• by Wendy Davis  @wendyndavis, June 18, 2008

With online privacy policies increasingly drawing public attention, ad company Undertone Networks has joined the self-regulatory privacy association Network Advertising Initiative, the company said Tuesday.

Undertone Networks CEO Mike Cassidy said the move was partly driven by questions from online media buyers, who wanted to know whether the company belonged to the group. "Over the past six months, we've had two or three companies ask us about it," Cassidy said. While that number is low, it marks a significant change from prior years, when no marketers seemed to have the group on their radar, he said.

Undertone serves ads for around 350 premium media sites, and about 25 to 35% of its ads are targeted based on users' presumed interests as gleaned from their Web-surfing histories. Undertone's platform is cookie-based, meaning that users are recognized by cookies placed on their computers, but the company doesn't collect names, addresses or other personally identifiable information.

As Washington regulators and lawmakers have turned a closer eye toward online advertising in the last year, the Network Advertising Initiative has been drawing more notice. Google, under fire from privacy advocates for retaining search query logs by IP address, is among the companies that recently applied to join the group. But Google's application hit a snag because the company doesn't have a link to its privacy policy on its home page--a requirement of the Network Advertising Initiative and also, arguably, the state of California.

The 8-year-old Network Advertising Initiative was formed in response to concerns that a merger between DoubleClick--then mainly an ad network--and catalog database company Abacus posed a threat to people's privacy. The organization, which includes companies like Revenue Science, Yahoo and AOL's Advertising.com and Tacoda, requires companies that engage in behavioral targeting to tell consumers about the practice and allow them to opt-out.

But some privacy advocates say the association doesn't go far enough to protect privacy. Jeff Chester, executive director of the Center for Digital Democracy, holds that companies shouldn't deploy behavioral targeting techniques unless consumers have expressly consented. "Consent has to be opt-in," he said. "The NAI (Network Advertising Initiative) is absolutely flat wrong."

The group is currently revising its principles, but the new proposals still largely call for an opt-out regime.