searchengineland.com » Search Ads: Behavioral Targeting

Behavioral Targeting: Creating A Unique Experience For Each Visitor

Daniel Waisberg — Wed, 18 Nov 2009 05:07:57 +0000

Behavioral targeting (BT) has been the buzzword of the year for the last two years in the web analytics field. But is BT really all that important and valuable to the companies making use of it? The answer is usually yes. And does it take a team of PhDs to implement BT for a website? The answer is usually no. In this and a following post I will explain the value that behavioral targeting offers, and show how a marketer can make use of BT to make the website experience richer for users, and increase conversion rates.

According to Wikipedia, there are two principal types of behavioral targeting:

Onsite behavioral targeting is a technique that uses visitor behavior to target certain content that is proved to be more relevant to a segment of visitors. It should be preceded by an encompassing analysis of users and their characteristics (using web analytics tools). We can either define hard rules (for example, offer a special deal to anybody that adds any two or more products to a shopping cart) or use an engine to dynamically learn about and then target high-converting groups.

Offsite behavioral targeting is technique used by advertising networks to increase advertisement targeting. For example, Google is using this type of targeting to profile visitors to their website network according to subjects they like (their “interests) and then uses this info to provide users with targeted ads across the entire content network.

In this article I’ll focus on the first type of BT, onsite behavioral targeting, the type of technique used by website owners to improve user experience by delivering the right content to each person. Companies that current provide such a solution to website owners are:

From tracking to behavioral targeting

Web analytics has been constantly developing since the 1990s. In the beginning there was data, and initially the struggle was to collect it accurately and provide reports on the state of websites, usually from an IT perspective. Then, with the turn of the millennium, analysts felt the necessity to turn numbers into insights, and the field evolved from simple data reporting to analysis. Today, marketers increasingly understand that testing is the way to go when it comes to design and implementation of websites (in other words, intuition-based decisions don’t really work well). Said another way, the customer should decide what works and what doesn’t (this phase is still rapidly evolving).

In the last two years, marketers, analysts and executives have started to understand that customers should get what they want without having to ask for it. That’s what behavioral targeting is all about: delivering the right content to each visitor to a website. It moves the current focus on overall results to segment results. It enables the website owner to understand which visitors are struggling and which are succeeding with their objectives. It helps marketers build more relevant campaigns to target the right market, be it through search, content, media, or emails. These insights and actions should not come at the expense of website testing, but in addition to it. Testing is very important to recognize the low hanging fruit that is ready to be plucked. It is also a great way to persuade management of the importance of investing in both testing and targeting.

Analytics guru Jim Sterne defined the benefits of behavioral targeting as follows:

“We can attract prospects with customized campaigns according to their interests, engage site visitors with dynamic content in response to their conduct and desires, and put the right message in front of the right person at the right time. We can create a more pleasant and more individual buying experience. We can quickly identify the offers that will more likely convert those prospects to buyers.”

However, the market is still not completely ready for this revolution. Recent research from eMarketer suggests that American internet users are not very fond of behavioral targeting techniques. As seen in the chart below, one of the conclusions of the research is that “respondents showed somewhat more interest in receiving personalized discounts and news, but still, less than one-half of Americans wanted any tailored Web content at all.”

Concluding, we can see a strong trend towards using behavioral targeting to provide web users with richer web experiences. But this will require a market education effort so that users don’t perceive companies using these techniques as not respecting user privacy.

In my next article I will go over a few examples showing how to implement behavioral targeting and analyze its results to increase website conversion rates.

Report: Most People Don’t Want Online Tracking Even If It Means Relevant Ads Or Savings

Greg Sterling — Wed, 30 Sep 2009 12:10:20 +0000

Get ready marketers: a credible new report with sweeping implications from the University of Pennsylvania and UC Berkeley is likely to be the nail in the coffin of self regulation of online advertising. Specifically I’m talking about behavioral targeting, which largely concerns online display advertising but does marginally touch search at Yahoo and Google.

The NY Times discussed the report, released today:

The study’s authors hired a survey company to conduct interviews with 1,000 adult Internet users. The interview, which lasted about 20 minutes, included questions like “Please tell me whether or not you want the Web sites you visit to give you discounts that are tailored to your interests.” The results were later adjusted to reflect Census Bureau patterns in categories like sex, age, population density and telephone usage.

