and the Interactive Advertising Bureau (IAB) have said that they will work together to create self-regulatory principles for behavioural advertising.

Behavioural advertising is that which responds to someone's online activities, as measured by monitoring systems. Privacy activists have raised concerns about increasingly sophisticated monitoring of users' activities, some of which monitor all activity at the ISP level, rather than at an individual web page level.

US consumer regulator the Federal Trade Commission (FTC) published the results of an investigation into behavioural advertising a year ago. It said that it did not think government regulation was necessary yet, but that the industry should self-regulate.

The group of advertising industry associations has said that it will base its principles on those identified by the FTC.

The FTC said that "every web site where data is collected for behavioral advertising should provide a clear, consumer-friendly, and prominent statement that data is being collected to provide ads targeted to the consumer and give consumers the ability to choose whether or not to have their information collected for such purpose".

It also said that companies that collect information should provide security for it and should only retain it for as long as is necessary to fulfill its purpose. It also said that sensitive data, such as medical information, should only be collected with specific permission from users.

"It is our responsibility as marketers to ensure the web surfing public’s privacy interests remain protected," said ANA chief executive Bob Liodice. "Strong and comprehensive self-regulation strikes a balance that both protects the public interest and allows marketers to provide relevant advertising, which is particularly critical during this period of economic downturn."

"Effective self-regulation of interactive advertising will help ensure that our industry can continue to evolve and innovate, offering consumers what they want when they want it," said Randall Rothenberg, chief executive of the IAB. "The value of online advertising to consumers and businesses cannot be understated, particularly in these challenging economic times. We want to be certain that we demonstrate the value exchange to the public that comes from online advertising."

Advertising technology companies NebuAd in the US and Phorm in the UK have promoted technologies which allow advertising to be based on all of a user's internet traffic by using data gathered from users' internet service providers (ISPs).

Privacy activists have said that the use of such technologies risks violating users' rights to privacy.

The FTC said in its report, though, that behavioural advertising is important because it allows companies to provide consumers with free content, but warned that consumers must be informed of its use.

"Behavioural advertising provides benefits to consumers in the form of free content... [but] this practice is largely invisible and unknown to consumers," the FTC said in a statement.

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