This report is an in-depth analysis of the history and current operations of the National Advertising Initiative (NAI) self-regulatory agreement.
Roadmap: The National Advertising Initiative – Failing at Consumer Protection and at Self-Regulation: Difficulties with the NAI
When people sit at their computers and browse for new car information or to learn about the latest treatment for diabetes, when people walk down the street reading stock quotes on their mobile phones, and when people text a response for more information based on a television commercial they saw, their actions speak louder than words. A new realm of consumer tracking has grown up to translate these activities into advertisements. This kind of advertising is behaviorally targeted advertising. Behaviorally targeted advertising is as controversial as it is lucrative.
In 1999, when online advertising was still a fresh segment of the advertising sector, widespread concerns arose about the ways that consumers could be tracked and targeted online for advertising purposes. The Federal Trade Commission held a workshop on online profiling in November 1999.  The concerns of the day were distilled in a FTC report to Congress in June 2000, Online Profiling: A Report to Congress. In that report, the FTC found that online profiling presented privacy problems for consumers. The FTC found that online profiling was primarily accomplished through banner ads, cookies, and web bugs, also called web beacons.  The Commission also concluded that online profiling was largely invisible to consumers:
The essential activity of the NAI is to define terms, discuss a handful of abbreviated consumer rights, which the NAI calls its “principles,” and to set up a structure of “opt-out cookies.”
Although it is possible to identify many aspects of the NAI that are broken, this report focuses on four areas in particular:
1) the effectiveness of the NAI opt-out cookie as the primary tool for stopping tracking;
2) the applicability of the NAI to types of tracking that extend beyond the traditional cookie and to business models not expressly covered by the NAI;
3) the constantly shifting membership of the NAI; and
4) auditing and enforcement of the NAI.