The NAI’s Very Important Report

January 5, 2010

Kudos to the Network Advertising Initiative for completing a comprehensive compliance review of their membership, and for laying out both positive and negative results in their assessment. The report is encouraging, and ultimately points to an even more crucial role for the NAI in creating an effective self-regulatory regime for online behavioral tracking.

Here’s what I found most important in the report:

We’re on the right track. The two areas of weakness in compliance noted by the NAI — missing data retention policies and lack of disclosure on publisher sites — have been primary areas of focus for the PrivacyChoice project (see our blog posts on retention and our PrivacyWidget for sites). It looks like we’re focused in the right areas.

Retention policy is hard for the big guys. Although the report does not name the four NAI members who lack complete policies about consumer data retention (why not?), here’s my list:  Google, Yahoo!, Microsoft and Specific Media. It’s ironic that the first three are the largest and highest profile members of the NAI (the fourth being a network with “possible compliance issues” and an incomplete submission). Setting and enforcing retention policies seems to be more complex and has higher stakes for the larger networks. The report promises clear retention policies from these companies by the end of Q1 2010, so get ready to compare and contrast how the big three approach and spin this knotty problem.

On enforcing publisher disclosures, NAI members got off easy (this time). Under the NAI’s current requirements, a website publisher complies by explaining in their own privacy policy that behavioral targeting is used on their site and providing a link to the NAI opt-out page. The report concluded that many members were not enforcing this requirement, even though confirming publisher compliance is trivial; you can just use Google to check that the right words and the link appear on the publisher’s site. (See a related post on this.)

While the NAI points to publisher confusion about the requirements, the real explanation is that ad networks have been loathe to ask their website-customers to do anything, particularly when it involves revising their privacy policy (i.e. lawyer time). Since the disclosure process can now be automated and the industry has coalesced around specific publisher requirements, the NAI shouldn’t let its members off so easy next year.

The NAI report is a reminder of how self-regulation is supposed to work in practice. As a consumer, it’s good to know that each NAI member was required to make formal submissions and be questioned on each element of the NAI’s standards. To see a half dozen networks implement retention policies in time for the report is a substantive sign of progress, even if there are a few laggards.

Even more important, the NAI’s promise to focus on website-level disclosure has the potential to vastly improve industry privacy practices across the board, even beyond the NAI membership. Our research revealed that on most websites NAI members are outnumbered by non-NAI members. Firms with less protective policies and no oversight will continue to track consumers as long as websites allow them to. The prevalence of non-adherent targeting firms is the central challenge to effective self-regulation.

But if the NAI makes publisher disclosure a serious focus in 2010, websites may for the first time start to feel accountable for the ad-network choices they make. That kind of transparency can bring more targeting firms into the NAI fold and squeeze out the rest. The good news for NAI members is that this also means lower-profile competitors will face the same restrictions and costs of doing business as they do.

This leads to me to wonder if the NAI is underrated in its self-regulatory role. While the IAB/DMA/BBB efforts get much attention, they seem focused on an advertiser-driven disclosure framework that assumes ad-network adoption and does little to foster website accountability.

Websites are the real decisionmakers in this ecosystem. Perhaps it will be the NAI’s clout with them that actually makes self-regulation work.


3 Responses to “The NAI’s Very Important Report”

  1. […] Specific Media: Out of the NAI doghouse? August 18, 2010 More than six months ago, Specific Media was the sole ad delivery company singled out as having potential compliance issues in the NAI’s 2009 report (discussed in an earlier post). […]

  2. […] privacy framework, particularly since publisher-to-consumer disclosure is a principle that the NAI vowed to enforce more strongly in 2010? Is it consistent with NAI policies for NAI members to purchase and use Clearspring’s […]

  3. […] It’s interesting but not surprising that websites aren’t following through on disclosure requirements, when left to their own to do so. No doubt Google has the resources and the technical prowess to automate this process to do a much better job. And no doubt that as a member of the Network Advertising Initiative, Google has an independent requirement to follow-through on publisher disclosure (a principle the NAI reaffirmed earlier this year). […]

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