WASHINGTON –- For Internet advertising and marketing, new technology and techniques are spawning old challenges: privacy and security.

As the U.S. Public Interest Research Group said last week in a filing with the Federal Trade Commission (FTC), "The Web's default state is now 'Privacy/Off – Surveillance/On.'"

On the second day of the FTC's hearings on the future regulatory challenges facing the agency, advertisers and marketers promised industry best practices are being developed.

Behavioral targeting, along with massive data collection, user tracking and audience profiling allows marketers to more accurately match advertising with users. When users visit a site, they are assigned a non-personally identifying number.

From there, users are tracked throughout their Internet travels.

"We're selling according to anonymous behavior," said Dave Morgan, founder and chairman of TACODA, an advertising firm that specializes in targeting methods. "Digital leads to addressable advertising with those on the end of the request."

According to the U.S. PIRG filing, "Even if these companies don't know our names, through online tracking and analysis they literally know every move we make."

U.S. PIRG claims that in most cases, users are not informed that they are being anonymously profiled.

Government regulation, however, is not necessary, the industry reps said Tuesday.

"We're working to better codify the best practices," said Morgan, who cited as examples consent notices and consumer opportunities to opt out of the tracking techniques.

John Greco, president and CEO of the Direct Marketing Association, added that best practices are essential since the "members I represent are clearly in this to establish long-term relationships with consumers."

Before those best practices can be determined, however, Greco said the industry must decide what it wants to protect consumers from beyond "which we all agree [privacy and data security]."

The point of Internet advertising, Greco said, is to precisely match advertising with what the user is seeking. "If consumers are not presented with an advertisement, they may have a huge missed opportunity," he said.

Marcia Hoffman, a staff attorney with the Electronic Frontier Foundation (EFF), said consumers have not forgotten the previous privacy battles fought with Internet advertisers. Consumers, for instance, unsuccessfully campaigned to make opt-out the standard for e-mail advertising.

"Everything we have out there today is very sophisticated," she said. "They [advertisers and marketers] are learning more and more about users. Anonymous data can be connected to databases."

She added, "There are few market incentives to protect consumer privacy. [Consumers] need to be empowered to make their own choices."

Brad Wieser, director of industry analysis for MAGNA Global USA, stressed to Hoffman that advertisers are concerned about a "consumer backlash."

Wieser, who moderated the session on the George Washington University campus, also questioned in his closing remarks just how much choice consumers want as he discussed the overall interactive media market.

"To say that the future is going to be interactive actually presupposes one thing: that consumers want to interact," he said. "The data suggests that consumers are taking control of their interactive media content."

Early adapters, though, are not particularly good indicators, Weiser said.

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