NAI Blog

Today, the NAI released its 2011 Annual Compliance Report, the third annual report published under the 2008 NAI Code of Conduct. The results of our 2011 annual review are encouraging. Overall, our member companies continue to meet the obligations of the NAI Code and to adopt best practices even where not required by the Code. Here, we summarize a few key findings:

Transparency: In 2011, our member companies vastly increased the transparency of online behavioral advertising (OBA). Our members, early adopters of in-ad notice, have been instrumental in rolling out the DAA’s Advertising Options Icon, an icon that is served tens of billions of times a day. Our members also ramped up efforts to educate consumers about OBA, collectively contributing 4.1 billion ad impressions to the NAI’s education campaign. Those ad impressions lead users to the NAI’s education site, which saw 2.5 million unique visits in 2011, a five-fold increase in visitors over the prior year. Members also began in 2011 to disclose the interest segments related to health that they use for OBA in accordance with the NAI’s new health transparency policy.

Choice: As a result of our members’ efforts to increase the transparency of OBA practices, traffic to the NAI website increased dramatically, with 8.5 million unique user visits in 2011. Six million unique users visited the NAI opt out site, and 840,000 opted out of one or more NAI member company on the NAI’s opt out page. These numbers suggest that users are increasingly aware of OBA practices and the choices available to them.

Looking forward: As in past years, we used the compliance process not only to assess the state of our members’ compliance and spread best practice recommendations, but also to identify areas in which we think the NAI and its members could do better. To that end, the report recommends that the NAI increase its technical monitoring, and that members be required to regularly report the domains they are using for OBA to supplement that monitoring. We think these additions to our compliance process will help ensure that user choice is reliably and fully honored at all times.

We believe that 2012 will see even more advances for the NAI and self-regulation. We expect transparency to continue to increase at an exponential rate through the continued deployment of the Advertising Options Icon, through educational banner ads, and through other innovative tools. As noted, we intend to add further accountability to our compliance program in the form of increased technical monitoring. We will review even more companies — we reviewed 23 companies as part of our first compliance review in 2009, 34 in 2010, and 60 in 2011 — and we expect to review more than 80 in 2012. By 2013, we expect to review more than 100 companies. As a result, each year, more companies not only agree to abide by the principles encompassed in the NAI Code, but also are held to those promises through our compliance process. To keep pace with this growth in membership, we plan on bringing on additional staff dedicated to compliance. We also plan to update our website to make it easier for users to find relevant information and to opt out if they wish. We think these changes will benefit our members and consumers alike.

We are proud of the work we do in our annual compliance reviews and throughout the year to help ensure the ongoing compliance of our growing membership with the NAI Code and NAI policies. Our compliance program includes not only reactive investigations into allegations or evidence of non-compliance, but also proactive, in-depth examinations of members’ business practices and policies on an annual basis. It also helps to inform the development of NAI policies by identifying new technologies, best practices, and evolving business models. We are delighted to work with member companies who, on the whole, express commitment to and a desire to learn from the compliance review process. We are excited to continue and improve our compliance program in 2012.

If you would like to learn more about our findings and our plans for the future, we encourage you to read the 2011 Annual Compliance Report and accompanying press release.

–Meredith Halama, Assistant General Counsel for Compliance

Last Thursday, the Subcommittee on Commerce, Manufacturing and Trade of the House Energy & Commerce Committee held a hearing entitled “Understanding Consumer Attitudes About Privacy.”

Among other things, the hearing focused on the successful deployment of the advertising choice icon by the cross-industry self regulatory program.  Both the Digital Advertising Alliance and NAI member Microsoft testified about how industry is providing consumers with enhanced transparency and choice for online behavioral advertising.

Witness testimony is available here.

Adopting new best practices in a large industry like online advertising can seem a little like turning a large ship. At first, to the outside observer, it may not seem like much is happening, as the changes start slowly and the ship has its existing momentum to overcome. As the ship continues to turn, however, the new course becomes clear, and it can accelerate with ever-increasing momentum.

Today, the Digital Advertising Alliance (DAA) announced that the online advertising industry is fully turned onto the course of adoption of the “ad choices” icon, with broad participation by a hundred of the largest brand marketers, agencies and ad networks.

Not surprisingly, members of the Network Advertising Initiative (NAI) have been among the leaders in adopting, promoting, and distributing the icon to consumer advertisers. Dozens of NAI members have enabled the use of the icon on the ads they serve today, or are rolling it out with their advertising partners within the coming weeks.

Showing that the industry is moving from development to deployment, the DAA also announced that enhanced notice using the “ad choices” icon has been served with more than 2 trillion ads. The icon is visible not just on ads served by NAI companies, but also on the sites of NAI members like Microsoft and Yahoo! that are also Web publishers. If you haven’t already seen the icon, you will soon see if far more across hundreds of other sites as this rollout reaches full deployment.

For anyone who wants to see the changes taking place in the online advertising industry to provide consumers with ubiquitous access to enhanced notice and choice, you won’t have to look far for the “ad choices” icon.

-Chuck Curran, Executive Director

A study released yesterday by several privacy researchers outlines the authors’ efforts to assess the notice and compliance requirements implemented by the NAI and Digital Advertising Alliance (DAA) as part of our respective self-regulatory programs. The study makes a number of assertions at the margins to which we take exception, in particular the claim that some NAI members are not providing sufficient notice about their collection and retention practices for online behavioral advertising.

On the whole, however, we think the study shows how robust and far-reaching the industry’s self-regulatory regimes have become, and we believe the authors may have missed that forest by peering too closely at the bark of the trees.

