NebuAd Closure Warning to BT Industry

I predict it’s only a matter of time before the FTC steps in to regulate ad targeting online. Though it’s effective people generally don’t like behavioral targeting and the failure of NebuAd is strong evidence of that. According to the WSJ:

A court document filed Sunday revealed that NebuAd is assigning its assets to its creditors and will “cease to exist as an ongoing concern.” The document, which is part of a court battle between NebuAd and several Web users who sued the company for allegedly violating their privacy, further states that NebuAd has been winding down since late summer 2008.

“NebuAd laid off substantially all of its officers and employees in July/August 2008 and closed its office in Redwood City on or about Sept. 25, 2008,” according to the letter sent by both parties to U.S. District Court Judge Edward Chen in San Francisco.

It was in July that NebuAd’s chief executive appeared at a House hearing and admitted that his company could track peoples’ activity on multiple Web sites without their express permission.

For now the FTC has allowed ad networks and sites that use BT to self regulate. Yet here’s what FTC Commissioner Jon Leibowitz said in February:

In sum, almost all of us want to see self-regulation succeed in the online arena, but the jury is still out about whether it alone will effectively balance companies’ marketing and data collection practices with consumers’ privacy interests. A day of reckoning may be fast approaching.

Thus in my view the day is coming when very explicit opt-in permission requests will be required of publishers, search engines and ad networks for ad targeting purposes. This will also likely extend into mobile. That will present a potentially major problem for advertisers and publishers because, given the option, many people will instinctively say no to ads.

The industry has been greedy and increasingly aggressive in developing online ad targeting and BT in particular. Going forward, assuming BT Armageddon as I do, it will have to be replaced with other types of ad targeting that don’t rely on PIN or actual user behavior. Such replacement targeting methodologies include anonymous location and demographic targeting.

One Response to “NebuAd Closure Warning to BT Industry”

  1. Facebook Won’t ‘Like’ FTC Inquiry on Privacy « Screenwerk Says:

    […] FTC Inquiry on Privacy By Greg Sterling For quite some time I’ve been saying and speculating that if “the industry” isn’t careful the regulators will spring into action. […]

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