As digital advertising enters a new year, questions abound as to how online marketing personalization will be affected by possible federal regulation of behaviorally targeted advertising.

Last month, the Federal Trade Commission dealt a seeming blow to online advertisers with a recommendation calling for a universal “Do not track” feature, similar to a pop-up blocker, as part of all Internet browsers. The commission also recommended the creation of a Do Not Track registry, similar to the current National Do Not Call Registry regulating telemarketing.

Both Microsoft Corp. and Mozilla Corp. quickly announced they will include such a feature in the newest versions of their respective browsers, Internet Explorer and Firefox.

The prospect of federal regulation of behavioral targeting has the marketing industry concerned.

“I think our job is going to be to make sure Congress knows three things,” said Linda Woolley, exec VP-government affairs at the Direct Marketing Association. “First, that users already are darn comfortable using the Internet, and second that they should be careful about killing the "golden goose' of Internet advertising, especially in this economy.

“And lastly, the phrase "do not track' sounds catchy and analogous to "do not call,' but it's not at all similar for a zillion reasons,” she said. “It will be our job [to be sure] that policymakers know these things.”

Nevertheless, most Americans appear deeply concerned about Internet privacy. According to a telephone poll of 1,019 adults conducted last month by the Gallup Organization and USA Today, 67% would prevent advertisers from showing them ads based on websites they have visited.

The FTC's recommendations strike at the heart of a self-regulatory program introduced in October by several marketing and advertising organizations, including the American Association of Advertising Agencies, Direct Marketing Association and Interactive Advertising Bureau.

That program allows advertisers to provide information about their behavioral ads as they are served, giving viewers the ability to opt out of campaigns one by one.

The idea of laws that would hobble advertisers' ability to understand and market to their customers is troubling, said Brian Adams, chief technology officer at marketing technology company AdMeld Inc.

“The thing that is wrong about digital advertising today is bad targeting,” Adams said. “As a result, publishers throw up five ads per page, and people see the same ads over and over again. Yes, the perfect ad for the perfect person is a blue-sky dream, but advertisers track because they need targeting to increase the value of advertising.”

The ad industry did gain some support from the more business-friendly Department of Commerce last month, in a report encouraging the development of “voluntary, enforceable privacy codes of conduct” to address both privacy concerns and evolving business models.

Nevertheless, most observers agree that some form of federal legislation will be passed mandating greater transparency in how computer users' information is housed and used by advertisers and that will restrict the unfettered presentation of behaviorally targeted ads.

“Yes, there will be fundamental change, and to some extent it may be needed,” said Dennis Dayman, chief security officer at marketing automation company Eloqua. “When you look at Canada and the European Union countries, they've always had a fundamental right to human privacy. Here in the U.S., we tend to "sector-out' privacy, for example with the HIPAA [Health Insurance Portability and Accountability] health privacy act.

“Part of me thinks this kind of oversight is welcome,” he said. “We have to get privacy concerns under control. We also have to legitimize the market. There have been some screwed up companies that have ruined the game for the rest of us.”

The FTC has said it will hear industry and consumer comments through Jan. 31 before issuing another report.