In fact, on core issues of self-regulation like reach, effectiveness, and compliance, the study shows the remarkable progress that has been made by the online industry in expanding the number and reach of companies involved, deploying new and innovative solutions for consumer transparency and choice, and strengthening the existing self-regulatory regime.

According to the study’s own findings, the NAI’s members enumerate their OBA activities in their privacy policies and comply with those policies. As the study affirms, “All NAI members mention their behavioral advertising activities, and all provide an opt-out mechanism.” Equally important, when testing a central feature of the NAI program, its consumer opt-out platform for more than 60 companies, the study found that the “NAI mechanism was able to set all opt-out cookies successfully.” Similarly, except for one company that was temporarily unable to set an opt out in one particular browser type, the study acknowledges that the new AboutAds opt out platform “worked with the other browsers” for all participating companies. Even if there is a rare technological glitch, these tools notify users when a particular company’s opt out is not set.

Beyond that, the study claims only one instance of non-compliance (out of 66 member companies) with respect to the requirement to disclose the type of data collected, and acknowledges that all NAI member companies are in compliance with the requirement to disclose how data collected will be used. We differ with the authors in their belief that any of the reviewed companies did not adequately make such disclosures.

We have a more substantive disagreement with the authors’ claims that several NAI members are not providing sufficient notice about how long they retain data for online behavioral advertising purposes. On this point, the study is not accurate, and we have provided the authors with excerpts from the policies of every NAI member in question showing their compliance with this requirement. For example, the authors claim that Yahoo does not disclose how long data will be retained. However, Yahoo!’s publicly-posted data storage policy explicitly states that “Yahoo!’s anonymization policy applies to user log file data and includes searches, ad views, ad clicks, page views and page clicks” and that “Yahoo! stores this data in an identifiable form for up to 90 days for most log file data.” Microsoft has made a similar public commitment: “Microsoft will no longer retain web log data in a profile used for display advertising for more than 13 months, unless a consumer consents to a longer retention period.” Other NAI members provide similar disclosures. Given that the NAI’s retention disclosure requirement is a best practice that exceeds current legal requirements, it’s particularly ironic that the authors have chosen to criticize the efforts of our members to provide robust consumer disclosures.

More importantly, the study ignores the many areas where the past year has seen dramatic – and ongoing – improvements in self-regulation. For example, nearly 3 million unique visitors viewed the NAI’s main web page in 2010, an increase of nearly 150% over the prior year. Use of the NAI’s opt-out tool increased by 58%, and traffic to the educational section of the NAI quadrupled to more than 500,000 unique visitors. This year, in the past two months alone, another 500,000 unique visitors have learned about online behavioral advertising through the NAI’s educational efforts.

Put another way, this study, and the NAI’s own data, validate that consumers who want to find out about their behavioral advertising choices are finding our site, reviewing our educational materials, and using the opt out platform itself.

Equally important, the NAI itself has dramatically extended its reach over the past year, increasing its membership from 35 companies a year ago more than 60 today. Our membership now includes all fifteen of the largest ad networks in the United States, the companies who enable and deliver the overwhelming majority of network ads to users. Moreover, the new DAA program (in which the NAI participates) offers other companies within the ecosystem another means participate in broader cross-industry self regulation. The study, quixotically, cites this remarkable growth in participation as a “problem,” on the grounds that consumers have more companies from which they can opt out using the “select all” feature of industry opt out tools. We think a reasonable observer would consider the rapid growth of participation in self-regulatory regimes to be a good thing for consumers.

Nor are skyrocketing usage and broad industry-wide participation the only significant changes. In the past several months, the online industry has started to deploy enhanced notice through the most effective device possible: an icon in or near the ads being delivered.

The study attacks the current state of deployment of that icon, as if trying to predict the final score of the game during the first inning, and it’s too early to make that claim. Indeed, just a week ago Google announced the implementation of the industry icon within its ads, joining MSN and Yahoo! as the industry’s three largest ad companies now using the icon. Other NAI member companies are now also participating in the rollout, offering advertisers the capability to incorporate the icon in or around their ads. The industry deserves enough time to make the technical changes necessary to integrate the icon, and users will become increasingly familiar with it across a wide range of advertising providers over coming months.

Companies that commit to self-regulatory programs are promoting transparency not just in the technologies they use for interest-based advertising, but also about the success of their compliance efforts. Practices in the online advertising marketplace are visible to consumers, policymakers, and privacy advocates, and we believe it is appropriate for others to evaluate the efficacy of self-regulatory initiatives. We also hope that at the same time equivalent efforts will be made to encourage any remaining companies outside current self-regulatory programs to join the collaborative industry initiative. That way, we can work towards ensuring the glass is full for all consumers.

Charles Curran
Executive Director
Network Advertising Initiative

Today the NAI is joining leading advertising and marketing associations in the launch of the cross-industry program for self-regulation of online behavioral advertising. At the program’s web site, www.aboutads.info, companies can now register to use an enhanced notice icon (the “Advertising Option Icon”) to be displayed within or near online ads or on Web pages where data is collected and used for interest-based ads.

Additionally, the program will soon offer an easy-to-use consumer opt out mechanism in which NAI members will participate.

NAI member companies are already deploying enhanced notice mechanisms for hundreds of millions of online advertisements, and the NAI looks forward to working with the cross-industry effort to deploy a comprehensive approach to consumer transparency and choice.

-Chuck Curran, NAI Executive Director