"It is proportionate to focus on improving and supporting self-regulation"

So concluded the Office of Fair Trading’s market study into online targeted advertising and prices, published on 25 May. The 87 page report set out the OFT’s views on targeted advertising, including behavioural advertising, after a six month consultation with business, industry bodies (such as the IAB), consumer groups and other regulators, such as data protection authority, the Information Commissioner’s Office, and communications regulator Ofcom. The IAB welcomed the market study and there was a fair amount of balanced national media coverage such as in the Independent and the Guardian.

But what does this all mean? What are the next steps? Let’s be clear: it’s not all rosy. The industry still has much work to do and the OFT set out the areas that it needs to focus on, such as increasing transparency via notices in or around the advertisement itself (such as what is developing in the US market), further consideration of potentially sensitive areas and covering a larger part of the market. These issues (and others) will be discussed at a roundtable meeting at the end of June and many of them are already being addressed at an EU level. But – in summing up – the OFT said “the IAB’s Principles do appear to go some way to addressing consumer concerns, although they are barely a year old and still evolving.”

This market study is important in many ways.

1. It recognised the importance of behavioural advertising to the digital economy and advertising per se: “behavioural advertising has the potential to dramatically increase the effectiveness of advertising spend”.

2. Whilst expressing strong support for the IAB’s Good Practice Principles, the OFT firmly put its weight behind an industry-led approach: “self-regulation can offer benefits for consumer protection and add real value to the functioning of efficient markets.”

3. And perhaps most importantly, there’s a little nudge to the policy-makers in Europe: “The debate around opt in or opt out of behavioural advertising is better framed in terms of transparency…this is the key issue for consumers.” This is backed up by the OFT’s own research that found that consumers were fairly ambivalent to the likes of behavioural advertising but wanted greater transparency and control over data collection and use.

This is a long, detailed and sometimes complex market study but, if you read it all, you’ll see it is recommending a way forward: industry has more work to do to get where both the OFT and consumers want it to be but a good start has been made that will help safeguard privacy whilst providing consumers with a more relevant and customised digital experience. To be discussed.

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    Just finished reading it (there’s a drought of good iPad apps) and it’s a reassuring document in more ways than one – glad to see the Sports R Us diagram made it in! 🙂