Tailored ads in general did not appeal to 66 percent of respondents. Then the respondents were told about different ways companies tailor ads: by following what someone does on the company’s site, on other sites and in offline places like stores.

The respondents’ aversion to tailored ads increased once they learned about targeting methods. In addition to the original 66 percent that said tailored ads were “not O.K.,” an additional 7 percent said such ads were not O.K. when they were tracked on the site. An additional 18 percent said it was not O.K. when they were tracked via other Web sites, and an additional 20 percent said it was not O.K. when they were tracked offline.

Lawmakers have been ready to regulate “behavioral advertising” for some time and the FTC has signaled that it did not believe marketers were doing a good enough job with self regulation. However, the new economic and political climate, more favorable toward regulation, combined with public frustration and anger generally have set the stage for regulation of some kind.

Search will largely be exempted because of the way it works — keyword matching rather than data mining — although the search engines’ data retention policies are implicated by the report (which I quote a bit more fully on my blog). Yahoo is using search queries as part of its behavioral targeting and Google not long ago implemented “Interest Based Advertising,” a euphemism for behavioral targeting.

However, Google’s privacy and preferences management could become a kind of model in some new regulatory regime.

Very soon lawmakers will introduce legislation to more aggressively protect consumer privacy. One member of Congress, Rick Boucher of Virginia, recently wrote:

Because consumers need an assured level of control over the collection, use and sharing of information about them, a statute providing those assurances is now called for. That goal should be achieved by legislation, which reflects best industry practices and requires that they be followed by all websites that collect information from Internet users. Legislation assuring Internet users that their online experience is more secure will be a driver of greater levels of Internet uses such as e-commerce, not a hindrance to them.

In my view all this points to “when” rather than “if” and the question is: what disclosure and data management burdens will imposed on marketers and publishers? As I said, I think search will largely be unaffected but display could be profoundly affected.

If people are required to be given an “up front” opportunity to “opt-out” of targeting a majority likely will: “Tailored ads in general did not appeal to 66 percent of respondents.”

SEMPO Releases Survey Data Revealing State Of SEM

Greg Sterling — Wed, 08 Apr 2009 14:04:42 +0000

SEMPO formally released data on the state of search engine marketing, its annual survey of agencies and marketers. This year’s survey consisted of 800 respondents from all over the globle. However 68 percent of respondents were from the US, with 20 percent coming from a range of countries. Seven percent of respondents were from Canada and 5 percent from the UK.

The respondents/clients represented a range of industries. The top sectors were “retail, business services, electronics manufacturing and financial services.”

As part of the findings and related report SEMPO forecast that SEM spending would grow from a projected $14.7 billion in 2009 to $26.1 billion in 2013. SEM is defined broadly as all spending on search-related marketing including SEO. Consequently it represents more than the share of online ad revenues that the IAB assigns to search.

The report is lengthy and extremely detailed. Among other things it explores what marketers are willing to pay for specialized offerings or enhanced targeting including behavioral, local and mobile. Here are some of the high-level findings:

In the past three years, offline channels are most frequently cannibalized to move budget towards SEM. This year, the top marketing channels advertisers are shifting budgets from are print magazines (26%), direct mail (21%), and print newspapers (19%).
However, the degree to which certain channels are cannibalized is a bit lower than in last year’s survey. Only a quarter of advertisers (26 percent) report they are shifting budgets from print magazine advertising (down from a third last year), and only 15 percent of advertisers are cannibalizing their web site development budgets. Other channels affected by a shift in spending include TV advertising (13 percent), conferences (10 percent) and print yellow pages (9 percent).
Organic SEO has always been the favored search marketing tactic among advertisers, but its popularity has risen significantly, from 80% in 2005 and 76% in 2006, nine out of ten advertisers using it the past two year.
Advertisers are most willing to pay a premium for targeting consumers based on behavioral metrics followed by demographic targeting
There is growing interest in new platforms for search marketing such as video and mobile search, and growing willingness to pay more for these emerging vehicles

In the context of the debate surrounding whether search is a branding or direct response medium, one of the most interesting findings was that respondents said “brand awareness” was the top goal of paid search, which took over from “sales” in the previous year’s report. The larger the firm the more the goal shifts from sales to brand awareness, which makes a certain amount of logical sense. Still I found it interesting.

Some charts from the report:

Where are marketers transferring budgets from to support paid search?

