On the issue of online privacy, where do industry and government agree?

The House Subcommittee on Commerce, Manufacturing and Trade held its fourth hearing on consumer online privacy on Oct. 13. Its goal was to gain a better understanding of what consumers “expect and want” regarding this important issue.

This is not an easy question to answer, as consumers have a wide range of sensitivities regarding online privacy that public policies often are ill-equipped to address. Consequently, policymakers are undecided on whether some kind of government intervention is necessary. However, several points of alignment between government officials and industry executives emerged at the hearing, which included testimony from the Digital Advertising Alliance (DAA), Microsoft Corp. and Evidon.

Free Internet benefits consumers and businesses

There is a universal understanding that advertising supports a vast amount of free, highly accessible content across the Internet — an immense benefit to consumers. There is also an appreciation that the Internet has created an expansive virtual marketplace that contributes to the nation’s economic vitality and that marketers need to be able to operate in this online commercial space efficiently.

Transparency empowers choice

Both the government and industry concur that transparency and the ability to opt out are key to ensuring that consumers’ rights are protected while enabling the Internet to continue as a largely free content environment and a viable, competitive marketplace for businesses.

Consumers seem to understand the implications of the privacy-advertising dynamic. Data indicate that when they are empowered to control the use of their online browsing behavior, less than 1% actually choose to opt out of targeted advertising.

Industry accountability

Policymakers are clearly looking to the advertising industry to respect consumer privacy and be transparently accountable for the collection and use of online data in ways that build consumer confidence and trust. In response, all six of the major, national trade associations have joined together to form the DAA and launch the Self-Regulatory Program for Online Behavioral Advertising based on clear principles that match the Federal Trade Commission’s stated goals.

Now beginning its second year of operation, this Self-Regulatory Program promotes the display of the Advertising Option Icon, which signifies a company’s use of online behavioral advertising. By clicking on the Icon, consumers link to a clear disclosure statement and an easy-to-use opt-out option.

The National Advertising Review Council, a division of the Council of Better Business Bureaus, and the Direct Marketing Association — two of the six organizations that comprise the DAA — have a long-standing and effective history of advertising self-regulation including vigorous enforcement of practice principles.

Hundreds of top advertiser brands have joined with the leading ad networks and service providers to help broaden the adoption and use of the DAA Advertising Option Icon across the entire online advertising ecosystem.

Effective self-regulation is the answer

While policymakers will inevitably press the advertising industry to constantly do more to protect online consumer privacy — and indeed we are — they concede that government action cannot always respond to consumer needs or technological concerns as quickly as the industry can.

As the debate over online behavioral advertising and privacy continues, it’s reassuring to know that policymakers and the industry are working toward the same goals: creating a safer and more viable online marketplace for both consumers and businesses.

Peter Kosmala, CIPP, is the managing director for the Digital Advertising Alliance (DAA), a self-regulatory body that develops industry best practices and effective solutions for consumer choice in online behavioral advertising (OBA). Appointed to this position in April of 2011, he brings more than 20 years of professional experience to his current role, and is a pioneer in the field of online data privacy, with roots in advertising and publishing. A Certified Information Privacy Professional (CIPP), Kosmala oversees the DAA’s Self-Regulatory Program for Online Behavioral Advertising, a preference management system that gives consumers enhanced control over the collection and use of data used in OBA that is delivered in Web-based environments. He is also responsible for the large-scale licensing and distribution of the DAA’s Advertising Option Icon to program participants. Prior to the DAA, Kosmala held leadership positions at the International Association of Privacy Professionals (IAPP) as assistant director and then as vice president, and before that at the Network Advertising Initiative (NAI) as assistant director.

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