The Office of Fair Trading has just (May 2010)  announced the result of its

study into on line targeting of advertising and pricing and calls for more transparency to allay users fears about privacy and misuse of personal data. The OFT has indicated that web users need to know when they are being served targeted ads and be provided clearer ways to opt out and that if the industry does not improve self regulation the OFT and the Information Commissioners Office will increase external regulation.

Why does this matter? The behavioural advertising sector is already worth and estimated £64-£95 million and is growing. The benefits to advertisers of reaching targeted audiences are huge. A failure to adopt good practices, such as set out in the IAB’s Good Practice Principles could lead to legislative intervention and restrictions on behavioural advertising and even the adoption of an opt in regime rather than a opt out system as presently exists.

One recommendation by the OFT is to “increase transparency to consumers by developing ‘clear ad’ notices alongside behavioural adverts including information about opting out”. This is rather alarming and suggests that users might be served some sort of notice on their screens every time a targeted ad appears…what could be worse and more invasive! It also assumes the majority of Internet users are fools. Clearly more needs to be done to educate users and for advertisers to fully comply with the IAB’s  transparency recommendations but there is a concern that alarmist media and privacy advocates will lead to unintended consequences.

For example on line publishing is financially unsustainable with the current model,  hence  shrinking news organisations and attempts to require paid for news services on line. Advertising pays for our diverse and free media , further restrictions could back fire leading to less choice, reduced services and poorer quality content. Interestingly the OFT’s research discovered that many consumers were not concerned by behavioural advertising, and that any concerns that did exist would be greatly reduced if they were told it was happening and given control over the process.

“We found that attitudes to online targeted advertising are mixed with 40% of consumers holding neutral views, 28% disliking it and 24% welcoming it,” said the report. “Concerns decreased when consumers were able to opt-out of behavioural advertising, and the associated tracking, if they wished. Around 40% of consumers said they would take some actions to prevent behavioural advertising (such as deleting cookies), although only a very small minority would reduce their internet usage to avoid it. Around 60 per cent would not alter their behaviour at all.”Continue Reading OFT Threatens to Intervene over Regulation of On Line Behavioural Advertising