Webware

Facebook's targeted advertising program is "materially different from behavioral targeting as it is usually discussed," Chris Kelly, the social network's chief privacy officer, said in remarks prepared for a Thursday morning hearing before two House subcommittees.

"In offering its free service to users, Facebook is dedicated to developing advertising that is relevant and personal without invading users' privacy, and to giving users more control over how their personal information is used in the online advertising environment," read the remarks for two subcommittees of the U.S. House of Representatives Committee on Energy and Commerce.

The hearing, titled "Behavioral Advertising: Industry Practices And Consumers' Expectations," was also slated to include testimonies from Jeffrey Chester, executive director of the Center for Digital Democracy; Scott Cleland, president of Precursor; Charles Curran, executive director of the Network Advertising Initiative; Edward Felten, director of the Center for Information Technology Policy at Princeton University; Anne Toth, vice president of policy and head of privacy at Yahoo; and Nicole Wong, deputy general counsel at Google.

Chris Kelly

(Credit: Kelly2010.com)

Kelly, a White House staffer under President Clinton, has announced an exploratory bid to run for attorney general in California.

Social-media sites like Facebook, where members fill out extensive personal profiles that can detail everything from their music tastes to travel plans to political leanings, are at the forefront of new developments in behavioral ad targeting. The Facebook Ads program lets advertisers fine-tune their campaigns to reach specific demographics and audiences. Kelly insisted that this does not constitute an invasion of user privacy, an Internet-wide concern that the Federal Trade Commission has been exploring at the request of privacy advocates.

"The FTC's behavioral advertising principles recognize the important distinctions made by Facebook in its ad targeting between the use of aggregate, non-personally identifiable information that is not shared or sold to third parties," Kelly's remarks read, "versus other sites' and companies surreptitious harvesting, sharing and sale of personally identifiable information to third party companies."

Privacy concerns are nothing new to Facebook. The social network went through a user backlash over the introduction of its News Feed in 2006, and a bigger one over the controversial Beacon advertising program. More recently, a revision to Facebook's terms of use prompted consumer advocacy blog The Consumerist to highlight language that it said meant that Facebook claimed ownership of user profile data and photos.

"In February of this year, we looked to revise our Terms of Use, simplifying them to cut out as much legalese as possible and explain them in plain language," Kelly's remarks explained. "When we released a first version of our new terms, a blog misinterpreted our simplification of our copyright license, claiming that it meant we were seeking to own user content. The user reaction was predictably swift and severe, and we needed to choose among weathering the storm, revising the language, and introducing an entirely new process that would directly involve users in the governance of the site."

Facebook ultimately underwent a "notice and comment period modeled in part on the federal government's rulemaking procedure...(with) a user vote at the end of the process."

The points he tried to drive home the most: that Facebook members have extensive control over their personal information and that Facebook does not allow advertisers access to "personally identifiable" data in the Facebook Ads program.

Kelly also included a general mea culpa of sorts: "Perhaps because our site has developed so quickly, Facebook may have sometimes been inartful in communicating with our users and the general public about our advertising products," he stated. "We learned many lessons about the importance of user education and extensive control from the imperfect introduction of our Beacon product in 2007. As a result, Facebook continues to be dedicated to empowering consumers to control their information in both the noncommercial and the commercial context because we believe that should be the future of advertising."

A few other interesting tidbits from Kelly's remarks: out of Facebook's 200-million-plus active users, about 65 million are in the U.S.; more than 10,000 sites are using the Facebook Connect universal log-in product; and Facebook plans to continue the discussion-and-feedback-period strategy on any future changes to its "critical site documents."

Lotame, a targeted-ad start-up that focuses on social sites, announced Tuesday that it has raised $13 million in a Series B venture round. The lead investor is Emergence Capital Partners, and existing investors Battery Ventures and Hill Crest Management also contributed. The money, per a release, will be used for "product enhancements, marketing, and business development efforts." Nothing surprising there.

The company's primary offering is a technology called "Crowd Control," which pinpoints discussions on social-media sites related to a particular brand or its niche, and helps that brand get its name on the relevant discussions.

"Forty percent of Internet use is on social networks. This is no longer a wild frontier, and will soon be the primary use of the Internet," CEO and founder Andrew Monfried said in a statement. "Until Lotame, the basics of Internet advertising had not changed to address the unique challenges and opportunities presented by social media. Now advertisers can take full advantage of the basic premises of social networks--the user sets the content agenda and connects other users to ideas." That's a lot of new-media speak, but Monfried now has $13 million backing him up.

Some of Lotame's existing customers include the Huffington Post, Flixster, Fotolog, and ad agency Media Kitchen.

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.

Logo from Kathy Sierra's blog

Tech bloggers are outraged tonight over the taunting and death threats that one of our own, Kathy Sierra, received on her blog and elsewhere (see News.com blog post). In reaction to these threats, Sierra has canceled a trip to the ETech conference that's on now, and called off a presentation she was scheduled to give.

Is the blogosphere unsafe? Is it hostile to women? As Chris Pirillo writes, "The problem isn't with the blogosphere. It's with the human race." That's indeed the core problem. But the Internet amplifies human behavior. With it, bullies and psychotics have an easy-to-access, free, and anonymous channel to lob their fear bombs at their targets. It's horrid.

The Internet also amplifies the good things about us as individuals and as a society. When James Kim and family went missing, the outpouring of support on various Web sites (this one, Digg, others) was overwhelming. And Wikipedia is a staggeringly great community-created product.

The Web is a new social medium and people still have to learn how to live together in it. Sadly, that also means that we need to give up some of our innocence on the Web. One of our editors here, a veteran of TV news journalism, told me that when he was in broadcast, he never let female anchors do public appearances or report on stories from the field without a security escort. Over time, he and the people he worked with learned that such precautions were necessary.

Few online personalities take the same efforts to protect themselves online. From leaving anonymous comments open on blogs, to running pictures of our children on our sites, to posting our whereabouts on open-access publishing platforms like Twitter, many of us show what can only be called a lack of street smarts. Sierra's plight shows us what we can expect if we don't all wise up. We need to be as smart in the virtual world as we are on the streets of New York. We're going to have stalkers and bullies online. But it'd still be a good idea to take a few precautions, and when necessary, to follow up on the worst of the threats, as Sierra is doing.