The VeriSign of Privacy? TRUSTe Scales Up and Tackles Mobile, Cloud, and Ads

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Beacon, a system that used information about members’ activities on external websites to serve them targeted ads inside Facebook. Google was being blasted for mistakenly collecting Wi-Fi browsing data as part of its Street View mapping project, and for weak privacy settings in its Buzz microblogging service. In a settlement with the Federal Trade Commission, the search giant agreed to conduct annual privacy audits for the next 20 years. (NebuAd and Beacon are now dead, and Google announced last week that it’s killing Buzz.) “You basically had privacy concerns becoming foremost in businesses’ and consumers’ minds,” says Babel.

That new awareness has enabled TRUSTe to speed up its growth on all fronts, beginning with the flagship website certification program. “Historically we were seeing 10 to 20 percent growth [per year],” says Babel. “Now we have kicked it up to 100 percent.”

That’s thanks in part to new low-cost services that TRUSTe is selling through partners such as Web hosting providers Tucows and eNom for just $10 to $60 a year—far below the $500 to $100,000 per year that the traditional licensees pay. For those prices, TRUSTe merely generates a privacy policy, but doesn’t actually certify a site—or it scans the site with automated software and offers the seal, but only for low numbers of page views. All of these down-market experiments are drawn from Babel’s experience at VeriSign. “We had 500,000 [SSL] customers but only 300 of them were spending over $50,000 a year, and the lowest was spending $6,” Babel says.

But at the same time, TRUSTe has been diversifying. Big Web brands, which used to provide nearly all of the company’s business, now account for only about 70 percent of TRUSTe’s revenue, Babel says. The second-biggest source—about 15 percent—is the new “TRUSTed Ads” program.

TRUSTed Ads is tailored to work with the “Self-Regulatory Program for Online Behavioral Advertising,” a voluntary system set up last year by a group of ad-industry trade organizations called the Digital Advertising Alliance. In essence, this is an effort by the advertising industry to preempt Congressional action that might ban or severely limit behavioral advertising, in which records of people’s browsing activities are used to place ads that match their interests. Such records usually aren’t connected to personally identifiable information, but behavioral advertising is controversial anyway, since it often occurs without users’ explicit permission. Publishers, advertisers, and ad networks participating in the voluntary program agree to place special “AdChoices” icons on or near any Web ad placed using behavioral information. That’s where TRUSTe comes in: companies pay the organization to make the AdChoices icon show up on their ads. If a user clicks on the icon, TRUSTe displays a privacy notice and an interactive opt-out screen.

Already, TRUSTe is serving up the AdChoices icon 650 million times a day—a sign that the idea of giving consumers more control over the ads they see is “finally moving into the mainstream,” in Babel’s view. Other companies like Evidon and DoubleVerify offer support for the new AdChoices icon, but Babel says TRUSTe offers superior tracking and reporting, so that advertisers can see exactly how many consumers are opting out. (Serving those hundreds of millions of icons, by the way, depends on rock-solid infrastructure technology, which is where Babel says he’s been directing a lot of the company’s engineering investment.)

The last 15 percent of TRUSTe’s revenue comes from its mobile and cloud certification programs. On the mobile side, as I explained in my piece last year, TRUSTe helps app developers craft privacy policies and then certifies that they’re being followed. This program only has a few hundred customers so far, Babel says, but it’s particularly interesting to … Next Page »

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Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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