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Target Marketing and Consumer Privacy: Some Do’s and Don’ts

Let’s face it; to survive you have to market your business. That means reaching the right audience, those who have an interest in the kind of products you are selling and making the pitch. That is pretty self-evident as far as it goes. We have word of mouth, ads on traditional mass media outlets such as TV, radio and print; and now there is Internet marketing, with its search engine optimization, pay-per-action ads and social marketing, that reaches people not just across town but around the world. The technology used to reach these potential customers is powerful, flexible and becoming more useful and expansive each day. 

However, technology moves a great deal faster than either law or ethics. This has been the case, for example, with physics (nuclear technology), and biology (cloning, stem cell research), and it is certainly the case with Internet technology, especially when it comes to the subject of targeted advertising and its effects on privacy.


How Targeted Advertising Works

Also known as “Behavioral Advertising,” this is based on a given user’s browsing history. This is a departure from its close cousin, “Contextual Advertising,” since it doesn’t look at current search engine results to generate relevant advertisements; it looks at the user individually to determine what they are interested in.


Network vs. Onsite Behavioral Advertising

Behavioral advertising both over networks and on specific sites is based on building up demographic data on what users spend most of their time looking at with networks building up this data by looking at specific sites people visit while onsite advertisers look at where users go on a single site and target their ads based on that data.


The rationale behind this is that the money spent by advertisers is better used when the ads are targeted to the specific needs of the audience. Why would someone who enjoys mountain biking, but isn’t interested in fishing, want information from a travel agency that specializes in Canadian fishing trips? They wouldn’t, so why waste that travel agency’s money advertising to them? On the other hand, say the advertisers, since there are plenty of mountain bike-related ads that would be perfect for this person to see, shouldn’t we make sure they see them?


The major concern is privacy. Even when the advertisers are using anonymous data based on the number of hits that certain sites or links get, there are concerns that the privacy of the Web users who are visiting those sites and clicking those links is somehow being violated. American’s have traditionally resented anything that smacks of being monitored. Since 9/11, we have accepted more of that from the government and law enforcement (lest the terrorists win) but when it comes to private corporations harvesting and using that data—especially since they seem to be pretty bad at keeping our personal information confidential—Americans still tend to have a problem.


ISP Behavioral Advertising and the Threat to Privacy

That said, we can recognize that it is one thing for a network of sites to look at where people are going in order to target advertising, but quite another when an internet service provider (ISP) does it. After all, they already know us by far more than just an IP address. They have our names, addresses, phone numbers—credit reports for all we know—and they can also track our movements and communications on Web whether we like it or not.


This comes as a surprise to most people for the simple reason that few, if any, of us ever read the voluminous mass of painfully tiny—and often semi-legible gray—type that makes up the ISP’s end-user license agreement (EULA). In a Fox News interview, Marvin Ammori, general counsel of Free Press, a Washington-based consumer advocacy group, said: "The network is asserting almost complete control of the users' ability to use their network as a gateway to the Internet. They become gatekeepers rather than gateways." This role as “gatekeepers” also includes monitoring your Web surfing, watching the way you use your e-mail and even deciding what sites you can or cannot visit.


Given that much power handed over by customers who just want to get online, is it any wonder that some ISPs are looking at behavior advertising as a new income generator? It shouldn’t be. Three of the nation’s largest ISPs have been considering a plan by a company called NebuAd, Inc., to launch behavior-based advertising on their systems.


The response from both privacy advocates and public figures was quick and clear. In fact, one of them, Charter Communications, dropped its plans after protests arose over privacy concerns and U.S. Rep. Edward Markey (D-Mass.), chair of the House Subcommittee on Telecommunications and the Internet, and Rep. Joe Barton (R-Texas), wrote to Charter asking it to put the test on hold to give time for discussions.


If this idea was not so alarming, what would there be to discuss?


As for the other two, Embarq Corporation and CenturyTel, Inc., both phone companies, have finished their testing and are still considering the move. Embarq has yet to come to a decision but CenturyTel’s head of investor relations, Tony Davis, claims that Charter’s decision was based on cable industry regulations and, therefore, don’t apply to telephone companies, saying that “At this point it’s not affecting our thinking.”


It has not affected their thinking. Why does this not surprise me?


The Cost of Behavioral Advertising

For those of you who answered, “Because you are a cynic,” I congratulate you on your insight but no, it has more to do with Tony Davis’ position with CenturyTel. He’s the guy charged with keeping the investors happy and—all other things being as they should be—the more income streams a company has, the happier those investors get. It is one of the fundamentals of business, right? The problem is that Davis and his cohorts are forgetting another fundamental of business: Be a good corporate neighbor.


I don’t see any good to behavioral marketing. You may have figured that out by now. I see it as an invasion of my privacy, a reminder that what I am doing online and in the privacy of my own home is being monitored and I am just old-fashioned enough not to like it. How does this translate into action? It is simple: I do not click on any ads that correspond to things that I have searched for and I trash any e-mails that relate to anything I have been looking at. I may not be able to get out of this monitoring but I can choose whether or not I reward the people invading my privacy.


If I am making that choice, refusing to give my business to companies who offensively invade my privacy, then there are many, many others. In a recent study of consumer attitudes toward behavioral marketing, Truste, a consumer privacy organization, came up with some interesting statistics:

  • 71% 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% 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.
  • 91% 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.
  • 64% would choose to see online ads only from online stores and brands that they know and trust.
  • 44% of respondents would click buttons or icons to make that happen.
  • 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.


The analysts at Truste say that education, transparency, real choices and real value are needed before this kind of advertising is acceptable to the majority of people. Right now, however, this approach to marketing, regardless of what people say about wanting to see more relevant advertising, is not beloved of the masses with a very sizeable percentage wanting it out of their lives entirely. How do you think they feel about the advertisers behind those unwanted ads? It can’t be good and, ultimately, that is the cost of invading people’s privacy. Their opinion of you and your company goes bad and they deny you the one thing you want—the very reason you invaded their privacy in the first place—that sale.


The Bottom Line

Sometimes, in the mad scramble for cash that is today’s marketplace, it is good to step back, take a couple of breaths and consider what you get and what you lose by going with the latest and greatest of anything. In the case of this behavioral marketing, what you might gain by employing it will mostly be lost by the way people will be turned off by knowing that you have your eye on them. If you want to target customers, target your own, keep an eye on what they buy and suggest things based on that data. They have already opted to do business with you so it is not really an invasion of privacy. Strangers haven’t and the more they feel targeted, the more they will treat these ads as what they really are, spam.