The majority of adult Americans (66%) do not want marketers to tailor advertisements to their interests, according to a recent study. When informed of three common ways that marketers gather data about people in order to tailor ads, even higher percentages--between 73% and 86%--said they would not want such advertising.

Yet major web advertising companies, including Google, Yahoo! and Microsoft, are expanding their business to aim online ads at users based on their web browsing histories. These companies are increasingly using data collection, analysis, consumer profiling and tracking, and interactive ad targeting known as behavioral advertising across online venues. As online use expands into video, mobile phones and other outlets, behavioral targeting is becoming increasingly pervasive.

Privacy advocacy groups have raised important questions about whether companies that track and store huge amounts of behavioral ad data on web user movements have adequate controls in place to protect sensitive data from unauthorized access. There are special concerns around targeting children and youth, often the most active users on the Internet. Legislators and regulators have admitted that technology is racing ahead of our ability to keep up with privacy concerns. The Federal Trade Commission is currently reviewing online advertising practices and privacy and Congress is considering legislation on behavioral advertising.

Both Google and Yahoo! offer opt-out options that can block the companies from tracking user movements and providing behavioral ads. But privacy advocacy groups say the opt-out process is inadequate and that companies have not been sufficiently forthcoming about data tracking, storage, and sharing policies.

Companies acknowledge consumer confidence in their privacy policies is critical. Yahoo!’s 2008 10-K report stated that “failure or perceived failure” to comply with policies, requirements or self-regulatory principles related to privacy “could result in a loss of user confidence in us, damage to the Yahoo! brands, and ultimately in a loss of users, advertising partners, or affiliates which could adversely affect our business.”

In September 2009, a coalition of consumer groups published “Online Behavioral Tracking and Targeting Concerns and Solutions,” a legislative primer on behavioral advertising practices. It asserted that tracking people’s every move online can be an invasion of privacy and that it can be used to take advantage of sensitive or vulnerable users. Information about a consumer’s health, financial condition, age, sexual orientation and other attributes can be inferred from online tracking, the report said, and could be used to target vulnerable people for expensive payday loans, subprime mortgages, bogus health cures and other dubious products. Children are of special concern since they may lack the capacity to evaluate questionable advertising.

In December 2009, the Center for Democracy and Technology, a prominent mainstream-oriented privacy protection group, published a report on behavioral advertising that concluded:

“Although progress has been made in expanding self-regulatory efforts, self-regulation alone will continue to be insufficient to adequately protect consumers in regards to behavioral advertising. Not only do recently revised self-regulatory principles still fall short even as written, but the online advertising industry has historically failed to fully implement its self-regulatory principles.”

Web advertisers say they have adequate controls in place, but data mined for behavioral ads could be a tempting target for misuse by hackers, rogue employees, or advertising partners with whom data may be shared with fewer controls.

We believe those issues need to be better addressed by public companies doing behavioral ads. Can web advertisers do a better job of explaining how they protect the public from misuse of data they gather, disclosing more about how data is protected, and how they hold advertising partners accountable to those same standards?

Google Proposal

In order to help gain more clarity on these issues, As You Sow Foundation and Northwest & Ethical Investments filed a proposal with Google for 2010 asking it to develop principles for online advertising that go beyond current company statements and address collection of sensitive information in areas such health, finances, ethnicity, race, sexual orientation, and political activity for the purposes of behavioral advertising. As You Sow filed a similar proposal with Yahoo! that was withdrawn and a dialogue with the company is proceeding. The proposals developed from a partnership with colleagues at Trillium Asset Management Corporation and Open MIC (Open Media and Information Companies Initiative), a non-profit media advocacy organization.