Behavioral marketing raises privacy issues

Source: Union Tribune

If you use Yahoo’s Web search engine to learn about hybrid cars, the site will quietly note that you fit into a group of users it calls “Consciously Cruising.”

If you click on ads for moving companies you will join the “Home Hopping” group. Shop for wedding cakes and reception halls, and you might be tagged as a future bride or groom.

Earlier this year, Yahoo introduced a computer system that uses complex models to analyze records of what each of its 500 million users do on its site: what they search for, what pages they read, what ads they click on. It then tries to show them advertisements that speak directly to their interests and the events in their lives.
Yahoo and the many other companies building similar systems say they are benign because they typically do not collect personal information such as names and addresses.

“We are much more conservative than we need to be” in using information about site visitors, said Usama Fayyad, chief data officer at Yahoo.

Still, just how personal even “anonymous” information can be was shown vividly last week as a list of three months of search queries from 657,000 AOL customers began circulating online. Collectively, a person’s Web searches, it turns out, can create an eerily intimate portrait – one that some privacy advocates say should never be assembled and stored in the first place.

But Web companies still are refining their techniques.

Advertising on search engines is a $14 billion-a-year business because the ads can be tied so closely to what people are looking for. Yahoo’s system is meant to use search queries and other actions to select ads people see while checking their e-mail and reading other pages.

AOL is working on a similar system to display ads for products related to a person’s Web search history. Microsoft’s MSN just introduced technology to do the same. Other companies use systems that bring together information about users from across many sites.

Internet companies call this behavioral targeting, and it is based on the insight that knowing what people do online can be more valuable to a marketer than knowing how old they are or what they do for a living.

“Search behavior is the closest thing we have to a window onto people’s intent,” said Jeff Marshall, a senior vice president of Starcom IP, an advertising agency. “When people are gathering information to make a choice, that means they are often going to spend money.”

Many Internet users have no idea that records of their actions are being collected and used. They might find out about these practices only if they read the fine print of Web site privacy policies.

AOL’s release of search data has led some privacy advocates and legislators to call for new limits on how Web sites and advertisers keep and use information about online behavior.

AOL has apologized for the release, saying that its research unit had not been authorized to publish the records. It removed the data from its site, but copies are still available online.

Not all of the behavioral marketing involves search engines. Technology from companies such as DoubleClick and AOL’s Advertising.com unit allows marketing messages to follow people around the Web.

Starwood Hotels alerts members of its frequent-guest program to new promotions by placing ads that will be shown only to people who have previously visited its Web site. These ads can find customers in unlikely places, like the vast social networking site MySpace.

While most MySpace users are more likely to spend money on soda and sneakers, some of the site’s 100 million members do stay in Starwood’s Westin or Sheraton hotels and will see the ads.

Cingular Wireless uses a similar approach to advertise to people who have started shopping for a phone.

“You are no longer targeting people you think will be interested in your product,” said Les Kruger, a senior marketing manager at Cingular. “We know based on your behavior that you are in the market, and we can target you as you bounce around the Internet.”

Most of these marketing systems use “cookies,” unique numbers that a Web site can place on a computer to spot return visitors. Cookies also are used by companies such as Advertising.com that place ads and track visitors across many sites.

Shopping sites such as Amazon.com use cookies to greet returning customers by name. Many of the targeting systems try to avoid recording personally identifiable information, such as a person’s name and address.

In the late 1990s, an outcry about an earlier wave of marketing schemes led to some restrictions on how data is shared among sites and rules that allow users to specify that they do not want to have some data collected about themselves. These options rarely are used.

Yahoo and most of the major Internet companies do not sell profile information to others, as magazine publishers and credit card companies often do. They want to profit directly from the information they gather.

Web publishers sometimes do trade information among themselves – often simply what sites a particular computer has visited. Seevast, an Internet advertising company, pays Web sites to place its cookies on the computers of users that visit them. That way, Seevast will know more about those users when it chooses which advertisements to display on sites in its network.

Fayyad of Yahoo said Internet companies were walking a fine line.

“If you get bombarded by ads for minivans on Yahoo, even if you are interested in minivans, it becomes creepy,” Fayyad said. “If you want to do this responsibly, you have to restrain yourself.”

He said Yahoo’s new system is based on monitoring for 300 types of behavior – some as detailed as having shopped for flowers in the past two days – but it does not keep records on more sensitive topics, such as specific medical conditions.

Still, Fayyad says some level of targeting is necessary for Internet companies to avoid the fate of television networks.

“Every time I serve the wrong ad to the wrong person, I am training that person to tune out,” he said.

This entry was posted on Wednesday, November 8th, 2006 at 10:47 amand is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.