• by Wendy Davis , Staff Writer @wendyndavis, June 22, 2011

A new report about privacy by Havas Digital makes the extraordinary claim that behavioral targeting could risk going the same way as adware if the industry doesn't adequately address concerns surrounding data collection. "If history is any indication, the industry, specifically in relation to OBA [online behavioral advertising], risks a fate similar to that of Gator Corp," warns "Navigating Online Consumer Privacy," written in partnership with Evidon, which provides monitoring technology to enforce the industry's self-regulatory program.

Gator, later known as Claria, offered users downloadable software that served pop-up ads, targeted based on the sites they had visited. Like most other companies with a similar business model, it ultimately shuttered.

The reasons for adware companies' demise, however, didn't have nearly as much to do with their tracking of tracking people's Web use as with complaints about the installation procedure. Many people said that they downloaded the software without realizing what it would do -- or, worse, that their computers were hijacked and the software was installed by third parties without their consent. Additionally, some users complained that adware programs slowed down their machine and interfered with their ability to surf the Web.

What's more, behavioral targeting is largely invisible to consumers, while adware made its presence known all too well.

Given those differences, do the folks at Havas really think that policy concerns could put behavioral targeting companies out of business? "I don't think it will happen, but is it within the realm of possibilities? Yes," says Adam Kasper, Director of Digital Investments at Media Contacts USA, one of the report's authors. "If advertisers don't get on board with this program and efforts," he says, referring to a cross-industry self-regulatory initiative to notify users about targeting and allow them to opt out, "I am concerned that there could be a larger FTC action that could limit the use of cookies."

For all of its warnings, however, the Havas report more or less repeats the basic recommendations that have been around for at least 10 years. That is, the report says that ad networks should at a minimum give consumers information about data collection and allow them to opt out of receiving targeted ads. The report includes some newer recommendations -- including that companies place an icon on or near ads that are being served based on data, and emphasizes that privacy policies should be written in plain English -- but these details don't change the basic notice and opt-out framework that's long been in place. (Report co-author Evidon also is one of the companies that powers the you-are-being-tracked icons.)

The report calls attention to one of the thorniest points of contention between the industry and privacy advocates -- whether companies should be required to stop collecting data about consumers who have opted out of behavioral targeting -- but doesn't answer that question. Current self-regulatory standards call for companies to allow consumers to opt out of receiving targeted ads, but don't mandate that ad networks stop amassing information about those users.

"The difference between opting-out of seeing a targeted ad vs. opting-out of being tracked is subtle, but important," the report says. "Unresolved issues like this, and countless others, will continue to elevate the focus on privacy throughout the government and will stoke society's fears that one's personal data are available to anyone who wants it."