Privacy Concerns, Online Ad Targeting On Apparent Collision Course

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.