A coalition of advertising industry trade groups have agreed on new guidelines for privacy related to behavioral targeting on the Web. Officially released on Thursday and expected to go into effect early next year, the set of principles concern what advertisers can do with personal data collected in order to zero in on target audiences.
The groups involved are the American Association of Advertising Agencies (4A's), the Association of National Advertisers (ANA), the Direct Marketing Association (DMA), and the Interactive Advertising Bureau (IAB).
The guidelines take the form of seven principles, ranging from a commitment to better consumer education about behavioral targeting, to a focus on keeping potentially sensitive data secure.
"Consumers deserve transparency regarding the collection and use of their data for behavioral advertising purposes. I am gratified that a group of influential associations--representing a significant component of the Internet community--has responded to so many of the privacy concerns raised by my colleagues and myself," Federal Trade Commission (FTC) commissioner Pamela Jones Harbour said in a release.
"These associations have invested substantial efforts to actually deliver a draft set of privacy principles, which have the potential to dramatically advance the cause of consumer privacy. I commend these organizations for taking this important first step."
Lawmakers have paid close attention to the evolution of online behavioral targeting over the past few years, especially as the vast amount of personal data on social networks makes it possible for advertisers to target more and more specific niches. Some have even suggested that behavioral targeting should be opt-in by default.
Last month, several subcommittees of the U.S. House of Representatives Committee on Energy and Commerce hosted a hearing about behavioral ad standards, and executives from companies like Facebook, Yahoo, and Google testified. At least one of those companies has come out publicly in support of the new guidelines.
"One of the key strengths of the principles is the fact that they apply to a broad range of companies participating in online advertising--advertisers, publishers, and ad networks," a post about the new measures on Google's public policy blog read.
A stealth start-up on Monday plans to take the wraps off a new advertising data exchange designed to connect publishers and advertisers so they can target ads to Web surfers. The privacy pitch: consumers can tweak the advertising data held about them.
The start-up, Bellevue, Wash.-based BlueKai, is taking a novel approach in an otherwise crowded new market for Internet advertising technologies. Many start-ups, ad networks, and Net media giants are honing technologies to leverage vast troves of data about people online so that they can tailor ads to their behaviors, preferences, or demographics--so-called behavioral ad targeting. One targeting trick is to collect data about what someone does at one site, (e.g., reading a Las Vegas travel article at CNN.com), and then target an ad (e.g., cheap flights to Vegas) while they're visiting another site.
BlueKai CEO Omar Tawakol
(Credit: BlueKai)BlueKai wants to play middleman in that equation. With BlueKai's exchange, sites like AutoBytel can sell anonymous data about the people, for example, who have configured a BMW Mini Cooper on its site in the last month. (AutoBytel would use a tag called a cookie to identify that person's computer, without a name or address.) Then sites like CNN.com could buy that data (in the form of identifying cookies) so that when those people show up at its site, BMW could show a Mini Cooper ad.
BlueKai CEO Omar Tawakol said data exchanged on its service is anonymous. To participate, publishers, sites, and advertisers must agree not to combine personally identifiable information about people with non-identifying cookies. Consumers will also be able to see what information is linked to them (cookies on their PC) in BlueKai's registry database, which will launch Monday. Data might include the person's ZIP code and interests like luxury cars, BMWs, Las Vegas travel, and so on, depending on how often they visit BlueKai's partners.
"We're creating a data economy, where you can get data from a seller to a buyer as long as they meet privacy rules and make the payment. Our job is to set the rules, ensure payment, and guarantee some notion of quality," said Tawakol.
The consumer registry, he said, is meant to get people accustomed to the idea that their data is worth something. For now, BlueKai will let people give to charities like the March of Dimes by maintaining data on the site, but five years down the road they might invest their data like they invest money.
BlueKai's online ad model, keeping consumer privacy in mind.
(Credit: BlueKai)"We need to stop trading data in the shadows," he said.
Tawakol, who previously worked at behavioral ad targeting company Revenue Science, said this is the first ad exchange focused on so-called intent data, meaning that people have demonstrated an explicit interest in buying a product or service. Ad experts say such intent data is why search engines like Google have had so much success--people simply type what they want into the search bar and a related ad appears. BlueKai aims to do the same thing to improve the targeting of banner or display ads by trading intent data from sites related to auto buying, travel, and shopping.
A publisher like video site Tremor can go to the exchange to buy data for 3 million people who are in the market for an SUV, for example, demonstrated by whether they've configured a car. Tremor can then upsell to those people from Ford, General Motors, or another SUV maker. Like Google, the exchange is based on bid pricing, meaning that advertisers bid against each other for the data. Advertisers or publishers may pay half a cent for a unique cookie, or in the case of the 3 million SUV shoppers, $15,000 for the campaign. But just like with search, the cost varies by the type of consumer.
BlueKai's Tawakol compares the idea to the direct mail marketing business. Offline, marketers call up a data company like Axciom to buy the names and addresses of household decision makers in a certain ZIP code, for example. Then they would take that data and create a campaign.
He said that there's a huge opportunity to take data from sites like Orbitz or Amazon.com to establish shopper intent.
"The behavioral targeting problem is when you rely on context, like someone reading about travel so you assume they're going to book a ticket somewhere, whereas if they go to a travel site, they book something. You know more than Google does about that potential travel," he said. "Buyer data specifies exactly what the user wants."
