Behavioral Targeting: What is it? And does it invade your Privacy??
Part I in a Three Part Series:
There has been a lot interest in Behavioral Targeting as of late. Many consumers and internet marketing professionals are voicing their opinions about whether or not it is an invasion of privacy or just a more targeted approach to online marketing.
But in order to have an opinion on one side of the fence or the other, I think it is important to understand what exactly behavioral targeting is, how it works, and why consumers seemingly think its use is an invasion of their Privacy. So in this, a three part series, I will take a give an overview of Behavioral Targeting, the regulatory bodies who have taken a closer look at Behavioral Targeting’s proposed invasion of privacy and recommendations they have made to put the consumer at ease, and an insider’s opinion… i.e. Mine.
So what is Behavioral Targeting? Online behavioral targeting is the practice of tracking web users’ behavior and serving ads tailored to that behavior. The primary method is cookie-based, allowing Ad networks to track the web pages a user visits. This information often contains demographic data such as geographic location or search queries, to help further personalize advertisements, however this tracking usually is conducted anonymously with data collected linked only to a computer’s Internet Protocol (IP) address, not name or other personally identifiable information.
For instance, say user 12345 is interested in booking airline tickets for an upcoming business trip. User 12345 visits sites like Travelocity.com, Expedia.com, and UsAir.com. Each time this user visits one of these sites a cookie is placed on that user’s “profile.” As this user visits other non-travel related sites like Morningstar.com (s)he may be served ads for Tripadvisor.com based upon user 12345’s cookies. Simple, right?
It should be no surprise that there is a vast difference of opinion amongst the consumers and marketers: In a recent Harris poll, 60% of Americans (ie. average internet users) believe that Behavioral Targeting is, to some extent, an invasion of privacy and were uncomfortable with the idea of companies tracking personal information such as their search queries and using that information to target specific ads to them. On the other hand, most online marketers believe Behavioral Targeting to be a more efficient, effective, and cost effective way for clients to advertise to those consumers who are believed to be “in market.” Many marketers tout increased Click Thru Rates (CTR) and conversion rates and have stressed that behaviorally targeted ads can generate as much as 10 times (10x) the revenue compared to Run of Network based ads.
So what are your thoughts? Is Behavioral Targeting an invasion of privacy? What have those in the industry regulatory agencies done to curb networks from capitalizing on the consumer’s information? What more needs to be done, if anything?
Tomorrow we will take a closer look at these questions and more. Namely we’ll look at what the Federal Trade Commission has said about Behavioral Targeting, the fight one New York Assemblyman is waging against the use of Behavioral Targeting, and what the Internet Advertising Bureau (IAB) is doing to self regulate the industry.
Stay Tuned!
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June 2nd, 2008 at 4:36 pm
Kat,
Nice, basic overview.
I’m glad you stress the anonymous nature of most behavioral advertising (BA) - that’s key to seeing BA as less of an invasion of privacy and more of a way of serving more relevant advertisements.
Another important point you made is that most BA is cookie-based. Whether users know it or not, just about every form of online tracking (BA or not) is cookie based. For instance, when you log-in to gmail or Yahoo Mail they drop a cookie….when you shop online at your favorite store (i.e. Amazon, Zappos, etc.) a cookie is dropped. In most cases the cookie is used t store personal information so that it is more easily retrieved in a particular user session or in the future. My point is that users should not be scared of cookies - they are more common than you would think.
Unfortunately, behavioral advertising got a very bad reputation (deservedly so) back in the late 90’s in 00’s when companies like Gator used what is called “bundling” to serve non-concentual, intrusive pop-ups and pop-under banners. In short, back in the day when you thought it was cool to download music file-sharing services like Morpheous what you didn’t know was that you were also downloading Gator software, along with other pieces of intrusive software that you didn’t know about, as part of your Morpheous download. Shaddy - right? Absolutely! But…that was the early days of behavioral advertising and it’s been difficult for the industry to shake the early reputation.
Fortunately, Congress stepped in and examined the idea of bundling and created rules around what is legal (concentual) and what is illegal (non-cencentual) downloads. Of course, the argument still instigates serious empotion by users who feel violated by any kind of behavioral tracking, regardless of whether it is covert (like the old days) or overt (understood and agreed upon).
Nonetheless, the bottom line for purposes of better understanding BA is that it isn’t as spammy, and isn’t as uncommon, as one would think.
I’m a big believer in throughly understanding a concept before you advocate against it.
Most of the Anti-behavioral marketing folks out there, in my opinion, don’t understand the concept. Instead, they latch on to the old days of Gator when resonable minds couldn’t differ - BA back then was an invasion of privacy and would have been illegal under today’s standards.
Kris Jones
CEO,
Pepperjam
June 3rd, 2008 at 7:30 am
Kris,
I completely agree. I think a lot of people are forming opinions without really taking a look at what BA actually is or how it works. As you mentioned, cookie based tracking is used almost everywhere on the internet and most of us can’t image using the internet without… or at least i can’t. I like when sites remember me and prompt my surfing of their site based on past visits. I also appreciate that when i am perusing other sites, like FaceBook or Yahoo Entertainment, that i am served ads that are relevant. I can’t tell you how many times I’ve clicked on a Facebook Ad that was advertising shoes or some other fashion item… and purchased!
