2018 Annual Compliance Report Released

The Network Advertising Initiative (NAI) today released its 2018 Annual Compliance Report, a review of members’ adherence to the 2018 NAI Code of Conduct (Code). The report shows that, while NAI staff found that some member companies had various non-material violations of the Code, these members actively worked with NAI staff during the course of the year to ensure that these issues were resolved quickly. Ultimately, the NAI’s compliance reviews of new and member companies indicate that all 103 companies met their obligations under the provisions of the Code in 2018.

The report is based on findings from the 2018 compliance period in which 92 returning member companies, all leading third-party digital advertising companies, were reviewed during the year by NAI staff for compliance with the Code. The remaining member companies underwent an equally stringent review as part of their membership application process in 2018.

NAI staff found a variety of non-material violations of the Code as a result of the organization’s robust year-round monitoring program. These violations included several privacy links that did not appear to function correctly, and privacy disclosures that did not appear to provide adequate information regarding data collection and use in specific circumstances.

NAI staff, as well as attorneys and engineers from member companies, devoted hundreds of hours to reviews, monitoring, and interviews. NAI’s compliance staff worked with each member company throughout the year to monitor and ensure compliance. Such active monitoring enables the NAI and its member to preemptively spot potential problems and to resolve issues promptly, before they turn into larger complications affecting greater numbers of consumers.

The compliance process is the most important program undertaken by the NAI, as the NAI’s high standards for self-regulation would be meaningless without an insistence on accountability. The NAI’s compliance program is a time- consuming and expensive undertaking for its member companies, and it shows their commitment to consumer privacy and industry best practices.

The NAI retains the option to sanction members if Code violations are found to be material. However, the companies that join the NAI take their obligations to comply with the Code very seriously. As a result, ongoing dialogue and communication with members leads to issues being resolved quickly to the benefit of the consumer, which increases the overall health of the ecosystem.

The report also provided an update on the NAI’s achievements over the course of the year:

• Enforce the 2018 Code of Conduct. The NAI expanded began enforcing its 2018 Code of Conduct, which synthesized the previous Code of Conduct for web-based data collection and use, and the Mobile Application Code.
• Publish guidance for data collection and use on connected televisions. NAI staff and its Board of Directors continued work on connected TV policy and published the Guidance for NAI Members: Viewed-Content Advertising.
• Continue development of a thoroughly revised Code of Conduct. NAI staff and its Board continued work on a thoroughly revised Code, to encompass new business models and marketing strategies, including the use of “offline” data for digital advertising, the use of device sensor data, transparency around political advertising, and dramatically expanded privacy protections for the collection and use of Precise Location Data, leading to the 2019 publication of the 2020 NAI Code of Conduct.
• Expand the NAI’s public policy efforts to address new and proposed legislation and regulation on a state, federal, and international level. The NAI greatly expanded its public policy efforts by hiring additional staff, including a new Vice President for Public Policy. This allowed the NAI to engage with legislators, regulators, and policymakers on a far more frequent basis, and included testimony at congressional hearings, development of new educational materials, and providing multiple briefings for policymakers and thought leaders.

The NAI leverages the findings of the Annual Compliance Report to further strengthen its self- regulatory program. In 2019, the NAI is conducting advance work with its members and industry stakeholders to prepare for enforcement of the 2020 Code of Conduct. The NAI is also further developing and expanding its public policy efforts to inform legislators and thought leaders about the latest developments in digital advertising and the most pressing privacy concerns in this area.

At a time when the nature of digital advertising is being questioned and reconsidered in Europe, in several US states, and on a federal level, it is even more important for self-regulatory efforts in the US to clearly demonstrate that thoughtful and flexible self-regulatory approach can provide robust consumer privacy protection while also allowing digital advertising technology, and the Internet economy more broadly, to flourish. Perhaps most importantly, the NAI’s approach aims to preserve free and equal consumer access to a bounty of diverse content online.