'Advertisers should give consumers better info on behavioural ads'

But is more legislation needed?

Online advertisers must give consumers better information when they are using behavioural advertising, according to a report by the Office of Fair Trading (OFT).

Behavioural advertising allows companies to determine users' likely interests by placing cookies on their computer to gather information on the types of sites they visit, and then serve ads relating to those interests.

According to the OFT, behavioural advertising as an industry is now worth between £64m and £95m per year - a figure that is expected to rise in coming years.

The watchdog's report, published last week, said that while behavioural advertising has the potential benefit of giving consumers free access to content, it has also caused consumer disquiet around both privacy and the potential misuse of personal data.

The OFT report added that while current industry self-regulation does address some concerns, more action could be taken by the industry to inform users about how their personal data is collected and used.

Consumers have raised concerns around behavioural advertising about privacy and use of data
(Photo credit: Shutterstock)

While it is already a legal requirement for firms to clearly inform consumers about their use of cookies and provide an opportunity for consumers to opt out of behavioural advertising, the report identified the need for clearer information to be made available.

Other improvements suggested by the OFT include clear notices next to behavioural adverts explaining how consumers can opt out of the technology, and increasing awareness of good practice principles among publishers and advertisers seeking to engage in behavioural advertising.

Rather than calling for new government legislation on behavioural advertising, the report instead asks for greater self-regulation within the industry. It encourages the Internet Advertising Bureau (IAB) - the trade association for online advertising - to work with the industry to improve on its current self-regulation.

It also recommended the IAB provide clearer guidelines for companies concerning the use of sensitive information for behavioural advertising.

A spokesman for the IAB said the organisation welcomes the report's recommendations, adding the organisation is currently discussing with its members the potential to create a "one-click opt-out" feature for users, as well as a website informing European consumers about behavioural advertising. Advertising campaigns to raise awareness of the site are also planned in the near future.

However, Alex Hanff, head of ethical networks for pressure group Privacy International, said behavioural advertising is a direct infringement on privacy.

"The power it gives individual companies allows them to know people better than they know themselves," he said.

Hanff also expressed his surprise at the OFT's decision not to mandate legislation, saying the advertising industry has had 15 years to develop a self-regulatory programme without success.

As an alternative measure, the privacy group supports the EU telecoms reform package, which aims to ensure a unified government approach to internet security, and specifically consumer rights to privacy, across the EU. Privacy International is also calling for a law stating that consumers must opt in - rather than opt out - of behavioural advertising.