I think part of the problem currently is that regulatory agencies or political figures are playing on consumer’s fears that their privacy is being invaded through the use of Behavioral Advertising. The public is given scary examples and statistics from the days of yore, they become scared and up in arms about their privacy. Then the people, via these regulatory bodies, start demanding really unnecessary and complicated measures on our industry that prohibit us from doing our job to the best of our ability.
In today’s post I’m actually going to go over what the FTC, the IAB and this one Assemblyman in New York is saying about BA and the proactive restrictions they are looking to place on Behavioral Advertising.
Thanks for the comments though. Solid, per usual.
June 3rd, 2008 at 8:59 am
I think people don’t really understand that ads are important to the internet working they way it currently works. Do they like their free e-mail? It won’t be there if there aren’t ads. It also makes sense that targeted ads are more effective.
The problem is that cookies can be used for evil as well as good so to speak. Adware and spyware has been such a hot topic over the last 8 years or so that it has an automatic negative connotation associated with it. I don’t think the general public really understands how the internet works and this leads to the idea that all cookies attack our privacy. It also doesn’t help when their antivirus program (cough norton cough) sends off all kinds of bells and whistles for every cookie it finds.
I don’t know that it’s going to be easy to change people’s impression of this type of advertising.
-Todd
June 3rd, 2008 at 2:30 pm
On the surface, behavioral targeting implies some compromise to the privacy of the individual user. The context of the user’s navigation of the web being in the home at least 40% of the time (mostly much more if companies have taken the time to employ means to curtail on the job surfing) places this as a question of what is and isn’t fair game, where are boundaries for such activity (especially by Ad Networks or remarketers like Dotomi or MyBuys), and what does this pose. As a legal question, I guess it depends on how privacy is applied, what is opted into, what level we (or they) are entitled to, and what governance is in place to deal with it.
We watch television programming every day that leverages huge amounts of data about its audience to serve up the most LIKELY success advertisement for the time slot and the potential majority viewership. How long will it be before our MSN Passport data is made available to something like HDTV providers to key in on your set top box and personalize a commercial for your household, or habitual viewing tendencies. Moreover, what will that mean to companies, and individuals involved in that exchange. Will the outcome justify the potential, if not certainty of a breach of our personal privacy on some level? Isn’t being a consumer enough to do that in the world before BT? I think so.
David Weinberger (http://en.wikipedia.org/wiki/David_Weinberger) presented this really interesting topic on how this world of interrelated connections through the internet and social media exists and the more we fight it (having sat in audience as an analyst for a top 500 internet retailer) the more damage we will inflict on our brand and our ability to make it work. It would propose that the same is true from the individual perspective. As individuals engaged in actions and interactions on the web, we stand to have our experience enhanced by sacrificing a bit of our privacy for that purpose. I for one, know I would love if ads for cheap ski vacations to SnowBird came up everytime I exhibited the appropriate behavior on sites which deemed it was, for me, at that time affordable.
As this is limited to Behavioral Targeting, I won’t even go into my thoughts on the next step, which is site action based behavioral personalization. Having performed research on how to achieve this, and apply advanced methods to its implementation, I can say that the world is much better off for it. Plus, anyone who knows anything about the backend of how this data is collected, aggregated, and applied, should know that the level of anonymity which still exists (when proper policy from companies is applied) should give the user the freedom to go about their business without fear of ever being stopped on the street by a person who knows about their web surfing habits or preferences…whatever they may be.
Sincerely,
Daniel Shields
Chief Analyst & Contributor
Wicked Business Sciences
http://daniel.webanalyticsdemystified.com
June 3rd, 2008 at 4:22 pm
Daniel,
Thanks for your comments!
Extremely well-written and thought provoking!
Kris
June 5th, 2008 at 12:15 pm
Good discussion here. I do agree with Kris that behavioral targeting has received some bad press in the past. Having said that, companies like AOL does see potential in this type of technology. They purchased Tacoda, an ad network leading the behavioral targeting movement, early last year.
I was wondering when the affiliate marketing industry (networks in particular) will utilize more of this type of targeting technology and blogged about it here. Affiliate Marketers Don’t Behave. Do You?
That was a blog post from last year. I have yet to see any indication that affiliate networks are heavily diving into behavioral targeting. Is this post a sign that PepperJam is indeed going to lead the way and test out this technology?
June 5th, 2008 at 3:31 pm
Ian,
We have no plans to add behavioral targeting into Pepperjam Network although that would be interesting.
We currently only work with BA in our media planning and buying division, which Katharine (the author of the post) leads.
Kris
July 14th, 2008 at 10:01 pm
Good post! I would be interested to know of other “non-intrusive” ways of collecting information or data-mining because I believe you can promote better if you know your web visitors’ demographics and buying preferences. For example, it’s easier to sell a pink t-shirt to me than a t-shirt with a button that talks….if only you know my preferences. >,