Native advertising companies Outbrain and AOL-owned Gravity failed to follow the online ad industry's privacy program, according to an enforcement program administered by the Better Business Bureau.
Outbrain and Gravity are among the companies that distribute sponsored content across the Web. Both typically do so by displaying widgets that include thumbnails, photos and headlines, aimed at drawing in Web users.
The BBB-administered Online Interest-Based Advertising Accountability Program, which enforces the industry's privacy program, said on Wednesday that both companies did not provide "enhanced notice" about online behavioral targeting. Companies generally meet that obligation by serving the AdChoices icon -- a small blue triangle that includes links to sites where people can learn about how they're tracked by advertisers, and opt out of receiving behaviorally targeted ads.
The company responded that it was aware of some problems with its privacy notifications, and had already contacted the publisher of one site that incorrectly implemented the widget, among other moves.
Outbrain also said it would take additional steps, including routinely auditing its widget and the sites that host the widget.
The company said in a statement that it is committed to the industry's privacy principles, "and will continue to take a proactive approach to privacy and disclosure compliance."
The Online Interest-Based Advertising Accountability Program said in its disposition of the case that Outbrain is now in compliance with the industry's self-regulatory code.
AOL's Gravity also used behavioral-targeting techniques when displaying its native ad widgets, but didn't place the privacy icons on or near them, according to the watchdog.
Gravity has since modified its widget, but argued that it didn't need to do so. The company offered several reasons why it shouldn't have to serve privacy icons with the native-ad widgets, including that consumers can opt out of receiving its targeted ads via a page published by Digital Advertising Alliance.
The industry watchdog rejected that argument. "We must reject Gravity’s assertion that mere presence on an industry developed consumer choice page, absent effectively collaborating with web publishers to ensure enhanced notice links are in fact provided, is sufficient to satisfy its obligation to provide enhanced notice," the opinion states. "We cannot accept an interpretation of the Principles that allows third parties to avoid their most important responsibility."
But Gravity successfully argued that it doesn't need to include icons when the widgets appear on AOL properties.
"Since Gravity is a wholly-owned subsidiary of AOL, Gravity’s collection and use of web browsing data for interest-based native advertising on AOL-controlled websites is exempt first-party activity," the opinion states.
The watchdog's move comes almost one year after it warned ad companies that native ad campaigns must comply with the industry's privacy code.