The letters read: "Tracking people's every move online is an invasion of privacy. It's like being followed by an invisible stalker -- individuals aren't aware that it's happening, who is tracking them, and how the information will be used. They're not asked for their consent and have no meaningful control over the collection and use of their information, often by third parties with which they have no relationships."

Opposing Ad Restrictions

But the coalition has fierce opposition. The Progress & Freedom Foundation (PFF) is speaking out with some strong words. PFF Senior Fellow Berin Szoka called the coalition members anti-consumer elitists who not only presume consumers are too stupid or lazy to make their own decisions about privacy, but also ignore the benefits to consumers. He said those benefits include more relevant advertising plus more and better content.

"Advertising has been the 'mother's milk' of media in America since colonial times and the future of media depends on the ability of publishers to replicate that revenue model online," Szoka said. "Micropayments, donations, subscriptions alone simply can't fund a vibrant marketplace of ideas. Only personalized advertising can sustain publishers through the Digital Revolution."

As Szoka sees it, regulatory advocates haven't demonstrated any harm to consumers that would justify the sweeping preemptive regulation the coalition wants. Such regulations, he added, would strangle funding for new media and amount to an "industrial policy" for the Internet. Instead, he said, policy-makers should focus on educating consumers and empowering them by promoting development of better privacy-management tools.

Avoiding Industry Regulation

But Greg Sterling, principal analyst at Sterling Market Intelligence, said the possibility of legislation is real. The Obama administration has proven to be more regulation-friendly than the Bush administration and the use of behavioral targeting has become more pervasive.

"The online advertising industry has enjoyed very limited regulation in the past and I think some regulation is almost unavoidable," Sterling said. "The only way for the industry to avoid it is to be more proactive and adopt some of these measures the privacy groups are suggesting, such as not doing behavioral targeting around certain types of sensitive issues."

Sterling suggested another approach might be for targeting leaders to meet with the privacy groups and negotiate some compromise. With the backlash over bank bailouts and government intervention in the health-care system, Sterling said there is a contingent in Congress that doesn't want to see the government get more involved in regulating industries. That might work in the advertising industry's favor.

"From what I've seen, most of the requests from the privacy advocates looked fairly reasonable. It didn't seem outrageous," Sterling said. "By simply sticking to the arguments that self-regulation is sufficient or that regulation is bad for business or consumers don't really care, they aren't going to be successful."