The politics of behavioral targeting

I hope those who read my previous post, Behavioral Targeting creates fear, didn’t feel I was questioning the value of this complex advertising methodology.

I wanted to pose a question about advertisers being exposed to the risk of a consumer backlash from being involved with a process perceived to be about privacy exploitation or spyware. As well as any potential for a general flight from behavioral targeting because of consumer fears.

To understand the history of Behavioral Targeting, the issues in the industry and to see what Behavioral vendors think might be coming up in the future, this excellent keynote address video by Dave Morgan, founder of TACODA and Real Media (predecessor of 24/7 Real Media), is worth watching. It is from MediaPost’s OMMA Behavioral conference in San Francisco in June this year.

In the 35 minute address Morgan outlines problems with consumer perceptions about behavioural targeting and spyware with particular reference to US senators he has spoken to, including Washington’s Senator Maria Cantwell, former Marketing Director of RealNetworks, all of whom are apparently willing to err on the side of political caution due to the significant concern over privacy and spyware of their constituents.

Dave Morgan at OMMA Behavioural

Dave Morgan at OMMA Behavioral, June 2008

He ends by answering a question about ISPs doing deep packet inspections. “Is it legal – yes, probably it is. Is it a good idea – no. It doesn’t pass the creepy factor” He says that anything we do in this environment must pass the creepy factor or it is doomed – which is exactly my point.

There are two sides battling out the privacy debate, particularly in the US, and their arguments have been summarised concisely by Josh Gordon in his blog The Lunch Pail.

Side 1, articulated by Jim DeMint, a former marketing research firm founder-turned Republican Senator from South Carolina, states that any new privacy laws governing behavioral targeting amounts to, “a solution looking for a problem.” He supports his argument with the idea that market forces will provide the changes needed to protect consumers’ rights. In sum, he argues that businesses will try to out-do each other with their privacy policies, paving the way for self-regulation.

Side 2 is best captured by committee chair and North Dakota Democratic Senator Byron Dorgan. He sarcastically argues that if market forces could alone regulate society, then the FDA would no longer have to perform inspections. If a company sold spoiled or bad goods they would simply be avoided by consumers, an example of corporate Darwinism. In sum, Dorgan believes self-regulation doesn’t go far enough and is risky for the consumer.

It may be a type of corporate Darwinism that I talk about when companies get backlashed for using techniques such as deep packet inspection, but I’m concerned about unwitting advertisers who aren’t aware of the types of behavioral products they are using and how powerful the market’s response can be if it feels betrayed. The fundamental rule of marketing 2.0 is “be honest with your customers, because if you’re not, this big, networked world will turn around and bite you”, and advertisers need to understand the risk and return for each investment. Where government policy is “the elephant in the room”, as Dave Morgan puts it, that can change the terrain for BT vendors and users in a flash – consumers are the whale.

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Behavioral targeting creates fear

A great deal of fear surrounds certain online advertising techniques variously described as behavioural (or behavioral) targeting. Put simply, a website, ISP, advertising network or other online entity that can access your data puts together a profile of your browsing habits and uses this information to serve you better targeted advertising. The argument is that you will prefer these advertisements because they are more relevant and you will therefore recall the brand and have a more positive response to the advertiser because the ads are engaging and not intrusive (see Yahoo’s take and case studies on BT).

The dark side of the behavioural space is that your personal browsing patterns are analysed, recorded and used to generate an advertising campaign by people you’ve never heard of. They say all information is decoupled from personal data, often segmented and grouped, so that no one can match the behavioural information to you – but who really believes that?

Well, whether it’s true or not, it’s perception that carries weight in the advertising world, with all things. A recent study by TRUSTe and TNS uncovered significant distrust within the internet community regarding behavioural advertising and the use of personal data for targeting:

71 percent of online consumers are aware that their browsing information may be collected by a third party for advertising purposes, but only 40 percent are familiar with the term “behavioral targeting.” 57 percent of respondents say they are not comfortable with advertisers using that browsing history to serve relevant ads, even when that information cannot be tied to their names or any other personal information.

An overwhelming majority (91 percent) of respondents expressed willingness to take necessary steps to assure increased privacy online when presented with the tools to control their internet tracking and advertising experience, suggesting a need for added education, transparency and choices for behavioral targeting. Nearly two-thirds (64 percent) would choose to see online ads only from online stores and brands that they know and trust and 44 percent of respondents would click buttons or icons to make that happen.

To the contrary, a similar proportion of consumers (42 percent) say they would sign up for an online registry to ensure that advertisers are not able to track browsing behaviors, even if it meant that they would receive more ads that are less relevant to their interests. This division poses a serious dilemma for BT practitioners and industry privacy advocates, because consumers say they want more relevant advertising, but don’t want to be tracked in order to get it. [bolding added by blog]

Reuters reported that on Friday last week senior members of the United States’ House Energy and Commerce Committee wrote to more than 30 broadband internet providers and other online companies, including Comcast, AT&T, Verizon, Google and Microsoft, asking whether they have “tailored, or facilitated the tailoring of, Internet advertising based on consumers [sic] Internet search, surfing, or other use.”

This government-sanctioned fear of Internet privacy violation could make it very difficult for purveyors of behavioural advertising platforms to gain the trust of users. Will this fear break through to advertisers and stop them using behavioural, or other, systems?

The attempt to bring ISPs into the behavioural fold has been met with major concern in the UK, Europe and USA, as outlined recently in Sean Carmody’s post, Poor Phorm, where he discusses how Phorm, NebuAd and FrontPorch are being used to profile surfers directly at the ISP, to assist the pipe providers gain a share of the advertising dollar.

As privacy groups and commentators identify these concerns, will users shy away from ISPs that trade on data collection and will advertisers, like politicians, run from anything with a bad odour? Is behavioural targeting so demonstrably superior in performance to sophisticated contextual targeting that major advertisers will continue taking the risk of negative publicity if the pressure from consumer watchdog and government bodies continues to build?