Source: SEMPO/Radar Research (2/09)

Overall the report shows the search industry to be maturing and increasingly sophisticated, diversifying into a range of related digital media.

Privacy Concerns, Online Ad Targeting On Apparent Collision Course

Greg Sterling — Mon, 16 Mar 2009 11:39:43 +0000

Call it the “Cuban Missile Crisis” of online advertising: consumers and publishers are increasingly at odds over online ad targeting and behavioral targeting (BT) in particular. While that may be a hyperbolic characterization, the majority of US internet users appear uncomfortable with online tracking and targeting at a time when publishers and search engines are more aggressively embracing it.

Most recently, Google introduced BT as “interest-based advertising” on the AdSense network. Yahoo, which has been using BT for quite some time, started factoring search queries into the targeting mix. Microsoft and AOL use BT as well. And online newspaper sites, early champions of BT with Tacoda (now part of AOL’s Platform-A), are using it increasingly via the Yahoo APT platform — if they’re part of the Yahoo Newspaper Coalition.

Publishers and ad networks use it because it works. And SEMPO’s 2008 survey indicates strong interest in BT among search marketers.

Yet consumers seem to be more aware of online ad targeting than in the past and more concerned about it. For example, the New York Times yesterday reported on the results of yet another survey about privacy and online ad targeting, this time by TRUSTe involving 1,000 US adults.

Here are some of the top-level findings according to the Times:

28 percent said they were comfortable with BT; “more than half said they were not.”
Just over 75 percent of respondents agreed with the statement, “The Internet is not well regulated, and naïve users can easily be taken advantage of”

As further evidence of growing privacy concerns:

41 percent of respondents said they use a web browser that deleted cookies and the history of the sites they had visited. About the same number used software to use the Internet anonymously. Around one-third of respondents said they chose “do not track” options on Web sites that offered them. Eleven percent used a proxy server to mask the Internet address of the computer they were using, and 36 percent gave false information when registering for Web sites.

Another recent consumer survey conducted by Burst Media, originally discussed in the Google BT post, is consistent with the TRUSTe data above:

The study found that a vast majority (80.1%) of web surfers are concerned about the online privacy of their personal information such as age, gender, income and web surfing habits . . . [and] over 60% of respondents are aware of the tracking, collecting and sharing of information that occurs as a result of online activities. In addition, respondents did not see value in ads targeted to them based on their web surfing behavior – even if it improves their web surfing experience

The contrast between the increasing use of BT and the growing awareness of the practice and apparent discomfort among consumers is striking. The two trends appear to be moving in opposite directions. It could well be that consumers are concerned because of uncertainty about how their search/surfing histories are being stored and used, and whether or how that data may surface in the future.

While the online ad industry has escaped FTC regulation (for now it would appear), it needs to do a better job of educating consumers and providing privacy assurances. With credible assurances of privacy and an obvious way to opt out, more consumers might be comfortable with targeting and BT.

Google’s introduction of a prominent “opt-out” feature in its interest-based advertising program is a good step. But in reconciling the divergent sentiments of consumers, publishers and advertisers, it would appear there’s a long way to go.

SEMPO Report Cuts Search Ads Forecast

Greg Sterling — Tue, 10 Mar 2009 13:06:02 +0000

SEMPO’s new report, due to be released this week, cuts its forecast for search advertising. The results are based on a survey of almost 900 agencies and search marketers. According to the Wall Street Journal, the report scales back previous growth projections considerably:

[SEMPO] says North American search marketing spending will increase only 9% to $14.7 billion in 2009 from $13.5 billion a year ago. Its previous estimates, made in early 2008, called for the industry to grow at more than twice that rate this year, from $15.7 billion in 2008 to $18.8 billion in 2009. The new forecasts call for the industry to reach $19.8 billion in 2011, down from a previous estimate of $25.2 billion for that year.

But even as the economy hits search spending fairly hard, other media are faring worse. Search, widely regarded as the most efficient form of online advertising, is still benefiting from advertiser and agency budget shifts to online:

Search is continuing to steal from traditional ad budgets, according to the survey. More than a quarter of advertisers reported that they were shifting budgets into search marketing from print magazines. Nineteen percent said they were shifting their budgets into search from print newspaper advertising.

