What is this all about? Folks in Washington are preparing to increase the scrutiny and regulation of online behavioral advertising. As I have written before, Rep. Boucher is one of Congress’ foremost advocates for and experts on technology matters. Over the past two months, he openly discussed his concerns about whether or not online ad and telecommunications companies have been providing consumers with adequate protection of their privacy. The hearings were a first step in the development of legislation to govern how companies capture, store and use behavioral and other data from consumers as they surf the Web and, potentially, how companies will use cable television.

Who was there? Several key industry folks were there today. Among the witnesses were representatives from AT&T, the National Cable & Telecommunications Association (NCTA), the Center for Democracy & Technology (CDT), and the Electronic Privacy Information Center (EPIC).

What did they say? Virtually everyone talked about deep packet inspection, the practice of Internet Service Providers sifting through all of consumers’ browsing data, either to manage the delivery of the broadband service, or to capture data to be used for advertising or marketing. This practice drew a lot of negative fire last year when NebuAd debuted its ad service using the technology. The most significant testimony came from AT&T, whose Chief Privacy Officer, Dorothy Attwood, took the position that all behavioral advertising should be “opt-in” — that it should all require an affirmative consent from each and every consumer. The NCTA representative talked about developments in building advanced TV systems through the consortium Canoe Ventures.

What does this mean for the digital media and marketing industry? Everyone should expect that today’s hearing is just a first step in what will be a long process. Clearly, Washington is preparing to move across a broad front on this issue. If industry self-regulatory efforts are going to happen, they’d better happen soon.

What else is out there? Not to be lost in Congress’s actions today are the recent strong moves of FTC Chair Jon Leibowitz to make his presence felt on consumer advertising issues. First, Chairman Leibowitz just named a new slate of department heads to the commission, all of whom have strong consumer protection pedigrees. Second, just a few days ago, the FTC moved very quickly and decisively to challenge Kellogg’s television commercials that claimed that eating one of its frosted cereals would make children 20% more attentive in school that day. Kellogg’s immediately pulled the spots. Leibowitz, like Boucher, had been on record for some time with his concerns about abuses of consumer privacy online and his desire for online ad companies to be more transparent about what they’re doing.

It looks like the clock is now ticking for the industry to solve some of these problems before Washington tries to solve them first. It probably won’t be pretty. What do you think?

(This post originally ran on MediaPost’s Online Spin on April 23rd, 2009.)

The issue has been with the online ad industry for years. We had the public concern and regulatory backlash after the DoubleClick/Abacus merger. We have had organizations like the Network Advertising Initiative, TRUSTe, and more recently the Interactive Advertising Bureau working to develop self-regulatory programs to help the industry manage privacy. Many of us have been called to testify on privacy issues before the Federal Trade Commission and Congress.

In the past, most of the advocates calling for tougher privacy laws represented relatively extreme views. They were privacy advocates representing organizations that no one — even those inside the beltway — had heard of. No more.

Events during the past three weeks have changed the outlook for privacy legislation that could impact our industry.

First, FTC member Jon Leibowitz was named by President Obama to be the commission’s new chairman. Not only is he a passionate consumer advocate, but he has stated many times he believes the online industry is giving short shrift to protecting consumer privacy. He does not believe that online ad companies do a good job of telling the public what user information they capture and what they do with this info. He is right.

Second, Representative Rick Boucher, the new chairman of the House Subcommittee on Consumer Protection, announced that he will be introducing legislation to regulate online privacy. While he recognizes that the FTC recently released an advisory report calling for continued self-regulation, he is on record that he doesn’t believe most online ad companies are complying with the FTC’s advice. He is right.

Leibowitz and Boucher are no Luddites. Nor are they fringe privacy zealots. They are both among the most tech-savvy in Washington and are quite centrist and pragmatic, certainly relative to those normally calling for more regulation or legislation in this area. No longer is the fight against governmental privacy protection a fight against the fringe. It is now a fight against the middle.

What should we do? Now is the time for online ad companies to get truly serious about self-regulation. The industry may not be able to avoid legislation in this area, but it can work to insure that the impact of any legislation is minor.

There is no question that many of our companies are vulnerable in this area. A number of companies try to be good actors, but don’t pay enough attention to protecting privacy to realize that they are doing a bad job giving appropriate notice and choice to their users concerning data capture on their sites. We also have a number of companies out there that are just plain bad actors, who hide behind those that are ignorant. And, finally, we have a number of folks out there with a mindset that just because we can offer “better” services by capturing user data, and just because many younger users don’t seem to worry too much about privacy, we don’t have a problem.

We do have a problem. It is about to move beyond our control. Will you help fix it?

(This post originally ran on MediaPost’s Online Spin on March 19th, 2009.)