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Should consumers be worried?

Author: Atelier

23 Jan

In November, the Center for Digital Democracy and the U.S. Public Interest Research Group filed a complaint with the Federal Trade Commission (FTC) based on their concern that online advertising networks, behavioral targeting, and rich “virtual reality” media, among other data collection practices, were threatening the privacy of the American public.
“A vast infrastructure of data collection has been put in place without the public’s awareness,” said Jeff Chester, executive director of the Center for Digital Democracy. “It’s designed for only one thing — to get you to buy and buy and buy.” The two public-interest advocacy groups are also worried about other harmful effects in the long term.
“The emergence of this on-line tracking and profiling system has snuck up on both consumers and policymakers and is much more than a privacy issue,” said U.S. PIRG Consumer Program Director Ed Mierzwinski in a statement released at the time of the filing. “Its effect has been to put enormous amounts of consumer information into the hands of sellers, leaving buyer-consumers at risk of unfair pricing schemes and with fewer choices than the Internet is touted to provide.”
In early November, the FTC hosted hearings on “Protecting Consumers in the Next Tech-ade”. The hearings were attended by experts from the business, government, and technology sectors, consumer advocates, academicians, and law enforcement.
Dave Morgan, chairman of behavorial targeting advertising network TACODA, was among the attendees. “The FTC has been aggressive when there has been fraud. For example, they shut down the spyware industry. What we do is legal and my hope is that the government is not going to get involved.”
Morgan has a couple arguments to bolster his claim that these techniques are here to stay. “The number one complain from consumers about Web advertising is that it is irrelevant. As behavorial targeting gets better, consumers will notice that the ads they see are more relevant to them,” he believes. “Internet users like to get content for free. It is things like behavorial targeting that pay for free newspapers online. For a media site, 99% of the revenues come from advertising.”
Online marketers are eager to point that they do not collect addresses or other identifying information. That is not what they are interested in. This may be of minimal comfort to consumers when they realize that their surfing and buying habits are on file. One of the Center for Digital Democracy and U.S. PIRG’s main beef is that “current privacy disclosure policies are totally inadequate, failing to effectively inform users what data are being collected and how that information is subsequently used.”
The two organizations have called for “an immediate investigation into the online marketplace in light of this new environment, exposing practices that compromise user privacy, issuing the necessary injunctions to halt current practices that abuse consumers and crafting policies—and recommending federal legislation—to prevent such abuses.” The ball is in the FTC’s court.
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  • Filed under: Advertising and Marketing

    • Behavorial targeting increases the relevance of advertising

    Author: Atelier

    23 Jan

    Behavorial targeting increases the relevance of advertising
     
    Simply put, behavorial targeting makes it possible to deliver ads to Internet users based on their recent surfing history and likely interests.
     
    Isabelle Boucq
     
    According to Dave Morgan, chairman of behavorial targeting advertising network TACODA, advertising so far has been woefully limited. “The way advertising worked in traditional media or on the web was that you placed car ads in a car magazine, food ads on a cooking show and banking ads on a financial site.” Morgan sees behavorial targeting as a revolutionary tool which is changing the way ads reach consumers.
     
    “Based on the recent, anonymous navigation of a user, we can do a better job of delivering ads that are relevant to him at that moment,” says Morgan. All of a sudden, Internet surfers can see ads pertinent to their current preoccupations – buying a car or expecting a baby, say – pop up even when they are visiting irrelevant pages. Studies have shown that users are more responsive to these out-of-context ads both not only because they are relevant, but because there is a favorable element of surprise to them.
     
    Here is how it works: with the help of a behavorial targeting specialist like TACODA, a site places a unique cookie on each visitor. The cookie reports what the user reads, what ads he clicks on and everything else about his navigation on the site. TACODA federates 4,000 sites which together represent 150 million unique visitors each month. “We have one of the 10 largest databases of anonymous consumer behavior in the US,” boasts Morgan.
     
    Newspaper sites love behavorial targeting. While ads on their automotive pages are sold out months in advance, other pages such as the high school sports results will never attract many advertisers. But behavorial targeting now allows them to sell ads even on those long-ignored pages. In the advertising business, they call it “monetizing the low-revenue ad inventory”.
     
    But that’s not all. Behavorial targeting is also being used as a new weapon in the customer relation management battle. As Mike Cassidy, CEO of Undertone Networks, recently told the Behavioural Insider newsletter, “By placing a pixel on the [brand’s] home page, advertisers can track how customers or would-be customers engage with the brand, segmenting customers with as much granularity as they wish in terms of what and how much, or how often, they buy; what types of content they browse; the intensity or casualness of their interest; and how short or how long their sales purchase cycle tends to be. They can then follow these customers anywhere on our network and serve them ads based on their customer profiles.”
     
    Where is behavorial targeting headed? “Now that behavorial targeting is proven to work, we can start doing it on a large scale to reach every consumer. Our challenge is to get smarter about figuring which past behaviors predict which future behaviors,” says Morgan.
     
    In the same interview, Mike Cassidy wondered how long behavorial targeting would work. “The unanswered question is how many times you can reach a consumer this way before you see diminishing returns. Related to that, there’s the question of just what the optimal number of exposures to behaviorally served ads are. A big goal for 2007 is to develop a far greater understanding of how frequency capping can work for behavioural ads.”
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  • Filed under: Advertising and Marketing

    • Life Beyond MySpace

    Author: Isabelle Boucq

    13 Nov

    myspaceWe have come full circle. When Tim Berners-Lee created the Web in the early 90s, his intention was to offer a communication tool to physicists and other researchers around the world. That is a niche audience if there ever was one. After the success of free-for-all social networking sites, the trend is now swinging towards boutique sites where people over 50, hip women or cat lovers get together.

    MySpace’s domination is not over. In September 2007, it drew 82% of visits among the top 20 social networking sites, the Web’s fastest-growing category, according to a report by research company Hitwise. One in 20 Internet visits went to social networking sites during the month, nearly double the amount of traffic from a year ago.

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  • Filed under: E-Business & IT

    • Chinese Internet Research Conference 2006

    Author: Atelier

    9 Nov

    chinese_internet_research_conferenceAtelier was at the Chinese Internet Research Conference (www.circ.asia) held in Beijing from September 21–24, 2006. The annual meeting, which brings together China’s Internet players, is a must for getting a sense of new Web trends in China.

    Established leaders include Tencent based in Shenzhen, near Hong Kong. Tencent is a “company on the rise.” According to Alexa, it recently became China’s number two site, a nose ahead of Sina but still trailing Baidu. Tencent’s first success was becoming a favorite of young cybernauts, particularly with the triumph of its number-one instant messaging software QQ (that has outpaced MSN Messenger, which ranks second).

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  • Filed under: Events and Conferences, International
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