Ad servers opt for opt-out in proposed privacy code

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The Web's major third-party ad servers, readying a proposed industry privacy code, have told marketers and ad agencies that they will let consumers opt out of individualized profiles even when no data are personally identifiable.

In expanding the scope of privacy limits that up to now came into play only when profiles included a name, address, e-mail or phone number, the Network Advertising Initiative--representing DoubleClick and five other ad-serving companies--is taking a major risk.

A GAMBLE

Its bet is that instead of losing revenue as millions of consumers opt out of profiles needed to create personalized online ads, consumers will become more sanguine about Web ads and the code will gain endorsement from government agencies and perhaps even President Clinton.

NAI members sent a proposed code that included the opt-out provision to the Federal Trade Commission for consideration April 28.

Some individual ad servers, including category leader DoubleClick, let consumers opt out of profile collection. The new move would require each ad server to offer opting out and would allow the coalition to set up a consistent method of opting out, perhaps including one central site for consumer information and action.

The NAI move comes as the privacy political debate heats up.

An FTC report on privacy that could include legislative recommendations is due at month's end.

Democrats warned privacy would be a major fall campaign issue if Republicans don't act.

"It is one of those animating issues that people are going to vote on," said House Minority Leader Dick Gephardt (D., Mo.) at a Capitol Hill press conference.

NAI members cautioned that several issues in their proposal remain to be resolved. There has also been a split within the group on the issue; Real Media dropped out, saying the group's proposal doesn't go far enough.

"We're not going to be members going forward," said Real Media Chairman Dave Morgan, citing "different interests" of ad-tracking companies such as DoubleClick and Excite@Home's MatchLogic vs. ad sales rep companies such as his own.

"We will support the principles that are going to come out and we think they are good principles," Mr. Morgan said. "We just think they should ultimately be much stronger."

REAL MEDIA SUPPORTS OPTING IN

Real Media President-CEO Chris Neimeth said his company's position "is that third parties that don't have an explicit relationship with consumers should not gather data unless [consumers] have been made aware and have given permission on an opt-in basis."

The industry code, as previously reported, is expected to include a promise not to combine information collected anonymously with that containing personally identifiable data as well as a promise not to combine offline and online information without a consumer's permission.

Marketers and ad agencies have up to now always insisted privacy issues come into play only when information becomes personally identifiable, and then only when it is used in certain ways.

"We don't think that publishers ought to be prohibited from collecting anonymous information," said Clark Rector, VP-government relations for the American Advertising Federation. He said he has no problem with ad servers agreeing to give consumers an option about non-personally identifiable information, "as long as they are doing it voluntarily."

John Kamp, senior VP for the American Association of Advertising Agencies, said his group doesn't believe the government should have any role in setting standards for anonymous information. "Non-personally identifiable information is exactly that, and it is not the government's business," he said.

Some government officials suggested that while anonymous profile data technically isn't personally identifiable, a consumer who visits a golf site becomes suspicious when ads for golf clubs pop up later on unrelated sites.

"It creates the eerie impression that you are being followed," said a government official.

GOVERNMENT AGENCIES PUSH

The FTC and the Commerce Department in meetings as recently as last week pushed marketers to go farther. The FTC in March wanted ad servers to limit profiles to consumers who opted in.

The task force's draft recommendation had suggested a need for legislation on security, but that's being rewritten to give the FTC alternatives that don't need new laws, said several members.

Richard Purcell, Microsoft Corp.'s director of corporate privacy, said marketers' worries about maintaining consumer confidence in the Web are more than sufficient to prompt companies to act. "I don't expect legislation is necessary to implement the [Net security] report," he said.

Meanwhile, President Clinton's Consumer Financial Privacy Act, proposed last week, ostensibly was limited to financial privacy issues, but could affect marketers that issue credit cards.

Direct marketers, however, last week breathed a sigh of relief. The legislation generally would require credit-card companies and insurers to let consumers bar sharing personal information derived from financial records, but it would continue to allow sales of customer lists.

Copyright May 2000, Crain Communications Inc.

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