The Future of Maintaining State September 18, 2014 Presented By Marc Groman, Network Advertising Initiative Reed Freeman, Morrison & Foerster, LLP

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1 mofo.com The Future of Maintaining State September 18, 2014 Presented By Marc Groman, Network Advertising Initiative Reed Freeman, Morrison & Foerster, LLP

2 What is Maintaining State? Keeping track of a particular browser or device over time Web traffic is inherently transient, and thus websites and web applications are responsible for linking web traffic together over time. Uses Identify a device or browser Store settings and data Examples Online shopping carts Account logins Multimedia Web applications (e.g., Google Maps) Online advertising Both Interest-Based Advertising and Ad Delivery and Reporting 2

3 State maintenance generally occurred through cookies Transparent User controls built into browsers Safe Long history, many tools to view/manage Why change? Cookie blocking by browsers and plugins Not possible on mobile, platform-provided identifiers New state maintenance technologies New types of data, like location Issues Cookies used to maintain opt-out preferences Some alternatives are less transparent or invisible Alternatives may not have controls built into device/browser Some alternatives are temporary and/or probabilistic Beyond Cookies 3

4 Background: Cookie-Based Tracking 101 Key concepts of the typical page request Data is sent by web browser with every request Includes IP Address of the computer and domain cookies Web servers record information Includes IP Address, time stamp, referring URL, cookies, browser information, etc. The Web browser assembles the web page based on the instructions of the HTML page often including requests to third party domains (ads load last) A cookie is a small text file held in a web browser for a specific domain. Cookies are often used to provide continuity between a user s web browser and a web server As a result, without a cookie, what happens on a webpage is forgotten on subsequent pages Each cookie is tied to a specific domain, and thus can only be read by that domain 4

5 Background: Cookie-Based Tracking Cookies can be either 1 st party or 3 rd party st party cookies are set by the same domain that is in the URL line 3 rd party cookies are those set by a different domain than the one in the URL line Common uses of cookies: Shopping carts (1st party) Storing preferences (1st and 3rd party) Content personalization (1st and 3rd party) Analytics (1st and 3rd party) Targeting advertising and tracking (3rd party context) Cookies: Text-only file stored on a browser, each browser is different NOT advertising-only technology, hidden data executable, application, script, virus 5

6 Background: Cookie-Based Tracking 101 Basic transaction Browser Requests URL from Web Server Web Server Logs Request and Responds with Content Browser Receives and Displays Content Direct transactions with third parties Once the browser receives the content, it requires additional calls Makes additional requests for content Page is assembled (e.g., in come the ads) Indirect transactions (Server-Side redirect) After the Web Server logs the request, Web Server Requests Information from Another Web Server Receives Response and Relays Combined Content Page is assembled 6

7 The Move to Mobile A significant chunk of ad spending is moving to mobile According to the Interactive Advertising Bureau (IAB), global mobile advertising revenue hit $19.3 billion in 2013 nearly double Estimated to reach $31.5 billion by 2017 What explains the growth of mobile advertising? Technological Improvement The ability to identify devices and collect data on them is improving There are new ways of associating data and linking devices (e.g., finding the same users on different devices) Industry Growth The general growth of the adoption of smartphones, tablets and other connected devices These devices are mobile, and personal and intimate always with the consumer As a result, they offer the ability to deliver advertising based on where you are (with, of course, considerable privacy implications) Social Media Platforms like Facebook, Twitter, Instagram, Pinterest enable more engagement, and generate more consumer-provided data (e.g., valuable data) 7

8 Tracking on Mobile the players Types of players Mobile apps/publishers Mobile ad networks and exchanges Demand side platforms Advertisers (brands) Companies providing cross-device identification Google and Facebook: Half of all mobile ad spending is on their services 8

9 Tracking on Mobile, 101 The mobile ad ecosystem Two parts/platforms: Apps and mobile web browsers About 85% of use on mobile devices is in apps, not on web browsers Challenges faced: Maintaining state across the mobile web, because many web browsers block third party cookies Otherwise, cookies do still work on mobile browsers But movements toward new technologies for tracking behavior Maintaining state across apps, because cookies do not work across apps Solutions include platform-provided IDs (e.g., Apple Advertising Identifier) Linking activity in mobile web browsers and apps on the same device and crossdevice tracking and targeting Solutions include technology companies providing cross-device identification services, and cross device sign-in (such as the Google Chrome browser or Facebook) This distinction between tracking based on authenticated log ins as opposed to other methods raises business and privacy concerns Hence the prospect of a post-cookie future 9

10 Tracking Without Cookies Four possible alternatives to cookies, as noted in the IAB whitepaper Privacy and Tracking in a Post-Cookie World Two are in the market Statistical IDs Use of statistical algorithms that, using information passed by the device, browser, app or operating system, probabilistically infer a user ID which can then be used by publishers or third parties Client IDs Deterministic identifiers that sit on the device (or app, or browser), such as the Apple Advertising Identifier (also known as the IDFA) and the Android Advertising ID Two are not: Device IDs set by third party intermediaries such as content distribution networks, Wi-Fi or wireless proxy servers, and ISPs This technology could work across devices and on different platforms within a device. The key is that the identifier is set by a third party between the end-consumer s device and the publisher s servers. Centralized cloud-synchronized IDs Instead of a third party intermediary such as an ISP, the IDs are set and managed through a centralized cloud service that all parties in the ecosystem agree to work with 10

