Network Advertising Initiative
|Network Advertising Initiative|
The Network Advertising Initiative is an industry trade group formed in 1999 that develops self-regulatory standards for online advertising. Advertising networks created the organization in response to concerns from the Federal Trade Commission and consumer groups that online advertising — particularly targeted or behavioral advertising — harmed user privacy. The NAI seeks to provide self-regulatory guidelines for participating networks and opt-out technologies for consumers in order to maintain the value of online advertising while protecting consumer privacy. Membership in the NAI has fluctuated greatly over time and both the organization and its self-regulatory system have been criticized for being ineffective in promoting privacy.
The NAI was formally announced at the Public Workshop on Online Profiling  held by the FTC and the Department of Commerce on November 8, 1999. At that time, membership consisted of 24/7 Media, AdForce, AdKnowledge, Adsmart, DoubleClick, Engage, Flycast, MatchLogic, NetGravity (a division of DoubleClick) and Real Media.
In July 2000, the NAI published a set of Principles, negotiated with the FTC and endorsed by the FTC in their report to Congress on online profiling. In May 2001, the NAI released an accompanying web site  allowing users to more quickly download opt-out cookies for all participating ad networks.
In 2002, the NAI released guidelines for use of Web beacons — small images or pieces of code used to track visiting and traffic patterns and install cookies on visitors' machines. These guidelines use a similar model of notice and choice as the NAI Principles; opt-in consent is only required when sensitive information is associated with personally-identifiable information and transferred to a third-party.
In 2003, the NAI formed the Email Service Provider Coalition (since renamed the Email Sender and Provider Coalition). The ESPC engages in lobbying, press relations and technical standards development to support "email deliverability" — ensuring that mass email delivery continues despite anti-spam legislation and technologies. Today the two organizations exist entirely independent from each other.
In response to a 2007 FTC staff report (Self-Regulatory Principles for Online Behavioral Advertising), the NAI published an updated set of Principles in December 2008 after providing a draft in April for public comments. The new principles incorporated new restrictions on the collection, use of sensitive data and data related to children.
In 2009 the NAI launched a consumer education page, which provided a centralized location for a variety of informational articles, videos, and other creative content designed to educate users about online behavioral advertising.
In 2010 the NAI joined the Digital Advertising Alliance, a non-profit organization of leading companies and trade associations including the Association of National Advertisers (ANA), the American Association of Advertising Agencies(4A’s), The Direct Marketing Association (DMA), the Interactive Advertising Bureau (IAB), the American Advertising Federation (AAF) and the NAI. These associations and their members are dedicated to developing effective self-regulatory solutions to consumer choice for web viewing data.
In 2012 the NAI issued its third compliance report, which demonstrated that overall, the NAI member companies continue to meet the obligations of the NAI code.
Ad network membership in the NAI fluctuated between 12 members in 2000, two members in 2002-2003 and five members in 2007, prompting criticism that it did not consistently represent or regulate the industry. As of March 2010, the NAI lists 42 members, including Google, Microsoft and Yahoo!.
In 2013 the NAI released its fourth annual compliance report. The report described the NAI’s planned initiatives for 2013, which include the development of a revised NAI Code of Conduct governing the collection and use of data on mobile devices. Additionally, in 2013, the NAI released its first Mobile Application Code, which expanded the organization’s self-regulatory program to cover data collected across mobile applications.
The NAI’s Self-Regulatory Code of Conduct imposes notice, choice, transparency, education, and data security requirements on members, along with other obligations with respect to the collection and use of data for interest-based advertising (IBA). The Code also limits the types of data that member companies can use for advertising purposes and imposes a host of substantive restrictions on member companies' collection, use, and transfer of data used for Interest-Based Advertising.
The NAI mandates that member companies provide users a means to opt out of Interest-Based Advertising. The NAI opt-out tool is a simple web-based utility that allows users to opt out of receiving targeted ads from one, some, or all member companies.
The NAI employs a comprehensive compliance and enforcement program to verify ongoing member compliance with these obligations.The NAI's self-regulatory principles for online behavioral advertising depend on a model of notice and choice.
Choice: Ad networks which satisfy the NAI principles must provide consumers a choice about whether information collected about them is tracked and used to provide targeted advertising. Whether this choice is "opt-out" or "opt-in" depends on the type and usage of data. For sensitive information (including Social Security Numbers, financial account numbers, real-time location information and precise information about medical conditions), tracking is always "opt-in". Also, when previously collected personally-identifiable information is merged with non-identifiable information (and the consumer wasn't provided "robust notice" of this practice originally), then ad networks must obtain affirmative consent. In all other cases of tracking personally-identifiable and non-identifiable information, choice is provided through an "opt-out" mechanism: the opt-out cookie.
