Behavioural advertising Home | News & events | Legal updates | Ain’t misbehavin’: Opening our ‘i’s’ to behavioural advertising

Ain’t misbehavin’: Opening our ‘i’s’ to behavioural advertising

24 February 2010

The United States' online advertising industry has developed a new symbol it proposes adding to online advertisements aimed at improving consumer awareness and enhancing their privacy.

The EU already imposes quite detailed regulations on advertisers using behavioural advertising, but it is anticipated that this development in the United States will increase consumer awareness and serve to highlight non-compliance on this side of the Atlantic.


What is behavioural advertising?

Behavioural advertising is the practice of tracking an individual’s online activities to deliver advertising tailored to that individual’s interests.

For example, a website dedicated to selling theatre tickets might have an arrangement with a network advertiser to provide advertising to its visitors. On visiting the website the network advertiser places a cookie on the consumer’s computer which records the pages the user has looked at.

Later, when using a social networking website which is part of the same advertising network, the cookie could identify the user as someone with a potential interest in theatre and run an advertisement for the latest show.

What’s wrong with that?

Since the emergence of e-commerce in the mid 1990s, online behavioural tracking and the ability to deliver tailored advertising has evolved dramatically.

The level of consumer acceptance of this practice varies significantly, from those users who consider that it offers a number of benefits – including the support of free online content, a reduction in unwanted adverts and the receipt of advertisements that interest you thereby improving your online experience – to those who harbour concerns over the transparency of the practice, the security of the data recorded and the extent of data collected, particularly where persistent cookies which can remain on your browser for a number of years, are used. Nevertheless, this practice is becoming more and more common.

There is also an ethical question as to whether it should be permissible to capture sensitive information such as data relating to finance or health.

Why has the symbol been developed?

This latest step in the United States is supported by the Federal Trade Commission, an organisation with a long standing interest in online marketplace and privacy issues in the United States.

It follows a number of attempts by the American IT industry to develop self-governing principles as an alternative to legislation or legal regulation.

The new icon will link visitors to a page with information about privacy. Rather than hiding information about behavioural targeting in the privacy policy (which may not have been drawn to the user’s attention), the idea is to provide more information about how the advertiser uses a consumer’s web history and demographic profile to send them certain adverts.

The position in Europe

Use of cookies in the EU is governed by the ePrivacy Directive, and up until now it has permitted the installation of cookies onto a user’s equipment where the user has been told such processing was going to be implemented and given the opportunity to reject it.

A recent amendment to the ePrivacy Directive means users must now be given the opportunity to consent to the installation of cookies on their equipment (save where cookies are strictly necessary for the provision of services).

This amendment has been subject to much debate. There are those who think that frequent interruption to obtain consent will spoil the online experience that so many businesses rely on and there are those who think the amendment necessary in order to ensure transparency and to protect privacy.

However, those falling into the former category will find some comfort in the caveat stating: ‘where it is technically possible and effective, users consent to processing may be expressed using the appropriate settings of the browser or other application’, which others argue undermines the impact of the amendment completely.

What does this mean?

Member States have been given 18 months in which to implement the change to the ePrivacy Directive. It will be interesting to see how each Member State interprets it and how implementation will change our online experiences.

Although online advertising is already closely monitored and controlled in the EU, this recent amendment clearly demonstrates a similar line of thinking to that in the United States. Whether or not the EU Member States follow the example of the United States remains to be seen.

What is clear, however, is that the ever increasing consumer awareness of the previously invisible technology behind behavioural advertising is likely to lead to more questions being asked about the advertising techniques being used across the EU.

If advertising practices do not keep abreast of changing legislation, this could have a significant impact on online businesses.

What should you do?

All websites that collect third party data should have a comprehensive privacy policy and set of terms of use and these should be checked regularly to ensure that they are compliant with what is a rapidly changing area of law.

If you don’t have a privacy policy or are concerned about whether your legal notices fully cover how you use personal data, Shoosmiths’ IT team will be happy to help.

© Shoosmiths. This page is for general information: it is not legal advice. Please read our full terms and conditions for details of the disclaimers and exclusions which apply.

Get in touch

Ryan O'Sullivan

Solicitor
T: 03700 86 5153
I: +44 (0)115 906 5153
E: ryan.o'sullivan@shoosmiths.co.uk