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. [6] 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. [7] 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.

Report | Internet privacy | NAI — The World Privacy Forum published a new report today, The Network Advertising Initiative: Failing at Consumer Protection and at Self-Regulation. The report is an in-depth analysis of the history and current operations of the National Advertising Initiative (NAI) self-regulatory agreement. The NAI was created to protect consumers’ online privacy in the behavioral advertising arena. The report finds that the NAI has failed. The report discusses the failure of the NAI opt-out cookie, the uses of persistent consumer tracking technologies that go beyond cookies, such as Flash cookies, browser cache cookies, XML super cookies, and other issues. The report also discusses the practice of re-setting cookies after cookie deletion. The report gathers the details of the difficult membership history of the NAI, as well as the enforcement history of TRUSTe regarding NAI.

A traditional cookie as defined by the NAI is not the only persistent identifier and tracker available to network advertisers and marketers anymore. New technologies and techniques have become routine business practice since the original NAI was written, particularly in the area of persistent identifiers and tracking technologies. A rich array of browser cache cookies, Flash cookies, and other non-NAI-covered tracking techniques not only exist, but are in use today.