• by Wendy Davis  @wendyndavis, January 19, 2010

Hoping to be tapped to monitor Web companies' compliance with behavioral targeting guidelines, the start-up Better Advertising has just purchased Ghostery, which offers a Firefox plug-in that tells users when they are being tracked online.

The deal closed at the beginning of the year. Financial terms were not disclosed.

Ghostery has been installed by two million users since it launched last year. More than 300,000 of that group have opted to allow Ghostery access to their browsers, says Better Advertising CEO and founder Scott Meyer.

He says the company will use that panel data to determine whether Web companies are honoring users' decisions to opt out of behavioral targeting -- or receiving ads based on sites they have previously visited.

"We will never use this data for any form of advertising targeting," says Meyer, formerly CEO of About.com. "None of this personal data is being used for any reason other than to help consumers manage their privacy."

Better Advertising submitted a bid to the National Advertising Review Council last week in response to a request for proposals for a platform to monitor compliance with the self-regulatory privacy principles announced last year by an industry coalition.

That group, formed to stem new government regulation of online advertising, is made up of the American Association of Advertising Agencies, Association of National Advertisers, Direct Marketing Association, Interactive Advertising Bureau and the Council of Better Business Bureaus. Last July, it issued privacy principles that say companies that use behavioral advertising should notify consumers about targeting and obtain their consent -- which in most situations requires companies to allow users to opt out of targeting.

News of Ghostery's acquisition was first reported by Paid Content.

Better Advertising, which launched last year, has grown to 16 employees, says Meyer. Ghostery's founder, David Cancel, will serve as an advisor to Better Advertising.

Meyer adds that the company plans to soon roll out a version of Ghostery for Internet Explorer and Chrome.