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Online Marketing Regulation Looms

Fri, 06/19/2009 - 5:48am
Douglas MacMillan

Editor's Note: Legislation on online marketing and advertising is coming. What do you think it should regulate?

(BusinessWeek.com) - The impetus to regulate online marketing may be gathering steam. On June 18 a House of Representatives subcommittee held a hearing to take a closer look at how advertisers gather and use information on consumers' Web-surfing habits.

Up to now the government has had a hands-off policy toward online marketing, giving companies relatively free rein in how they use tools that track what people do online and then use that data to deliver tailored marketing messages. Although regulation is likely to be far off, it would surely rewrite how Google (GOOG), Yahoo! (YHOO), Microsoft (MSFT), Facebook, and a wide range of other Internet companies grapple for share in the $25.7 billion online ad market.

The hearing, which brought together representatives of Web companies and online privacy advocates, may mark "the beginning of the end of self-regulation for online advertising," says Marc Rotenberg, executive director of the Electronic Privacy Information Center (EPIC).

Advocates of regulation say Internet companies need to be more up-front about their use of so-called behavioral targeting, which includes placing "cookies" and other software designed to discern a computer user's tastes and preferences—information that marketers can use to better deliver online ads. Representative Rick Boucher (D-Va.), who chairs the House subcommittee on communications, technology, and the Internet, has stated publicly since February that he plans to draft legislation on targeting practices this year. He says sites should maintain plain-language privacy policies, visitors should be able to opt out of data collection, and any third-party companies working with publishers must obtain permission from Web users before acquiring or using their information. 

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