Code on behavioural web ads launched

Internet companies in Britain are being asked to sign up to a new code of conduct for behavioural advertising, in an attempt to quell invasion of privacy concerns over the controversial marketing technology.

The UK's Internet Advertising Bureau, a trade organisation representing more than 450 companies, has announced a set of guidelines for the systems, which have stirred up passionate reaction among civil liberties and privacy campaigners.

Ten companies have already signed up to the guidelines, including Google, Yahoo and Phorm, the controversial UK behavioural ad company, and the IAB said it was important to come up with standards to codify this area of business.

Behavioural systems employ data collected by internet companies to push targeted advertising at computer users, based on information such as the websites and subjects in which they are interested.

The IAB guidelines include a number of stipulations such as telling users clearly what behavioural tracking involves and gaining their consent for its use.

While web firms such as Google already use forms of behavioural targeting to decide which adverts to display, the adoption of the technology has been slower across the wider media industry.

Some organisations – including the Guardian – have looked at using more intelligent and complicated systems, but the greatest controversy has been around the use of behavioural tracking by internet service providers.

In particular, UK company Phorm has come under fire for a system called Webwise, which is being trialled by Britain's largest internet service provider, BT. Webwise can be installed by ISPs to monitor every action a user makes online – allowing it to send its own targeted adverts down everyone's broadband line and make extra money.

Some campaigners have called that prospect illegal, while others were outraged when it emerged that Phorm's systems were secretly trialled on thousands of BT customers without their consent.

BT and Phorm have repeatedly denied that the system presents a threat to users, and an investigation into the project by City of London police was dropped last year after officials said it would be a waste of money.

"Behavioural advertising makes up about 20% of the online display advertising market, and if this is going to grow we need to have consumer trust," IAB spokesman Nick Stringer told Reuters.

The IAB code of conduct may go some way to allay public concerns, but signing up to the agreement is voluntary and does not prevent any company from continuing with behavioural ads. Nor does it address the question of whether telecommunications companies should be able to use any information they collect on web users, given their privileged relationship with users.

Writing on guardian.co.uk last month Becky Hogge, the chair of digital campaign organisation the Open Rights Group, said rules were important for consumers to protect them not only from the worst excesses of internet companies - but also governments who could overstep boundaries.

ISPs, she added, "should be prevented from abusing that power, and shielded from the power of those who would seek to force them to break their confidence with us".