Many retailers engage in behavioral advertising, which 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 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 site, 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. They recommend clear, meaningful and prominent disclosure on a retailer’s website that describes its data collection, transfer and use practices. With respect to third-party behavioral advertising, they recommend describing the types of data that are collected, explaining the purpose for which it is collected or will be transferred to third parties, and providing a prominent opt-out mechanism by which customers can opt out from being tracked.
In addition to the self-regulatory effort, California’s Online Privacy Protection Act went into effect on January 1, 2014, and could be interpreted as requiring retailers and other businesses to notify consumers in their website privacy policies if they permit third party behavioral advertising. The following provides a snapshot of information concerning behavioral advertising.
What to think about when evaluating your organization’s online behavioral advertising practices: