On November 1 and 2, 2007, the Federal Trade Commission (FTC) hosted a town hall meeting titled “E-havioral Advertising: Tracking, Targeting, and Technology.” The two-day event featured consumer advocates, industry representatives, technology experts, and academics in an attempt to address privacy and other consumer protection issues related to online behavioral and targeted advertising.

Conference topics included the types of consumer data that are collected online, how such data are used, what protections are provided for that data, and the convergence of mobile and e-mail marketing. The FTC also focused on companies’ disclosures to consumers and consumers’ awareness of online data collection practices. One topic of discussion during the conference (raised by FTC staff and Commissioner Leibowitz in his remarks) is the sufficiency of online privacy policies as a method of providing notice and obtaining consumer consent for information collection and use. The FTC has made privacy policy disclosures of information practices a cornerstone of its enforcement and guidance in the online environment. Although it is unlikely that the FTC will advocate a dramatic shift away from privacy policy disclosures, the topics of how to best convey notice to consumers and to provide effective choice was discussed at length. Consumer education (and company transparency) were related themes throughout the event.

The self-regulatory regime created seven years ago for third-party ad servers, the Network Advertising Initiative (NAI), was a focal point throughout the two days. Participants discussed the NAI’s scope, educational process, and enforcement of its principles (or lack thereof). The FTC will likely try to obtain additional data about the NAI’s effectiveness, and continue the dialogue with the organization.

Leading up to and during the town hall meeting, companies and advocates alike introduced proposals relating to consumer notice and choice in online behavioral marketing. The company proposals included increased transparency on targeting choices, and providing ways to perpetually stop behavioral advertising. On the eve of the conference, several consumer advocacy groups proposed a “Do Not Track” List to be administered by the FTC. The scope of the proposal appeared to be more comprehensive than just advertising, and would require the FTC to keep track of all domains of servers registered by advertising entities that place persistent tracking technologies on consumers’ computers if the servers are involved in such tracking activities.

Consumers would then register with the FTC to have those domains blocked from serving the consumer targeted ads. The Do Not Track List appears to be difficult to implement; the FTC called it “interesting,” but does not have the statutory authority to implement anything of this scale. The creation and maintenance of the list could be a Herculean task, and yet does not appear to be any more effective in providing clear notice and choice to consumers about what activities are occurring.

The town hall meeting was supposed to be a “dialogue” among consumer advocates, industry, and the FTC about the pros and cons of behavioral targeting. This admirable goal was not necessarily met, given the size of the panels, and lack of concrete discussion about consumer harm, or alternative solutions. Despite the lack of concrete conclusions, the FTC promised to continue to explore issues surrounding behavioral targeting, including but not limited to: how to increase consumer education and understanding; whether notice and choice is sufficient to convey what is going on with behavioral targeting; are there areas that are “off limits” and what are those sensitive areas; and whether there can be industry competition on privacy.

The FTC is preparing a staff report following the town hall meeting. As part of that report, or as part of the continuing “education” in the area, the FTC will likely attempt to talk to companies who have been identified as leaders in behavioral targeting. At the end of the meeting, the FTC suggested it would consider compulsory process if companies did not cooperate voluntarily, claiming that companies had been “guarded” prior to and during the conference.

The FTC report will likely have recommendations for best practices, and may suggest modifications to NAI and current industry practices, if the FTC is not satisfied that consumers are appropriately apprised of behavioral targeting and online advertising. The FTC can also bring enforcement actions against online advertising companies as a demonstration of their commitment to the issue, but that is unlikely in the short term.

Targeted advertising based on online consumer characteristics is a burgeoning area, with rapid change in the past few years. Increased consumer education, more robust notice, and effective choice are likely the consensus points from the conference; how those goals will be implemented still needs to be determined