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At the urging of privacy advocates, regulators are ready to restrict behavioral targeting online. Firms target their best prospects by profiling Web surfing habits pegged to ads in the $21 billion online ad business. Limiting the practice would put a crimp in Internet ad sales, the primary source of revenue for many Web sites, and could push ads onto cell phones and other mobile devices.
"The overwhelming trend today is [free content on] Web sites supported by ads, so restricting the use of behavioral targeting greatly undercuts the model," says Jerry Cerasale, a senior vice president for government affairs with The Direct Marketing Association trade group.
The Federal Trade Commission (FTC) plans to ban most tracking by this fall unless consumers agree to opt in and allow business to track their surfing. Although the ban would initially be voluntary, a ban would force web portals, such as Google and Yahoo, and retail and media Web sites to show ads randomly, vastly nullifying the ads' effectiveness and value.
Look for an accord that will permit the practice, but with restrictions. Businesses are negotiating with the FTC on the limits to avoid an outright ban. The biggest restriction is likely to include bold disclaimers on Web sites that let consumers opt out if they don't want personal information gathered and shared. There’s also likely to be limits on the sharing of personal information obtained and on how long that information can be retained.
As a result, count on companies to offer incentives, such as merchandise discounts or free music downloads, to persuade Web surfers to opt in and allow businesses to share or retain personal information
Meanwhile, a growing awareness of privacy issues is boosting mobile ads, because that business model is based on permission-for-everything. Consumers opt in to get Internet, text, music and video downloads and advertising.
The customer-control aspect of mobile advertising is one reason businesses are seeing it as a cost-efficient way to reach customers. Mobile phones are becoming a Madison Avenue must-have because it offers companies the ability to engage consumers individually and let them search for products when they're most likely to buy and interact with sellers by texting or direct phone connection.
This type of interaction vastly ups the odds of an ad sparking a purchase. "Mobile phones are the one thing that people carry with them all of the time and it's the most intimate of device because advertisers can target consumers individually and offer them coupons and come-ons to buy products or services literally when they're around the corner from a store," says Bill Jones, president of Air2Web, a mobile advertising firm.
FedEx Mobile lets businesses and consumers arrange to ship, check delivery status, even send emails to a computer for label printing. Starbucks text-messages java-deprived consumers with pitches for complimentary brew and provides directions to the nearest outlet, says Nic Covey, director of insights with Nielsen Mobile, a division of the Nielsen Media Research. Toilet tissue powerhouse Charmin offers prizes, such as Super Bowl tickets in exchange for taking surveys on its products and suggestions for new ones.
Mobile advertising also is being spurred by Verizon, T-Mobile, AT&T and others opening and expanded their networks and spectrum. The growth in Web-enabled phones, PDAs and networks by Air2Web, Brand in Hand, AdMob and Third Screen to deliver the ads has convinced ad agencies such as Ogilvy Interactive, Resource Interactive and others to make mobile part of their advertising sales packages.
The result is huge increases for on-the-go ads. Spending on ads sent to Internet-enabled cell phones and other wireless devices is projected to reach $1.7 billion this year. In four years, it will nearly quadruple to $6.6 billion and will more than double its share of overall Web ad spending to 13%. That's comforting to online media companies that will be hurt by the new restrictions on behavioral targeting.
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POSTED BY: John Schafer (May 11, 2008 10:00 AM)
"Although the ban would initially be voluntary, a ban would force web portals, such as Google and Yahoo, and retail and media Web sites to show ads randomly, vastly nullifying the ads' effectiveness and value."
This isn't remotely true. Google ads based on search keywords don't depend on tracking people's browsing patterns. If I enter keywords in google, and get back ads based on those keywords, there's nothing inherently wrong with that, nor is that likely to be the result of google having any specific knowledge about my browsing patterns. Those ads are the result of businesses bidding on search keywords, and probably also the result of google's algorithms for mapping those keywords to likely sites of interest (in the same way that a search engine determines which non-ad sites to return for a search). This is a one-time transaction, and does not depend on any specific knowledge of my personal browsing history.
If you don't believe me, go to google, and search on something you'd never, ever browse about, and see how relevant the ads are.
It's true that having good search results does depend, in a vague way, on having "knowledge" about what search terms map to what websites. Obviously I have no insight into google and yahoo's proprietary algorithms, but as a computer programmer who has studied data mining, I feel utterly confident in saying that they are in no way using the type of information that this ban would affect.
There are a lot of businesses (comforce) that would be destroyed here, but google and yahoo wouldn't even notice this.
POSTED BY: Zane Safrit (May 15, 2008 11:57 AM)
I agree with John. The short version is...data-tracking's a huge industry. It's embedded in our lives, online or not, good or bad. The only option is to do business as much as possible with dependable, trust-worthy, privacy-protecting vendors,...and practice good privacy and security habits and realize...you're still being monitored.
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