Cracker of an Issue

Untangling the Web of Online Advertising and Privacy

Friday, August 12, 2005

Contextual Advertising meets Behavioral Targeting

According to this article, Google is supposedly testing a program that will allow AdSense publishers to submit demographic and psychographic data about their audiences, which will be used to determine which ads Google sends. The pilot started late last month, and the objective is to eventually provide it to all AdSense publishers. So, should we expect another privacy backlash when this pilot is rolled out across the web? Probably not. Firstly, it appears that Google will not be tracking behavioral data or using any data of its users for this program. Instead, publishers will be responsible for sharing this data with Google if they choose to do so. The important aspect of this development is that Google has in a small way embraced the potential that behavioral targeting offers and therefore wants to explore what can be done with contextual placements, when they are combined with knowledge of user behavior and interests as well as demographic information.

The competition

Of course, Google is not alone in its endeavors. Yahoo and Microsoft are ramping up efforts to challenge Google’s search advertising initiatives and behavioral targeting is a crucial component being used by both. Yahoo recently expanded its existing Yahoo Publisher Network to include small and medium-sized web publishers and plans to include a feature that enables publishers to suggest certain ad categories that are likely to be relevant for the audience. Further, Yahoo is also testing behavior-based content ads using data collected by Revenue Science.

MSN on the other hand is currently working on a new paid-search solution as part of its MSN adCenter platform, which is being tested in France and Singapore. Currently limited to sponsored search listings, MSN’s adCenter will incorporate demographic information and behavioral targeting and will allow advertisers to know a searcher’s gender, age and lifestyle category (based on the searcher’s psychographic and demographic profile). In what appears to be a bold move, (unlike Google) MSN will get this data from its registered users who sign up for Hotmail, Messenger, or other personalization services at MSN. MSN will eventually give advertisers a self-service platform for the paid-search solution in AdCenter that will rival Google's AdSense program and the Yahoo Publisher Network.

An information sharing explosion

If behavioral targeting is going to play an important role in the fight for dominance between Google, MSN and Yahoo, what does the future hold for consumers? What happens when Yahoo, Google and MSN partner with companies in the behavioral targeting space like Revenue Science, Tacoda, AlmondNet, Accipter , Kanoodle-24/7, aQuantive (who are all looking at expanding their reach). What if you throw Claria in the mix and make adware an integral component of reaching more consumers and learning more about their online behavior? There will be data sharing at so many levels that no consumer can possibly be in control over what information is collected, used, and shared online. Personal information submitted to websites during registration and saved personal preferences will be combined with behavioral data and search terms and search history to build detailed consumer profiles and provide more targeted advertising so that no consumer will ever have to see an irrelevant ad ever again. Sounds a little extreme, but it's an advertiser's dream come true and the biggest nightmare for a paranoid consumer.

Be responsible

Advertisers want more user data, and Google, MSN and Yahoo obviously understand the privacy concerns. Therefore, they are in a great position to be open and transparent about their data collection, use and disclosure practices and can also lead the way in educating consumers about possible benefits of responsible information sharing. However, if these Internet giants don't tread cautiously and fail to keep a tab on consumer sentiment, they are likely to face several roadblocks before they can truly achieve the goal of using the Internet to turn advertising into a targeted, precise and extremely profitable media.