Consumers buy-in
Still, consumers will need to buy in, too.
"It's already a large opportunity but the Holy Grail is if it becomes something consumers buy into. If they think of it as something they care about and view it as something improving their Internet experience, then you're entrenched," said Ali Partovi, founder of music site iLike who's an angel investor in the company. Partovi founded LinkExchange in the dot-com heyday.
Founded in December 2007, BlueKai has raised a total of $4.7 million from Redpoint Ventures and other angel investors. The company makes money by collecting a percentage of the money exchanged between sellers and buyers of data, but Tawakol would not disclose the split.
So far, only two companies participating in the exchange, Autobytel and video site Tremor, have gone public about their relationship with BlueKai. But Omar said it has relationships with many of the top 10 advertisers, publishers, and travel, auto, and retail sites. All of its partners, however, have had to agree to privacy standards and potentially change their privacy policies to notify people that they are sharing cookie data with a third party. They also must allow consumers to remove specific details, such as travel or shopping interests, or to opt out altogether through a link to the NAI, or the Network Advertising Initiative.
BlueKai's exchange also does not require sites or advertisers to disclose their name to a buyer or seller, but the company will guarantee a site's status and allow a company to say which sites it won't work with.
Marc Rotenberg, executive director of the Electronic Privacy Information Center, has been a critic of the NAI and industry self-regulation. The NAI, he said, has an opt-out system in which people must maintain a cookie on their computer to prevent other Web sites from profiling them, which is counterintuitive to privacy-conscious people who would typically delete all of their cookies.
"In the original , when they were targeting people based on preference without knowing who they are, we thought that was great. But of course the model changed very quickly, and Internet ads started to link names with cookies," Rotenberg said.
"Where we stand now is that the government should regulate any company that's collecting any personal identifiable information. The company should be liable for any misuse of the data, including security breaches," he said.
"And if there's commercial value I think it should be shared with the individual," he said.
A slide illustrating BlueKai's privacy approach.
(Credit: BlueKai)
Veoh Networks, an online video start-up featuring content such as Lost, ESPN SportsCenter, and The Bachelorette, has begun a beta test of advertisements geared to users' earlier video-watching history and other activity at the site.
The new ad system "combines video consumption, searching, browsing, and community activity data from Veoh's more than 28 million viewers to deliver branded ads and content to viewers across multiple lifestyle and interest categories," the Los Angeles-based company said Monday. Tests of the system showed targeted ads perform more than twice as well as ordinary ads, the company said.
Behavioral advertising offers the promise of more closely matching advertisements to people who are likely to be interested, but they've led to controversy because of privacy issues stemming from potentially close monitoring of people's online activity. They've been a particularly touchy subject at social-networking sites, where users store a wealth of personal information and connections to friends and other contacts.
Behavioral advertising as a concept spans a range of monitoring possibilities: everything from showing ads related to what a user is doing on a site at a particular moment, to including the user's history of behavior on that site, to incorporating the user's personal profile data or contacts, to monitoring all of a user's Internet activity.
Veoh is optimistic about the technology, though.
"With more than a billion video views every quarter, Veoh is in the unique position to observe viewer behaviors and patterns across various forms and sources of content at an unprecedented scale," Veoh Chief Executive Steve Mitgang added in a statement.
The initial system will target ads to more than nine categories of users, but the company also can set up customized categories around specific advertiser preferences, Veoh said.
Marketers ought to be aware that some consumers are suspicious about the phenomenon known as "behavioral targeting," a new report from eMarketer says.
Called "Behavioral Targeting Attitudes: The Privacy Issue," the report released Friday explores the digital ad strategy, which collects consumer information and uses it to serve up ads that they may find interesting or relevant. This has been the basis for high-profile programs like Facebook's Social Ads and MySpace's HyperTargeting, as well as Google's extraordinarily successful AdSense. (That's why you'll see ads for vacation homes in Gmail after you've been e-mailing back and forth with your friends about wanting a weekend getaway.)
The takeaway point from the report: "Consumers want ads that are relevant to their needs, but they have mixed feelings about how that relevancy should be determined."
eMarketer cited a TrustE study which found that 70.5 percent of Internet users polled seemed to be decently aware that their browsing activity could be tracked by third parties for advertising. But only about 23 percent of them said that they were OK with having their behavior monitored, even if they were assured that the data would not be shared and no personal information would be divulged.
Targeted advertising is an extremely sensitive subject, with privacy advocates on both the left and right ends of the political spectrum voicing concerns. Internet service providers have been criticized for behavioral-targeting campaigns, questions of legality continue to arise, and top executives at tech companies have been brought into the debate.
The study suggested that advertisers should ensure that consumers are educated on the fine print of behavioral targeting, and that they're offered an opt-in choice. "One way to ensure that consumers welcome rather than reject behaviorally targeted ads is to ask them to give their consent to receive them," a release about the report wrote. "Tell them about the real benefits of saying yes, including more-relevant advertising." That's what the Internet Advertising Bureau has recommended, too.
But perhaps a more serious issue for the ad industry is accuracy. The TrustE numbers cited by eMarketer said that only 12.6 percent of respondents said that more than a quarter of the targeted ads they were delivered were relevant. Ouch.
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