Cracker of an Issue

Untangling the Web of Online Advertising and Privacy

Tuesday, August 16, 2005

Future of Internet Advertising- Let consumers control their information?

For decades, advertisers tried incredibly hard to get their message across to the right consumers. Then, the Internet came along and promised a real solution to this challenge by making it easy to know as much as possible about individual consumers. It opened up some fascinating possibilities in targeted advertising, but presented a new challenge of how to leverage consumer data to achieve advertising goals, while addressing consumer privacy concerns.

According to “The Future of Advertising is Here”, Inc. Magazine, August 2005, the power of the Internet is beginning to spread into the real world and perhaps just five years from now, companies will be able to routinely and inexpensively embark on ad campaigns that hit exactly the right prospects -- and hardly anyone else -- with entertaining, hard-to-ignore messages that can follow people via new high-tech media into their cars, offices, living rooms, and bedrooms.

What about consumer privacy?

The above article provides some very interesting information on where advertising might be heading next, but seems to glaze over the privacy challenges that such a future presents. For example, while discussing behavioral targeting services, it accurately points out that these powerful new services do not capture personal information such as names or e-mail addresses -- only surfing habits -- and even then follow only people who have opted in to the tracking (this bit is not entirely accurate). Further, it refers to the results of a 2004 survey by the Ponemon Institute, which found that two-third of Internet users believe better targeted ads would be less annoying, and 45% would share personal information in exchange for that advertising relevance. Although the 2004 Ponemon survey presented some interesting and surprising results, I don’t think it can be used to jump to the conclusion that a majority of Internet users will opt to participate in these sorts of services. Moreover, a new survey has found that although consumers want a more personalized experience online, fewer of them are willing to divulge personal data now than last year.

Further, although behavioral targeting companies proclaim that they allow advertisers to get the right audience without ever identifying individual users, the truth is that such data is often combined with personally identifiable information (PII) about Internet users. For example, this article describes that the more publishers can understand about the people who visit their sites, the better targeting options they can offer to advertisers. Further, what makes services such as behavioral targeting so promising is that it can be combined with personal information which consumers voluntary provide while registering on websites, providing answers to surveys and questionnaires, entering sweepstakes, etc. This data can further be combined with data from external sources to obtain precise profiles of who is on a publisher’s website. Therefore, by merely taking PII out of the picture, behavioral targeting services fail to address the larger concerns with data sharing, data aggregation, and the fact that consumers have little or no control of what is done with their information

Addressing consumer concerns

Although, it is easy to get caught up in the intricacies of whether PII is used and how Privacy Policies are anyway carefully crafted to include myriad forms of data sharing, it is important to not lose sight of the primary consumer concerns that can result in resistance to emerging advertising solutions. If you narrow down privacy concerns of consumers, you can probably conclude that it boils down to the fact that consumers want to be assured that information (whether personally identifiable or not) that is collected about them is:
  • kept secure (so that unauthorized third parties do not get hold of their information);
  • not shared with third parties without their knowledge or consent; and
  • not used to bombard them with annoying marketing messages.
At the crux of the above concerns is a lack of consumer control over their information and a lack of trust in entities that collect such information. Firstly, giving consumers more control over how much data they provide is key to establishing trust. Secondly, consumer education can also play a critical role here and is probably the missing component that could have prevented the debate over cookies from being re-ignited in the age of spyware. Lastly, just as technology based solutions like anti-spyware programs are now allowing consumers to identify and delete unwanted software (and unfortunately cookies too!), wouldn’t it make sense for companies that are breaking new ground with targeted advertising to invest time and resources to design products that allow consumers more control over their information?

Handing back control

Luckily, there might be some help along the way from academia. A recent article regarding UC Berkeley's quest for the ultimate search tool discusses privacy-related research being done at Carnegie Mellon University’s Language Technologies Institute. CMU is reportedly perfecting a technology for personalized search that would solve some of the privacy concerns surrounding search engines. CMU has developed an add-on application that people download to a PC and will allow users to maintain and modify personal information, such as a query history, preferences, and favored sites, within a search profile. A search engine would be able to query the profile, along with the user's search term, to deliver a set of tailored results each time, thereby keeping personal information off the network and on the client's desktop. The technology is expected to be ready within a year and CMU might either offer it as open-source software or license it to industry players.

Such a technology could obviously have implications beyond search engines and if widely adopted and accepted by consumers, could result in targeted advertising that puts consumers in control over what exists in their profiles, without having their information collected, stored, and shared by entities online. Of course, it is not going to be a one-stop solution to online privacy concerns, but could be incorporated into certain online advertising technologies, whereby little or no data is transmitted and stored outside a consumer’s computer.

On the other hand, CMU’s proposed technology could end up having an insignificant impact on privacy concerns related to online advertising. However, if companies that are shaping the future of advertising could only focus some of their pioneering efforts on providing consumers with more, if not complete control over their information, they could pave the way for increased acceptance of new advertising technologies, while alleviating consumer fears and creating a new consumer experience when it comes to online advertising.

Sure sounds like a better future of advertising (at least from a consumer’s perspective).