Online Behavioral Advertising: A How-To Guide


Behavioral advertising refers to the use of information to predict the types of products or services of greatest interest to a particular consumer. Online behavioral advertising takes two forms. “First party” behavioral advertising refers to situations in which a company’s website uses information that it obtains when interacting with a visitor. “Third party” behavioral advertising refers to situations in which a company permits others to place tracking cookies on the computers of people who visit the company’s website, so that those individuals can be monitored across a behavioral advertising network.

Two self-regulatory associations – the Network Advertising Initiative (“NAI”) and the Digital Advertising Alliance (“DAA”) – have created standards for companies engaged in third party online behavioral advertising, as well as promoted mechanisms for consumers to opt-out of being tracked. In addition to the self-regulatory effort, on January 1, 2014, a California statute went into effect that requires a company to notify consumers if such company permits third party behavioral advertising in certain situations. The following is a snapshot of information concerning behavioral advertising.


Number of state statutes that may require companies to disclose the use of third party behavioral advertising.1


Number of companies that are members of NAI.2


Number of companies that are members of DAA.3


Number of references on FTC’s website to “behavioral advertising”4

2 - 60

The number of tracking cookies placed by the top 5 retailers on their websites.5

What to think about when evaluating your organization’s online behavioral advertising practices:

  1. Does your privacy policy comply with state law requirements concerning the disclosure of first party online behavioral advertising?
  2. Does your privacy policy comply with state law requirements concerning the disclosure of third party online behavioral advertising?
  3. Does your organization state or imply that it only permits behavioral advertisers to use its website if those advertisers utilize the opt-out mechanisms of NAI and/or DAA?
  4. If so, do all of the behavioral advertisers that you permit to use your website permit opt-out via the NAI and/or DAA mechanisms?
  5. Who within your organization has the authority to permit third parties to place cookies on your website?
  6. Who within your organization maintains a comprehensive list of all cookies placed on your website?
  7. Has the legal department reviewed the contracts with each behavioral advertiser with whom your organization has a relationship to verify that their privacy practices comply with law and with the standards of your organization?
  8. Have you audited the cookies that are placed, or tracked, on your website?
  9. Have you verified the accuracy of the description of behavioral advertising contained on your website?

1. Cal Bus. & Prof. Code §§ 22575(b)(5)-(7); Del. Code 1204C

2. Companies listed on as of January 2017

3. Companies listed on as of January 2017.

4. Based upon Google search restricted to conducted in January 2017.

5. Top 5 eCommerce retailers as identified by the National Retail Federation in May of 2016. Quantity of cookies identified by Ghostery on retailer home page on May 6, 2016.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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