Behavioral targeting on the Internet has recently come under the scrutiny of lawmakers and privacy advocates. This increased interest has been triggered in part by Facebook’s and Google’s recent adoption of targeted advertising practices. In response to growing concerns over behavioral tracking, three U.S. congressmen are preparing a draft bill that would mandate the disclosure of monitoring practices for advertising purposes. The goal of the bill is to increase transparency and provide individuals with the opportunity to learn what information is being collected about them, by whom and how the information will be used. At present, there are suggested best practices set forth in the Federal Trade Commission’s (“FTC’s”) Staff Report on Self-Regulatory Principles for Online Behavioral Advertising. These Self-Regulatory Principles are designed to encourage industry self regulation for the protection of consumer privacy in online advertising activities. The FTC is in the process of reviewing the privacy issues raised by online behavioral advertising over the course of the last decade. An FTC Town Hall meeting to address behavioral advertising practices was hosted in November 2007. In response to the comments received at the Town Hall meeting, the FTC issued Self-Regulatory Principles to promote industry self-regulation. If enacted, the proposed bill would frustrate industry’s nascent efforts to self-regulate in this area.

While there has been considerable discussion of online behavioral advertising, the placement of targeted ads on the Internet is not a new phenomenon. A number of well-known companies, including Yahoo! and Microsoft, have made use of the technology for years. Facebook has joined the bandwagon and notified advertisers that they could begin targeting ads to users based on language and location. A posting on Facebook’s company blog indicated that the location and language features represented a “huge upgrade for Facebook’s targeting.” The ability for advertisers to target specific users is significant given that Facebook recently announced that it expects to have 200 million users by the end of March 2009. Google also announced that it will begin interest-based advertising that provides users with ads based on the types of websites they visit. This service would supplement Google’s existing contextual advertising. As part of its approach to targeted ads, and perhaps to allay privacy concerns, Google will offer users an opt-out by downloading a browser level plug-in to restrict the use of interest-based ads.

The FTC’s online behavioral advertising principles are available here.