Sunday, April 13, 2008

Online Behavioral Advertising: How Much Privacy Do We Need?

Imagine that one day you go to visit your friend who’s just bought a new coffee machine. The coffee it makes tastes really good, and on your way home you start thinking that it could be a good idea to get one for yourself as well. But being an outstanding individual you don’t want to buy the same one as your friend has. So the next day at work (during the lunch break, of course) you Google ‘coffee machine’ and get overwhelmed by the variety of choice. Struggling to make up your mind you go to the Yahoo’s page to read a horoscope/rugby news headlines, and there it is, in the right hand-corner, the perfect coffee machine for just 99.99$!

That is not a miracle. That is online behavioral advertising (OBA), the tracking of consumer’s activities online – including the searches the consumer has conducted, the web pages visited, and the content viewed – in order to deliver advertising targeted to his individual interests (definition of Federal Trade Commission). Behavioral advertising is opposed to contextual advertising, and proves to outperform it by upwards of 10 percent.

Yet, at least in the USA, 60 percent of consumers are uncomfortable with web sites using data about their online activity to customize advertisements or content based on their interests. Behavioral advertising allows very precise targeting, provides more relevant ads to consumers, but they also may pose data security and privacy threats.

This week Network Advertising Initiative (NAI), a cooperative group of online companies engaged in the practice of online behavioral advertising, released its proposed guidelines for its members to follow when engaging in behavioral targeting. The group members include (an AOL company), Atlas (a Microsoft company), BlueLithium (a Yahoo! Company), Doubleclick (a Google company), Mindset Media, Tacoda (an AOL company), Yahoo!. The document was passed in response to principles proposed by the Federal Trade Commission last year.

NAI states that all the limitations to OBA should be carefully considered, as ‘the great diversity of content and services on the web is predominantly powered by advertising’ and that OBA ‘does not result in more advertising, but creates more relevant advertising’.

The guidelines outlaw targeting ads to children under the age of 13, using information about certain medical conditions (HIV/AIDS status, psychiatric conditions, abortion-related), or certain personal life information (sexual behavior).

The association also published a list of other topics that are potentially sensitive, which has been widely debated (age, addictions, pregnancy, race identification, death and others). Each company will decide, whether it is appropriate to use this information or not. But as Saul Hansell points out, ‘what sort of technology is needed to display advertising to potential customers afflicted by “death” goes unexamined in the document’.

It is understandably hard to define which data should be restricted. I value the benefits of OBA, but as a consumer I still want my life to be private. To my mind, these guidelines and rules of FTC are definitely good initiatives. But the further concern – is it enough to have just a voluntary self-regulatory code of conduct?

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MarketRMan said...

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