11 What is a Stat-ID? Tracking with Statistical IDs Uses the unique characteristics of your browser/device to maintain state (e.g., your plug-ins, fonts, exact browser version) Been around for a number of years, but, until recently, more commonly used for fraud detection than tracking for advertising purposes. Device-specific, but can work across multiple apps or programs on a single device Can t fully replace the cookie because not sufficiently persistent; IDs may change frequently as the device changes A truly stable and persistent statistical ID that would be sufficient for maintaining a shopping cart or honoring consumer privacy preferences (for instance), would be difficult to maintain Issues with transparency No storage on the user s computer, so very hard to detect that it is happening 11

12 Examples Cookies HTML5 local storage Similar to cookies Flash cookies Tracking with Client IDs Similar to cookies, but controversial works and works across browsers Platform IDs (Android and ios) Apple and Google have strict limitations on how their advertising identifiers can be used Device specific, like the Statistical ID Works across multiple apps and programs on a single device or operating system, but depending on the client ID implementation, may only be available through native applications and not through a mobile browser, for instance, as is the case with the Apple advertising identifier 12

13 Preference and Platform IDs Both Android and Apple ios devices provide consumers with the ability to opt out of receiving targeted advertising For example, on ios: 13

14 Preference & Platform IDs, cont. Android, ios, and Windows phones have platform identifiers Options: opt-out or reset the identifier Android and ios are very similar in their TOS. For both: Must use for advertising Can t use any other identifiers for advertising w/o opt-in consent Android: Identifier must not be connected to personally-identifiable information or associated with any persistent device identifier (for example: SSAID, MAC address, IMEI, etc.,) without the explicit consent of the user. Can only use the identifier for advertising Must honor the opt-out : Cease interest-based advertising only Don t have to cease contextual advertising, ad delivery and reporting, frequency capping, security and fraud prevention, etc. Must honor the reset Can t connect current ad id to previous ad id The use of the identifier must be disclosed in the privacy policy 14

15 Post-Cookie Compliance BBB Online Interest-Based Advertising Accountability Program (Accountability Program) issued a compliance warning in August 2014 to clarify that the OBA Principles are applicable and will continue to be enforced irrespective of the technology employed to collect and use consumer web surfing activity to serve interest-based ads BBB Compliance Warning In other words, the DAA Principles, and the entire tracking and targeting compliance regime, are technology neutral From the compliance warning: If your company is using, or partnering with, companies that are engaged in non-traditional, cookieless ad targeting, by any means, the process must be in compliance with the Principles. There must be an Ad Choices Icon in or around ads resulting from the program, leading to a landing page that provides consumers with the choice to opt out of the use of their data for OBA purposes. The OBA principles Transparency through real-time notice Consumer control through an easy-to-use opt-out mechanism 15

16 Post-Cookie Compliance: Challenges Even if it is technology neutral, the compliance regime that grew up around cookies poses challenges for cookie alternatives Transparency and control The use of the technology may not be obvious to consumers There may be no native browser controls (e.g., clearing cookies) developed for postcookie tracking technologies New Opt-out Mechanism The above-noted issues with opt-outs from statistical device identification, since device identification is not a permanent state Enforcement issues Most new technologies do not have browser controls or plugins to see the data stored, like cookies do Difficult to detect whether a company is honoring an opt-out NAI is developing technology-neutral compliance software that allows compliance team to view the data passed for online advertising 16

17 Post-Cookie Compliance: Challenges What is needed, based on the current regime Transparency and choice on par with cookie targeting and consistent with existing regulatory and self-regulatory standards Enforcement FTC authority under Section 5 of the FTC Act FTC Civil Investigative Demand and 20-year consent order for violations Council of Better Business Bureaus (CBBB) Online Interest-Based Advertising Accountability Program (Accountability Program) NAI enforcement of Self-Regulatory Code of Conduct 17

18 Tracking and Target Compliance Compliance obligations, including OBA notice and choice regime, arise out of February 2009 FTC Report Self-Regulatory Principles for Online Behavioral Advertising Covers: (1) Any information collected for behavioral advertising purposes over time (2) that can reasonably be associated with a particular consumer or device Excludes: (1) First-party advertising (single-site* tracking to personalize content and ads) *Affiliate relationship must be clear to consumers (2) Contextual advertising (delivery of ads based on single visit or search) 18

19 FTC OBA Standards: Principles Transparency and Consumer Control Clear, concise, consumer-friendly statement of data collection policy Clear, accessible means for exercising choices about online tracking No longer rely on privacy policy as sole means of disclosure Data Security and Data Retention Provide reasonable security, in line with FTC enforcement and guidance Tailored to sensitivity of data, risks faced, nature of business, etc. Security of retained data, and destroying data no longer needed or used Notice and Consent for Material Changes Express affirmative consent before using previously collected data in manner materially different than that allowed by the privacy policy in force when collected Opt-In Consent for Sensitive Information Express, affirmative consent before collecting sensitive data for purposes of OBA Financial data, health data, data about kids, geographic data, SSNs, others? 19