The paradox of these shifts is that they express a simplistic view of consumer behavior, which has become increasingly complex and relies on many sources of information and ad exposures, both online and offline. However, many marketers are starting to see with greater clarity the convoluted consumer path to conversions. Search remains perhaps the critical component of online advertising; however a search-only strategy is somewhat myopic.

Here’s an excerpt from findings from Atlas’s (Microsoft’s) recent “engagement mapping” report entitled The Long Road to Conversion: The Digital Purchase Funnel:

The large number of ad exposures consumed prior to purchase may come as a surprise to marketers who are used to discussions of frequency that revolve around site or campaign metrics. Measuring only the last ad in a conversion history conceals the true length of the relationship an advertiser has with each consumer. When we focus our view on individual converters’ histories and apply the funnel concept to their ad consumption, we discover that their histories are much longer and richer than typically assumed. These results confirm other research showing that advertising reaches consumers from multiple advertising campaigns and across channels . . .

Yahoo’s increasingly integrated search and display platforms are consistent with this more sophisticated consumer behavior model. And the SEMPO report apparently does find some interest in search retargeting accordingly.

We’ll explore the findings of the SEMPO report in more detail after we have a chance to review it.

Post-Click Marketing For Search Marketers

Scott Brinker — Sun, 22 Feb 2009 22:16:16 +0000

Over the past year, the term “post-click marketing” has come up more frequently in search marketing discussions, especially in the context of improving conversion rates and overall search ROI. At SMX West earlier this month, Gordon Hotchkiss of Enquiro unequivocally declared that post-click marketing moves the needle for their clients more than any other aspect of search marketing.

So what exactly is post-click marketing and how can you leverage it in your search marketing program? Here’s a brief introduction.

Post-click marketing > landing pages

The simplest definition of post-click marketing is this: it’s how you engage with respondents after they click on your ads.

Of course, since the entire customer lifecycle happens after the click, post-click marketing is usually narrowed to mean the experience a respondent has between click and conversion—particularly an experience tailored to a specific ad and/or a specific group of respondents, rather than general site optimization. (Lead nurturing and re-marketing campaigns are good too, but they’re further down the funnel—call them post-conversion marketing.)

Landing pages are the most common kind of post-click marketing.

However, one of the motivations for coining the term post-click marketing was to encourage people to think outside the box of a single page. Traditional 1-page landing pages—I call them “plain old landing pages”—usually have a predictable, and frankly boring layout and structure. What a wasted opportunity, especially when you consider that text search ads are all pretty much visually homogeneous. The design and flow of the first few pages after that click are a marketer’s best—and often only—chance to establish a compelling brand and differentiate themselves from the pack.

Post-click marketing embraces a continuum of creative possibilities for the experience served to respondents: landing pages, 2-step landing pages, branching conversion paths, microsites, mobile nanosites, contextual applications, etc. These experiences can include Flash objects, videos, interactive widgets, social media interfaces and more. You’re constrained only by your imagination in crafting an experience that will “wow” your audience.

But post-click marketing is about more than any one great experience.

Post-click marketing emphasizes segmentation

If there’s one overarching strategy in post-click marketing, it’s audience segmentation: identifying the distinct strata of respondents in your market, with as much granularity as possible, and serving them post-click experiences tailored to their needs and perspectives.

The post-click marketing mantra is: all clicks are not created equal.

Unlike traditional landing page optimization, which usually focuses on testing which pieces of content work best across all respondents, post-click marketing aims for segment optimization—”determining how many different landing pages are optimal for a given campaign, and determining how each should be different from the other.”

Search marketers often thrive by using long tail strategies in keyword bidding. But if you’re not segmenting respondents to different post-click experiences, then the long tail of keywords and ad creatives ends up crashing ignominiously into a short tail of a few landing pages and deep links. This causes message mismatch, where the relationship between the ad and the landing page is unclear to the respondent—probably the single biggest reason for triggering the back button bailout.

Post-click marketing employs a variety of methods for segmenting respondents, ranging from the keyword phrase a user searched on, to geo-location and domain information implied by that user’s IP address, to behavioral choices made by the user on those first several pages after the click. Note that behavioral segmentation dovetails nicely with deploying multi-page landing experiences to engage in productive up-front dialogues with respondents, to quickly move from the generic to the specific.

