Behavioral targeting has caught the attention of the US congressional leaders, as privacy advocates grow concerned with the tremendous amount of web data collected by internet businesses such as ISPs and search engines. Consumers, lawyers, congressional leaders, and businesses are now opining regarding necessary disclosures and the appropriateness of targeting offers/advertising based on web visits and/or queries.
When it comes to behavioral targeting (using clickstream data), where is the fine line of benefit vs. “big brother”?
With petabytes of data available to ISPs, auction sites, search engines, and social networks, these companies are naturally seeking profits via targeting advertising based on the interests and inclinations of users as determined by clickstream data.
However, “targeted advertising” based on the recordings of queries, clicks and mouse scrolls is quite controversial as some privacy advocates think such targeting is invasive, while others worry about companies amassing–and storing–too much information on our behaviors.
Adding to the challenge, a recent New York Times article, “Web Privacy on the Radar in Congress“, August 11, 2008 mentions, “There is no broad privacy legislation governing advertising on the Internet. And even some in the government admit that they do not have a clear grasp of what companies are able to do with the wealth of data now available to them.”
Why is behavioral targeting getting such prominent play?
Annoyed with non-relevant advertisements, internet users are increasingly ignoring banner advertising, skipping flash programs, and deleting email offers. Behavioral targeting provides promise because based on the analysis of clickstream data, powerful applications are able to calculate customer affinities with fine precision and then tailor advertising according to predicted customer needs.
More relevant advertising suggests satisfied consumers as offers pitched relate more closely to web queries, companies can charge more for advertising, and advertisers benefit with higher click-thru rates and hopefully more revenues.
Companies that rely on web-based advertising for their business model see much promise in behavioral targeting. Indeed, for many social networking websites, behavioral targeting may be their only viable path to profitability.
MIT’s Technology Review, “Part I: The Business of Social Networks“, July/August 2008, highlights the difficulty of turning a profit for social networks like Twitter, Ning, Meebo and others.
The Technology Review article notes that, for example, when users search Google, they expect display advertising and even in some instances welcome paid advertising results because they’re shopping for an item, or looking to supplement information in a buying decision. For social networks, however, Jason Calcanis, founder of Mahalo.com notes that users are, “are busy in conversations and don’t want marketing messages.”
Thus the challenge for social networks is to provide value to their user base while creating a revenue stream that can sustain the business and pay back shareholders and/or investors. Increasingly that path is behavioral targeting of relevant advertisements in order to turn a profit. Let’s be clear–”profit” is not a dirty word. However, some companies are pushing the limits of what many would find acceptable in behavioral targeting.
Case in point, the same Technology Review article details the well documented travails of Facebook’s roll-out of the Beacon platform.
The article mentions, “Working with commercial websites like Blockbuster and eBay, Beacon tracked Facebook users’ purchases and displayed them to their friends. The problem was that users were enrolled in the program automatically. If a user went to, say, the Blockbuster site and rented a movie, that information was automatically sent to everyone in her Facebook network. Online petitions and negative press ensued, and the program was clumsily scaled back.”
Perhaps there was nothing inherently wrong with Facebook’s approach to behavioral targeting; however the lack of disclosure was particularly galling to users and privacy advocates.
So where’s the “fine line” where advertisers, consumers and companies win?
With the debate on privacy swirling, and Congressional action looming, I have questions for DailyFix readers:
* When it comes to targeting advertising based on customer behaviors (online or off-line) where’s the fine line between customer benefit and “spooky big brother”?
* Is there a way to target customers based on their affinities–without actually invading their privacy? Barneys of New York seems to be doing it right. What do you think?
* Does “the line” get crossed when a consumer is targeted across multiple sites vs. one site?
* Done right, will behavioral targeting be Web 2.0’s salvation (from losses to profitability)?
Tags: beacon, behavior targeting, conversations, Facebook, Online Advertising, online tracking, petabyte, privacy issues, Segmentation and Targeting, social networks, web privacy
We’ve all received unwelcome marketing emails because our “information” was shared among parties other than those we intended, Paul. It does lead to a perception of an invasion of our privacy and I expect it will lead to more pushbacks, as a result. Customer profiles are being drawn all of the time, and targeted pieces are sent out online and offline with regularity. . .I just think we ought to be able to “opt in”. I also think many of us like doing business with companies who promise not to share our information or profiles with other parties. . .
For me it’s much less about Big Brother and much more about relevant targeting. I won’t be worried about stored information until a government agency sites that I watched a Cat Stevens (Yusuf Islam) youtube video and won’t let me on a plane the next day.
The Barney’s article is really where most of this should go. Whether it’s from affinity or by tracking my online behavior doesn’t really matter. What they do right is knowing who their customers are and how to interact with them.
Track me across multiple sites but only offer me things that I want or would want had I known about them. And not a new type of toothpaste whose value prop is ‘even more minty’ its got to be a new category or be compellingly better not just a variation on a theme.
As for saving the Web 2.0 social media business I think more attention needs to be paid to how people actually use the site. The problem is that ultimately ‘advertising’ online hasn’t evolved past banners and pop-ups. Even if they are extremely targeted they are still only banners. Now a group about emerging artists who are playing at a nearby venue might get my attention …. but facebook doesn’t currently have a way to charge for this.