20 FTC Enforcement Actions Tracking disclosures must be obvious and outside Privacy Policy In the Matter of Advertising.com (2004) Offered security software but failed to adequately disclose that the product collected IP addresses and browsing activity in order to deliver targeted pop-up advertisements (It was disclosed in terms & conditions, which users could click past without reading) In the Matter of Sears Holdings Management Company (2009) Sold software offering discounts but also tracked users; was disclosed in EULA, which users had to read, but was buried FTC v. EchoMetrix (2010) Company sold software that enabled parents to monitor their children s online activities, but allegedly failed adequately to disclose that it sold to third-party marketers information that it collected from children through this software. Websites and apps must offer an effective opt-out and honor user choices In the Matter of Chitika, Inc. FTC settled charges alleging that Chitika had tracked consumers online activities even after they had opted out of tracking. Opt-out lasted for only 10 days (reports indicated that this was the result of a programming error), violating the company s claims about its opt-out mechanism. In the Matter of ScanScout, Inc (2011) Allegedly used Flash cookies to circumvent opt-out promise made to consumers regarding tracking 20

21 FTC Enforcement Actions Privacy Policies must be accurate and complete... In the Matter of UPromise Browser toolbar offered college savings, but also transmitted personal information, often unencrypted, and possibly by mistake In the Matter of MySpace LLC Misrepresenting protection of user data collected transferred easily linkable data to third parties... and unexpected practices on mobile require out-of-policy notice In re Goldenshores Technologies (flashlight app) Privacy policy did not specifically disclose collection of geolocation information (it just said the app collects information relating to your computer ) Consent order includes specific instructions for just-in-time notice suggesting what FTC may expect to become industry standard: That the application collects and transmits geolocation information (and why it is doing so); how this information may be used; and the third parties that receive the information 21

22 FTC Enforcement: Tracking In the Matter of Compete, Inc. (October 22, 2012) Web tracking company collected data on browsing behavior of millions of users Allegedly: Convinced consumers to download tracking program by offering rewards in exchange for opinions on products and services Once downloaded, the program operated in background and collected information about browsing behavior, including usernames, passwords and financial account information Program did not disclose extent of collection, and did not adequately protect collected information Resolved by settlement Compete must obtain express consumer consent before collection any data from downloaded software Delete or anonymize any data already collected Provide directions for consumers to uninstall the software 22

23 DAA Self-Regulatory Program Digital Advertising Alliance ( DAA ) created its Self-Regulatory Program based on the FTC OBA Principles The program applies to OBA, which is defined as: (1) the collection of data online from a particular computer or device (2) regarding Web viewing behaviors over time and across non-affiliated websites (3) for the purpose of using such data to deliver advertising to that computer or device (4) based on preferences or interests inferred from such Web-viewing behavior 23

24 DAA Self-Regulatory Principles Educating consumers and businesses Transparency about data collection and uses Consumer control over whether data collected and used Security for and limited retention of data Material changes must be expressly approved with opt-in consent by consumers Sensitive data collection limited Accountability for companies that engage in OBA, including enforcement based on DAA Principles 24

25 Network Advertising Initiative ( NAI ) Code Applies to member advertising networks, and governs their behavior Contains audit and accountability mechanism that can lead to referral to FTC for noncompliance NAI is a part of the DAA Requirements Transparency NAI members will maintain a centralized website to educate consumers and provide access to consumer choice mechanisms Notice Conspicuous notice of collection, transfer and use practices on own sites Require that each website it engages with for OBA shall post same Either required by contract, or through best efforts Choice Commensurate with manner in which data collected is to be used Opt out for collection of non-pii Opt out with robust notice for merger of PII with non-pii Opt in for collection of sensitive data Health, sexual orientation, Precise Location Data 25

26 NAI Code, cont. Requirements, cont d. Use Limitations Only used for marketing Prior notice of data use changes No collection from children without verifiable parental consent Transfer Contractually require 3 rd parties data transfers to comply with Code Access Grant consumers reasonable access to their PII Reliable Sources Collect data (for append) from reliable sources Security Use reasonable methods Retention Retain only as long as needed for a legitimate business need 26

27 NAI Code, cont. Compliance program Annual compliance review Business Model Privacy policy Marketing materials Opt-out Contractual requirements Ongoing Monitoring Privacy policy scanner Opt-out functionality Mobile Code Cross-App Platform opt-outs 27

28 Caution: Tracking Location Exact geolocation is sensitive information Get affirmative consent for any collection, use or disclosure In mobile apps, make sure you follow the platform policies regarding geolocation Use geolocation only when you say you do provide out-of-policy notice And double check! General geolocation (IP Address) Generally not considered sensitive, but must disclose in Privacy Policy Ensure you know what you re doing before you make a disclosure New uses for geolocation Targeting users based on stores they visit Based on travel and consumption choices (e.g., hotels, airports, sporting events) 28

29 QUESTIONS? 29

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