OFT says behavioural advertisers can regulate themselves

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The advertising industry can be trusted to self regulate when it comes to behavioural advertising online, according to a report from the Office of Fair Trading.

However, the OFT stressed that it would work with the Information Commissioner's Office to "enforce" regulations when self-regulation from bodies like the Internet Advertising Bureau (IAB) didn't work.

Behavioural advertising tracks users as they roam the net - either using cookies or, like controversial Phorm, using deep packet inspection at the network level. The collected data is used to show more relevant ads to users.

While such systems have their benefits - they can cut advertising costs, boost revenues for websites, and show more useful adverts to consumers - they've frequently been criticised over privacy issues and could lead to discriminatory targeted pricing schemes, the OFT noted.

Heather Clayton, OFT Senior Director in the Consumer Market Group, explained that it was important to act now to encourage the industry to grow in the right way. "The OFT is keen to engage with industry players and consumer groups while behavioural advertising is in its relative infancy, and before targeted pricing takes hold, so that the market develops in a way that protects consumers from bad practice," she said in a statement.

"Discussions now about the potential for both benefits and harm, and how consumer protection legislation applies, will stand us in good stead in the event that industry action proves ineffective or targeted pricing becomes a reality."

The report admitted that the OFT and ICO could act as an "important fall-back if self-regulation were to fail or if there were concerns about practices which fell outside its scope."

The report called on the IAB to ask its members to offer clear opt out systems, ensure behavioural ads are clearly marked, and draw up guidelines over how to handle sensitive data. It also called on the body to include non-industry representatives on its complaints board.

Another issue has been whether such systems should be opt in or opt out. The OFT noted that the industry believes an opt-in system would make the internet difficult to use and actually slow surfing, but the watchdog is more concerned with transparency - an issue its own survey showed was key to consumers.

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