Post-click marketing encourages systems thinking

In online marketing, we talk a lot about the funnel—how respondents start with impressions, then clicks, then engagement, then conversion, and so on. This progression has a clear directional flow, from the keyword to the ad to the landing page to post-conversion fulfillment.

However, this one-way flow of the user experience can cause marketers to overlook feedback loops in the opposite direction—using information revealed from later stages of the funnel to optimize activities at the top of the funnel. Good post-click marketing tracks and analyzes different conversion rates by segment, mapping conversion rates back to behavioral choices and then back to the original ads and keywords.

This helps identify which niche audiences are driving real ROI in a campaign, and it suggests specific ad/segment combinations that are ripe for improvement and experimentation. Instead of a one-way funnel, your search campaigns and corresponding post-click marketing become a circular ecosystem.

In the spirit of systems thinking, post-click marketing also elevates post-click experiences, such as landing pages, from being ad hoc, under-the-radar productions to being executed with a more efficient and integrated process. Instead of treating each landing page as its own one-off experiment, which tends to be slow and costly, an organization with good post-click marketing capabilities can rapidly deploy dozens or hundreds of segment-specific landing pages.

This scalability is achieved by putting in place a certain amount of post-click marketing infrastructure—or leveraging your web site infrastructure for this mission: content management, a digital asset library, re-usable page design templates, defined proof/approval workflows, standardized data collection and analytics, ready-to-roll testing frameworks, etc.

You know your post-click marketing is firing on all cylinders when your average concept-to-completion deployment cycle for a new landing page is less than 1 day—which is what it needs to be to be able to keep pace with the inherent fluidity of search marketing.

You’ve always known that landing pages and other after-the-click tactics were important. The reason post-click marketing has been gaining traction is because it’s a way to frame the discussion of those tactics at a higher and more strategic level.

If you don’t yet have a structured post-click marketing program in place, this could be one of your big wins for 2009.

Location in the Browser: What Does It Mean?

Greg Sterling — Thu, 23 Oct 2008 14:24:02 +0000

Not long ago, Google rolled out its “Geolocation API” (via Google Gears). Initially it was intended to enable third party publishers and developers to get location for their apps on mobile devices using a combination of the phone’s inherent location-awareness technologies (i.e., GPS) and Google’s cell-tower database (which has been expanded now to include WiFi locations). However it also works for destkop browsers, provided that Gears is installed on the computer.

Here’s the Google Code Blog discussing the impact:

When we originally proposed the Gears Geolocation API our goal was to make it easy for developers to deliver location enabled web sites on mobile phones. However we realized laptop users would benefit from location enabled web sites too. Today we are adding WiFi signals to the Geolocation API so that laptop users can benefit from location enabled web sites for the first time and mobile users from the increased accuracy. And because the Geolocation API is the same for developers in both desktop and mobile browsers you can even use the same code on both platforms!

In Chrome and Android, with Gears built in, you can deliver a location enabled web site without requiring your users to install a plug-in, but in other browsers they will need to go through a simple plug-in install process. We also submitted a simplified version of the Geolocation API as a WC3 specification and the upcoming Firefox 3.1 plans to support the W3C version directly. The Gears Geolocation API is completely free to developers and users through the default Google location provider.

So what does all this mean? We know about location-aware content and services and their potential in mobile. But what about on the desktop?

It essentially means that developers can tap into location and create more locally relevant versions of their sites or provide locally relevant information without requiring the user to enter location. There are some hoops here though: the user must have Google Gears installed in most cases. This is not true for Chrome users and will not be true for users of the next Firefox browser update 3.1.

If Gears is not installed, users at some point in the process are asked to install it. Then they are asked to opt-in and share their location. There’s essentially a double opt-in process. Google will ask if you want to share location and the app/publisher online will do the same. This is quite cumbersome right now, but as these technologies move directly into the browser, as with Firefox and Chrome, users will just need to allow sharing of their location. Ultimately it will be very much like location sharing on the iPhone.

Yahoo’s FireEagle does this already on a “manual” basis: users tell FireEagle where they are (much like updating one’s Facebook status) and third party sites can tap into the API and get access to that information. Sprint’s (Clearwire’s) new WiMax ISP Xohm provides location-specific content to users on a default homepage. And Skyhook Wireless’ Loki toolbar has been providing locally tailored content for a few years.

