Congress Scrutinizing Online Ad Targeting

All kinds of online publishers (including news organizations) that rely on advertising for revenue are either already targeting ads to specific users, or they’re considering that option. The thinking goes that if ads and content are more relevant to specific groups or individuals, then people will probably consider them more valuable and respond more in ways that support publishers’ and advertisers’ business models.

However, today the Washington Post reports that Congress is taking a closer look at whether certain kinds of ad targeting constitute privacy invasion, and thus should be curbed. At issue is behavioral targeting: serving ads or content based on someone’s Web browsing behavior, either on the Web at large or within a particular site or site group.

The House Energy and Commerce Committee has been investigating behavioral targeting by major Internet companies like Google, Microsoft, and Yahoo. Yesterday the committee published letters from nearly 30 online giants offering responses to the Congressional inquiry. According to the Washington Post, Rep. Ed Markey (D-Mass.) “said he and his colleagues plan to introduce legislation next year, a sort of online-privacy Bill of Rights, that would require that consumers must opt in to the tracking of their online behavior and the collection and sharing of their personal data.”

While search engines and telecos are certainly major players in behavioral targeting, they definitely aren’t the only ones. Many news organizations also employ this technique to boost ad response rates (and revenue). Also, this February ClickZ reported that Yahoo has begun testing behavioral and geo-targeting across its growing network of newspaper publisher sites. It’s quite possible that any legislation aimed at Internet providers and search engines also could affect what happens with ad targeting on news sites.

Today on Businessweek’s Blogspotting, Heather Green observed, “Until now the standard generally for data collection has been opt out. …Opt out is optimal for companies because most people don’t do it. As we wrote on Friday, in July, Yahoo said that 75,000 users — a fraction of one percent of the traffic it sees on its network — visited an opt-out page to refuse behaviorally targeted ads across the non-Yahoo sites on which Yahoo serves ads. The [Internet] companies believe that that is because most people actually like targeted ads. But it could also be that most people don’t understand the kind of targeting that’s going on. Because in surveys when they are asked about it, they don’t like being targeting.”

To support her last point, Green cites a March 2008 survey by TrustE which found that 57 percent of the 1,015 respondents “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.” Of course, TrustE is hardly unbiased about online privacy issues — it sells privacy accrediting services to site owners.

It’s way too early to know whether Markey’s planned legislation will become a reality. However, any site that uses on behavioral targeting should watch this issue closely. An opt-in requirement could not only affect the ad rates you charge, but also could be costly and complex to implement — and probably not worth the investment, since few site visitors would probably use it anyway.

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