Debate over online privacy and behavioural targeting heats up

This week the debate on online privacy heated up further with the US FTC coming out with a strict online privacy report that put behvaioural targeting networks on red alert. I’d like to use this post to provide a summary of the technology and the issues in the mix.

Behavioral targeting advertisers can target users by interests via their internet ‘behaviour’ i.e. which sites they visit, what type of content they’ve spend time on etc. Advertisers and publishers claim that BT is beneficial to users by showing them only relevant advertising thereby improving their web experience. On the other hand web surfers are generally ad agnostic, finding online banners either irrelevant or creepy. Most of us trawl hundreds of sites in a year, some of which we stop by only briefly or discretely. The thought that big companies are keeping a track every step on this trail and serving ads based on the cumulative data is scary.

The abililty to offer behavioural targeting is a great hook for publishers and ad networks to get large offline advertisers on board online advertisers. Data from Emarketer shows 1 in every 5 US Display dollars by 2014 will be linked to BT and that this tactic is twice as effective as RON ads. These advertisers can now use the large sets of psycographic data they have at their disposal through market research to target users by their lifestyles and behaviours. Knowing where someone likes to vacation, the kinds of cars they are interested in allows powerful interest – based targeting. As users visit different websites within an ad network, a profile is built and the user is bucketed in one of pre-defined segments and served ads when he visits another website that is part of the same network. The technology has been refined over the years and now most major network and publishers including Yahoo, Facebook and Microsoft offer this service, with revenues from this tactic poised for strong yearly growth.

Last week the Federal Trade Commission (FTC) in the US announced support for a measure that requires publishers to offer a “Do Not Track” option so users can “opt out” of data collection. Another suggestion is to have a symbol on every online ad that will give users access to see who sent the ad and what data is being collected about them. Overnight Microsoft announced that its Internet Explorer 9 would have ‘Tracking Protection’ functionality allowing users to manage which organisations have access to their data.