Let’s just say that within a year location awareness to within 200 meters (or less) will be available through most desktop browsers to publishers — and advertisers. The current IP targeting methodology used by Google and Yahoo for AdWords and Panama will be replaced with much greater location precision. It will make that customized location map in AdWords a real thing. Targeting will become available by neighborhood and not just DMA/City (Yahoo just added Zip-Level targeting).

This will be easiest for AdWords where end users are on Chrome or Firefox, but it will eventually come to IE as well. Users will need to enable location on the browser but then the ad platforms will be able to tap into that location, serving much more locally targeted ads (provided advertisers create them). This will also be possible for display advertising as well.

I’ve argued in the past that once location-awareness on the desktop gets to the neighborhood level, you get to tap into US Census and other public data (which could be incorporated into AdWords or Panama or adCenter) to allow for demographic targeting on a national scale. This represents — and I’m speculating about where all this will go — a potentially radical transformation of the current state of online and search geotargeting.

Imagine that an automaker like BMW wanted to target its demographic online — I’m guessing 25 to 50 year olds in upper income segments — it could now do that through a search campaign with a high degree of reliability. (Forget about the current AdSense demo targeting.) BMW could bid on all the same BMW brand and generic terms, but those ads could be restricted to users in specific geographic areas, tied to the neighborhood-level Census data (income, age, education, etc.). In other words, it would become possible for BMW to select the audiences to whom it wanted its ads exposed on a national scale (upon the right query triggers) and the system would use the coming improvements in location targeting, assuming the incorporation of Census and other related data, as a way to reach those audiences.

In other words, the same search term(s) list might trigger a BMW ad for one user in location A and no BMW ad in location B. Here’s another interesting scenario, this time with GM. It could show an ad for a car in a certain price range to a person in location A and a different ad for a high-end model in another location. These different ads could both be triggered by the same keywords, but the location/demographic data would determine whether to show the ad at all or which ad to show. You can obviously see the marketing power here.

It would operate largely as conventional direct mail does today (which uses Zip-level lists and neighborhood profiles). And all this would be enabled by more precise location targeting vis-a-vis the browser, as described above. Would such as system be foolproof? No, clearly not. For example, what about work locations where there’s no Census data about audience composition? It also requires better location awareness to be implemented in the browser first and then requires the search ad platforms to incorporate the Census and other data, tied to location.

Nonetheless, this is where I see these geolocation improvements taking the market. They open up a potential revolution for search (and brand advertisers’ use of search) — all tied to better location targeting.

Yahoo Improves Content Match Targeting

Barry Schwartz — Mon, 13 Oct 2008 13:42:33 +0000

The Yahoo Search Marketing Blog announced they have improved the targeting and relevancy of their content match product. The improvements will lead to a higher click through rate on ads and higher satisfaction.

The specific improvement is that they now not only target the ads based on the content of the page, but also based on the user viewing the page. Yahoo will tailor the ad based on the “users’ geographic and behavioral profiles.”

Behavioral Targeting Under Fire As ISP Backs Away From Tracking Subscriber Activities

Greg Sterling — Wed, 25 Jun 2008 13:45:18 +0000

Privacy is dead, get used to it. In the effort to rescue display advertising from its historically dismal performance and so-called “banner blindness,” behavioral targeting (BT) was born a few years ago with Tacoda. It has both increased in popularity and infamy since that time. Consumers prefer more “relevant” ads but they also dislike being tracked. That’s the paradox and the problem with BT.

Here’s the issue in a nutshell. According to a March 2008 survey by Truste (written up in MediaPost), “nearly three out of four people, or 71%, said they realize that companies track their Web browsing activity for purposes of sending them targeted ads. The majority–57%–said they are not comfortable with the practice, even when their browsing history can’t be linked to their names. At the same time, 72% of Web users also told researchers they find irrelevant ads ‘intrusive and annoying.’”

The US Federal Trade Commission (FTC) held hearings on personal data collection and last year proposed voluntary rules for ad targeting on that basis. Just this week the IAB adopted formal guidelines around consumer privacy and when users should be notified and given the opportunity to opt-out of targeting. The IAB’s rules are apparently more “flexible” for publishers and advertisers than the FTC’s and don’t require as many consumer disclosures and notifications.

Every BT firm and practitioner out there will say that it works effectively without personally identifiable information. However, there are many in Washington and Europe, as well as privacy NGOs, who simply don’t buy those claims.