Although HTTP cookies are commonly used by advertising networks to track consumers as they access information across different web sites, the opt-out cookie is used to signal that the consumer has chosen not to have their data collected for providing targeted ads. The NAI provides a tool to download opt-out cookies for each of their member networks: member networks who detect the opt-out cookie must not collect data on that user for targeted advertising.
Additional principles prohibit collecting information of children under age 13 or using collected data for non-marketing purposes. Ad networks are required to provide subjects of data collection "reasonable" access to the personally-identifiable information they collect, make "reasonable" efforts to use reliable data, provide "reasonable" security and use "reasonable" efforts (through the NAI) to educate consumers about targeted advertising. Retention of data is limited to "legitimate business needs".
In 2013, the NAI unveiled new educational resources for consumers covering a variety of topics and concerns related to online behavioral advertising or internet-based advertising. As part of these efforts, the NAI provides current information and tools that are easy to understand and use, and the organization’s members donate billions of ad impressions to raise awareness and point consumers to these and other resources. The NAI also provides a framework to help businesses honor consumer preferences and act responsibly. Every NAI member company is required to provide choices through both the NAI and Digital Advertising Alliance websites. In addition, NAI requires members to include opt-out tools and comprehensive disclosures on their own websites. Moreover, NAI companies support the Ad Choices icon, just-in-time notice embedded in or around the advertisements consumers see online.
The NAI and its set of self-regulatory principles have been widely criticized by consumer advocacy organizations.
Since its first review in 2007, however, the World Privacy Forum’s founder has described the NAI improvements “profound,” calling its 2013 Code of Conduct “remarkable” for a number of reasons. The founder went on to say that the “NAI represents a really importantstep forward for what self-regulation has been.” 
Concerns have also been raised about the process for developing and enforcing the NAI principles. The Electronic Privacy Information Center criticized the negotiation of the original set of principles for not substantively including privacy advocates or consumer protection organizations, a concern echoed by seven senators in a letter to then FTC Chairman Pitofsky.
The NAI used TRUSTe for third-party enforcement of its principles starting in 2002, but over time TRUSTe provided less and less detail in their reports on consumer complaints about the NAI and stopped reporting these complaints altogether in 2006. When the NAI published updated principles in 2008, it chose to review member compliance itself, which the Center for Democracy and Technology argued would reduce consumer trust in the organization. The NAI responded to this criticism on its blog.
Because membership has fluctuated so widely, privacy advocates have also questioned whether the NAI system of self-regulation actually covers most of the networks engaging in online behavioral advertising. In 2005 and 2006, the majority of NAI members were "associate members" not required to comply with the organization's principles.
- "Comments of the Network Advertising Initiative: Testimony at the Public Workshop on Online Profiling". 1999-11-08.
- Federal Trade Commission. "Online Profiling: A Report to Congress, Part 2 Recommendations".
- Brian Krebs (2001-05-21). "Web Site Lets Consumers Opt Out Of Online Tracking". Newsbytes.
- Brian Morrissey (2002-11-26). "NAI Releases 'Web Bug' Guidelines". ClickZ.
- Network Advertising Initiative (2004-11-01). "Web Beacons – Guidelines for Notice and Choice".
- "NAI Email Service Provider Coalition Formed". 2003-01-21.
- "Email Sender and Provider Coalition - About Us".
- "Self-Regulatory Principles for Online Behavioral Advertising". 2009-02.
- "Network Advertising Initiative Announces 2008 NAI Self-Regulatory Code of Conduct for Online Behavioral Advertising". 2008-12-16.
- J. Trevor Hughes (2008-04-10). "Re: Network Advertising Initiative Written Comments in Response to the Federal Trade Commission Staff's Proposed Behavioral Advertising Principles".
- "Network Advertising Initiative Proposes Updated Principles". 2008-04-10.
- Pam Dixon (2007-11-02). "The Network Advertising Initiative: Failing at Consumer Protection and at Self-Regulation".
- "Network Advertising Initiative - Participating Networks". Retrieved 2010-03-11.
- http://www.networkadvertising.org/2012_NAI_Compliance _ Report.pdf
- http://www.networkadvertising.org/mobile/NAI_Mobile_A p plication_Code.pdf
- Center for Democracy and Technology (2008-12-16). "Response to the 2008 NAI Principles: The Network Advertising Initiative’s Self-Regulatory Code of Conduct for Online Behavioral Advertising".
- Electronic Privacy Information Center, Junkbusters (2000-07). "Network Advertising Initiative: Principles not Privacy".
- "Letter to Chairman Pitofsky from Senators Burns, Rockefeller, Wyden, Bryan, Hollin, Inouye and Cleland". 2000-06-21.