Ted, you make an interesting point about disclosure and opt-in. I do have a question however, for those companies that have a privacy policy online, or send consumers their privacy policies via snail mail, how many of us actually read the fine print, and more importantly, how many act upon the information?
I would bet a small minority actually read and act on such privacy policies. I’ll speak for myself – I need to be more diligent in this area.
Dave, very insightful comments, and I appreciate your input. You seem to be in one camp -”if it’s relevant and useful to me, then I’m OK with it.” Many consumers are OK with behavioral targeting for those very reasons, that it actually improves the quality of their decision making -whether it’s for simple purchases like toothpaste or big ticket items like autos.
You are, however, assuming a very benign and altruistic approach with the use of your data. Privacy advocates are concerned with more nefarious uses of accumulated data. And I believe they have every right to be apprehensive…
I don’t have a comprehensive response/solution, but I’m reminded of the signs I see on public transit every day, informing me that I’m being captured on camera at all times. Maybe the Internet needs a standard badge that should be placed prominently on every single page of websites that may collect and use your info.
It is certainly frightening to consider how much privacy we have left… with the Internet, there seems to be NO privacy left.
Patricia, I appreciate that you’ve taken the time to comment on this post. Standardization is often a natural bi-product of legislation. I think we’ll see in the next year some standards proposed and adopted by internet providers/sites in an effort to head off legislation. Internet privacy is an issue that’s reaching critical mass.
Follow Vic, you’ve taken a good first step by dialoging on the issue. The train has left the station, but where it’s final destination is yet to be determined. Engaging in the privacy debate helps shape the debate.
There is a fine line between benefit and big brother, and I’m still not quite sure we’ve found it…
Paul, Thanks, I agree with you. My point of view is strictly from the business side. As a US citizen I am increasingly more concerned with public data being used against the public.
I feel very strongly that laws need to limit how government agencies can use this data but it is incredibly tricky. The countries’ opinions can change dramatically …. ie. Elected Republicans pre 9/11 were worried about government invading privacy. Post 9/11 elected Republicans are for homeland security and unlawful wire taps. A 180-degree shift.
Let me ask your opinion about a hypothetical situation: The government tracks that a man buys a how-to assassination book from Amazon, a gun from his local gun store, and posts on a blog about how he hates a person (but never specifically threatens their life). Should the police react when all signs point to a crime about to be committed? And if they do act how can they intervene if he hasn’t yet broken a law? If they don’t act how can you justify that someone you don’t know died to protect your privacy?
But, as for business and marketing I’m fine with it as long as I don’t get anything from a gun company. Such material would be irrelevant to me because I don’t believe guns should be sold to the citizenry.
Dave, your hypothetical situation reminds me of the movie Minority Report. Great movie!
In a digital age, it’s a fact that on a computer we leave a digital trail wherever we go. Sometimes that information is used to our benefit, however there are other times when unchecked “progress” does more harm than good.
Personally, I believe there is much more potential benefit to consumers via behavioral targeting than big brother. But it’s a fine line to be sure.
The US congress is now actively concerned with how ISPs and internet companies collect data, how long that data is kept, use of that data, disclosure and user permissions (opt-in/out) are all part of the debate.
I appreciate your comments and thank you for joining the discussion!
This is definitely a gray area as they need to make money but without making the users feel spied on. It is quite strange to see the targeted ads grace our screens each and every time we log into the social networks — it’s eerie with what some of them come up with but we suppose it’s somewhat necessary to keep these networks we love so much online.
I personally feel this is a sad step in a wrong direction. People deserve their privacy no matter what. Under the guise of fake terrorism, even small things like internet targeting can be magnified in the wrong direction. It starts small with harmless internet targeting, then soon enough it escelates.
Nick, you are right about the necessity of targeted ads on social networks. Just think, for example of the millions of dollars in infrastructure and IT personnel needed to keep Twitter up and functioning. Even then, as recent news reports will attest, best efforts fail. There’s no free lunch as you aptly point out.
Ebay acct business, thanks for taking the time to post a comment. As you are well aware, freedoms aren’t really free – there will always be trade-offs and a constant push-pull between citizens and government. Continual vigilance is necessary ensure that fine line -wherever it is- doesn’t get crossed often.
If you wonder about how “innocent” online data could be accumulated and used against people, read “Little Brother” by Cory Doctorow. We just did a review of it at the CA NOW site: http://www.canow.org/canoworg/2008/08/if-you-care-abo.html
Elena, thank you for commenting on this post. I’m unable to glean your POV from the CANOW post. Are you for completely banning behavioral targeting in all forms? If not, under what conditions would it be permissible?
Marketing today is different than marketing just 2-3 years ago. And the key with this behaviorial targeting, if it’s done right is to appear that it was something you were already looking for, and not something intrusive as marketing used to be.
Several people mentioned in their comments that they were concerned with Big Brother, but, as I said, if it is done well, it will seem as if you just accidentally found what you are actually looking for so it doesn’t appear like Big Brother at all. It feels like you found it when you needed it.
Alan, thank you for commenting. The WSJ had a terrific series “What they Know” that consisted of a weeklong set of articles on this topic. In addition, over the past two years since this column was written many more articles have appeared on behavioral targeting. I suspect there are fewer people now who don’t understand the concept and technologies behind the scenes, which in turn will mean fewer web users will actually be “surprised” when targeted “just in time” advertising appears in their browser.