Earlier this year ISPs in the US and UK began collecting data on user behavior for resale to ad networks and others. In the US a firm called NebuAd provides the enabling equipment that captures the data and permits it to be shared with third party advertisers and networks. In the UK NebuAd competes with a company called Phorm. And there are others seeking to bring more targeting capabilities from deeper data mining of user profiles and activities. Yahoo is on the forefront of this in the US.

Yesterday, however, cable ISP Charter Communications backed away from a plan to work with NebuAd, citing privacy issues. According to the Washington Post:

The company had been planning to harvest the stream of data from each Internet customer for clues to their interests and then make money from advertisers who would use the information to target online pitches.

The data-collection effort would have protected personal information, Charter officials said in describing the plan, but critics likened the practice to wiretapping.

Charter said the plan had indefinitely been put on hold. This week, in a parallel but contrary development, the US House of Representatives passed domestic spying legislation that enables federal officials to obtain copies of all communications (phone or Internet) in the US without first obtaining a search warrant or court order.

Privacy advocates see little difference between what firms like NebuAd are doing and the efforts of the US government to spy on citizen communications. It’s therefore somewhat ironic that the US FTC is asking private companies to offer broad disclosures about data collection when the government is adopting an entirely different standard for its own activities. (The justification for the double standard is criminal law enforcement.)

On the advertising side, the question of who “owns” the data and what the scope of protection for that data should be will continue to be the subject of debate for some time. In Europe, it has been proposed that an IP address should be treated as personal information. That position has all sorts of privacy implications that fly in the face of BT and other targeting initiatives. Indeed, most advertisers and ad networks argue against such a policy.

Investor Esther Dyson, in a related piece in the Wall Street Journal this past February, wrote that a “coming ad revolution” is tied to individual management of personal data (on social networks). She also supports NebuAd and related firms in their effort to provide more relevant ads to users. Dyson’s bullishness has a one-sided, naive quality about it, however.

Facebook’s tracking initiative Beacon failed because it was manipulative and somewhat deceitful. Many users didn’t know their behavior was being rebroadcast to their networks. When they found that out, they were upset in many cases. Facebook was forced by bad PR and related negative coverage to drop the program, just as Charter Communications made a similar calculation before the PR problems could begin.

The issue of data mining and ad targeting is extremely complicated. The genie is out of the bottle, however, given that these capabilities exist. And users do prefer more relevant ads. In this environment the challenge is to find the right balance between data collection, discloses, and consumer choice around being tracked.

And that’s not an easy thing for anyone.

The Facebook Privacy Fallout Continues

Greg Sterling — Mon, 03 Dec 2007 12:34:37 +0000

For those just joining us, Facebook was overly aggressive with its Beacon tracking program, one of several new ad programs launched in early November. Beacon required users to opt-out or have their activity and transactions on Facebook partner sites broadcast to their networks back on Facebook. Discovering this, many people were frustrated and upset by what they felt was a lack of disclosure regarding the implications of the tracking.

Under pressure from users, the media, and privacy groups, Facebook modified Beacon’s opt-out policy on Friday, apparently making participation opt-in. But the fallout continues, with some critics not satisfied and some arguing that the company is still going too far in tracking user behavior off the site.

This report, published before the announced changes on Friday, makes the case that Facebook is tracking user behavior on third-party sites regardless of whether the user is signed in to Facebook or has opted out of Beacon.

From the New York Times blogs on Friday, Coca-Cola has reportedly opted out and said it’s not going to participate in Beacon — it had been one of the so-called “Landmark Partners” — for the time being:

“We have adopted a bit of a ‘wait and see’ as far as what we are going to do with Beacon because we are not sure how consumers are going to respond,” said Carol Kruse, Coke’s vice president of global interactive marketing, this morning. Coke had been one of Facebook’s “Landmark Partners” because it had made an especially large commitment to use the site’s new features. Other Landmark Partners included Blockbuster and Verizon.

And Silicon Alley Insider has more on Facebook “lying” to advertiser-partners about the nature of the Beacon program.

Eventually Facebook will probably create an acceptable policy around Beacon that will satisfy critics; it has faced similar uprisings and survived them in the past. The difference now is all the national media attention the company is receiving. Another question is whether consumers will cool to use of the site because of privacy fears. My guess is no, but we’ll have to see in a month or so.