Tattertech Blog

I took longer getting to this one than I planned, because shortly after writing the first post the FTC came out and (shockingly) did the correct thing on the topic of privacy.  The FTC announcement can be read here, but the general point is that the industry should have the opportunity to police itself.  This is a great way for the FTC to say they’ve looked at the issue while changing very little.  Most major players in the market already have opt-out language available, and shortly before the FTC announced these principles AOL even announced more robust opt-out abilities. As the news is fairly old at this point, I won’t go any further into the FTC announcement (plenty have covered it already).

Instead I’ll just cover some major points on the issue in general:

As it stands with most behavioral tracking, no personally identifiable data is stored in the cookie.  With a few exceptions, all that is tracked is that a browser navigated to a site that demonstrates something deemed of value (perhaps looked at a sports article).  That browser cookie space then carries either the data itself or a link back to data that ties the browser to sports content.   Advertisers are then targeting simply anonymous groups of browsers with a sports value.  No personal information is passed to the advertisers and it does track you anywhere outside of that browser’s cookie space.

Now with something such as Beacon the issue gets cloudier.  This no longer occurs behind the scenes with anonymous identifies but rather clearly linking your identity with the advertisement and worse yet, displaying to a third party (your friends).  Typical behavioral advertising is simply a transaction between the advertiser and your cookie space (resulting in only you see ads related to your behaviors).

Again, as the issue has been beaten to death lately, I’ll cut the privacy discussion short but in my opinion with a reliable opt-out provided, the benefits of better matching ads to me outweigh the non-issue of a cookie (that I can delete manually anyway if I don’t trust the company)  that just has some data about certain types of sites I’ve been on.

Thanks to Google/DoubleClick, the FTC, and of course most recently, Facebook, privacy concerns have become front and center on the internet. While I’ll touch on the privacy concerns later (and thoughts on how to mitigate them), it’s important to first have a conversation on who benefits from behavioral advertising and why.

To properly scope the discussion - and to give the most basic background on what behavioral advertising means I am discussing here advertising that uses data determined from the user’s actions prior to showing the ad as behavioral (stored by cookie or login). Most likely this will concern tracking that the user visited some site or section of a site and using that to determine what ad to show to the user. This can obviously be across ad networks or within a publisher or portal.

So who benefits? Let’s start with the obvious…

The Advertiser:

It’s not difficult to see how the advertiser can benefit. In the case of a remarketing campaign, the advertiser gets to push the message to user’s who have already shown interest and push the user towards converting (or at least visiting again). Even outside of remarketing, the advertiser can tailor a message to an individual with specific interests or seek users likely in the market for the advertiser’s products/services. The advertiser can focus their efforts on the correct types of users (at least if they understand their customers) and cut out wasted impressions.

The Publisher (and/or Ad Network):

This one’s not too difficult to understand either. In this case the publisher (or ad network depending on the circumstance) can demand higher price from the advertiser because of the increased relevancy and value of each impression. And the publisher doesn’t even have to use up their most valuable impressions on the advertiser. Instead of having to put the ad on the front page or next to the applicable content (inventory that is already valuable and has a high price), the publisher can provide the same level of value outside of those premium impressions. This means greater monetization across their entire inventory. The location is no longer the primary concern for price, but rather the user being reached.

The User:

And here’s the crux of the deal - the end user benefits too. Rather than seeing useless ads that have nothing to do with actual interest, ads are delivered that are relevant to current interests. A greater debate about the good of advertising aside, a person interested in purchasing a car in the next few months is going to be more interested in ads related to cars than ads about cellphone plans. Behavioral even in its most simplest form is the recommendation engine of the internet advertising. It funnels the long tail of advertisements to the users that are potentially the most interested.

In short:

• The advertiser reaches the proper potential customers with the least waste.
• The publisher/network potentially increases the value of its least valuable inventory and drives higher margins/revenue without increasing page views or other metrics.
• The actual user sees more relevant ads instead of random clutter and hopefully derives some value from the advertiser’s directed message.

The largest cost in this ecosystem (although there are some technology and scaling concerns behind the scenes) is the user’s sense of privacy while I’ll tackle in my next post (such riveting topics as opt-in vs. opt-out, acceptable tracking, etc).