WSJ Begins Online Ad/Privacy Series. Plus Online Marketers Explain Behavioral Targeting, including role of social media for predicting people’s behavior “before they do it”

The Wall Street Journal launched an important new series on the online marketing and data collection/targeting industry.  Julian Angwin and colleagues have the the first main piece entitled “The Web’s New Gold Mine: Your Secrets.”  The subhead underscores what we have been telling policymakers and others for the last several years:  “…one of the fastest-growing businesses on the Internet is the business spying on consumers.” The theme of the series: “Marketers are spying on Internet users – observing and remembering people’s clicks, and building and selling detailed dossiers of their activities and interests.”

They have done a terrific job, including producing a innovative video on how cookies work, including its history online. There are special graphics as well illustrating the data tracking process.  They also discuss the growth of so-called predictive behavioral targeting, including the use of social media.  The OpenAmplify CEO explains “Social media is an amazing opportunity. For the first time in marketing history we have hundreds of millions of people online telling us what they like, what they hate and what they’re going to do before they do it … That’s extremely valuable data.”

Meanwhile, online marketers are preparing to place the forthcoming behavioral ad “icon” from the online ad industry– that’s supposed to help the industry politically head off consumer protection rules.  Here’s how one legal expert working with online marketers, in discussing the icon, describes behavioral targeting:

“Behavioral ads use technology that tracks a user’s surfing behavior on the Internet. Key data includes clickstream data such as searches made, content read, site-visit times, and websites visited. With this key data about a specific user, advertisers can create a behavioral pattern that can be linked to a specific online demographic, which becomes the basis for ads that target the specific demographic…For example, a frequent traveler can be tracked to different locations through geographically different IP addresses, and then by combining this information with cookie data, an advertiser can draw a clear picture of the person’s travel habits – destinations, length of stay, travel frequency, preferred airlines – plus much more.”

I doubt the forthcoming digital data collection and targeting “icon” and its accompanying information will stand the truth test!  How do you explain an entire “ecosystem” of data collection and profiling techniques, including social media marketing, neuromarketing, “immersive” video, online ad exchanges, etc. with a tiny digital [and appropriately named] ‘bug.”

Ad Lobby Research Says Vast Majority of Online Ads Involve Behavioral Profiling & Targeting

The online ad industry lobbying group–the Interactive Advertising Bureau [IAB]–has revealed results from its own research that show the widespread use of behavioral targeting.  In a post on its criticisms of privacy legislation introduced by Chairman Bobby Rush, the IAB explains that:

“In an IAB survey of ad agencies conducted earlier this year, we found that 80% or more of digital advertising campaigns were touched by behavioral targeting in some way.

That means the majority of what consumers do online–including when they deal with sensitive transactions involving their finance, health or other family matters–are being closely tracked and profiled.  In addition, the IAB attacks the important civil rights provisions in both the Boucher/Stearns and Rush bills.  That provision would ensure that data collection about a consumers racial, ethnic or sexual orientation would be better under the control of the individual.   You would think that the IAB leadership, including Google, NBC, CBS, and Disney, would support a policy that would restrict the potential use of online racial profiling.  But the IAB claims these provisions protecting multicultural and other consumers “could constrain multicultural marketing and media…These types of services provide great benefits to their audiences and the proposed restrictions would actually harm the very group of people they seek to protect.”  That’s an irresponsible position.  We should be able to protect civil rights and promote diverse online publishing.
The IAB’s claims that behavioral targeting is anonymous doesn’t hold up to the facts, as well.  The time for action by both the FTC and Congress has arrived.

Multi-Billion $ Stakes for Online Consumers in How Congress Protects Their Privacy and Transactions

It’s time for policymakers to act and protect online consumers–who are at risk confronting a largely invisible, sophisticated, and far-reaching digital marketing system.  It’s useful to see how much was spent targeting U.S. consumers online.  This is from the IAB’s 2009 online advertising revenue report [my bold]:
Retail Advertisers Continue to Drive Consumer Ad Spending –2009 Annual Results
 Retail advertisers continue to represent the largest category of Internet ad spending, accounting for 20 percent of revenues for the full year of 2009 or $4.5 billion, down from the 22 percent ($5.0 billion) reported in 2008.
 Telecom companies accounted for 16 percent of 2009 full year revenues or $3.6 billion, up slightly from the 15 percent ($3.5 billion) reported in 2008
 Leisure Travel (airfare, hotels & resorts) accounted for 6% percent of 2009 revenues ($1.5 billion) compared to the 6 percent or $1.4 billion reported in 2008.
 Financial Services advertisers accounted for 12 percent of 2009 full year revenues or $2.8 billion, down from the 13percent ($3.0 billion) reported in 2008.
 Automotive advertisers accounted for 11 percent of 2009 full year revenues or $2.5 billion, down slightly from the 12 percent ($2.8billion) reported in 2008.
 Computing advertisers represented the fifth-largest category of spending at 10 percent of 2009 full year revenues or $2.3 billion, in line with the 10 percent reported ($2.4 billion) in 2008.
 Consumer Packaged Goods and Food Products represented 6 percent of the full year 2009 revenues ($1.4 billion), in line with the 6 percent or $1.5 billion reported in 2008.
 Entertainment accounted for 4% of 2009 full year revenues ($1.0 billion), up slightly from the 4% ($917million) reported in 2008.
 Media accounted for 4 percent of 2009 full year revenues or $881 million, up slightly from the 3 percent ($764 million) reported in 2008.

[and to underscore its importance, note the definition of financial services online marketing used by the IAB:  Financial Services—includes commercial banks, credit agencies, personal credit institutions, consumer finance companies, loan companies, business credit institutions and credit card agencies. Also includes companies engaged in the underwriting, purchase, sale or brokerage of securities and other financial contracts. 

As well as the $1.5 billion spent last year on:  Lead Generation—fees advertisers pay to Internet advertising companies that refer qualified purchase inquiries (e.g., auto dealers which pay a fee in exchange for receiving a qualified purchase inquiry online) or provide consumer information (demographic, contact, behavioral) where the consumer opts into being contacted by a marketer (email, postal, telephone, fax). These processes are priced on a performance basis (e.g., cost-per-action, -lead or -inquiry), and can include user applications (e.g., for a credit card), surveys, contests (e.g., sweepstakes) or registrations. 

Online Advertising and News: How HuffPost Worked with GE

An excerpt from Ad Age’s interview [June 30, 2010] with Greg Coleman, Pres. of Huffington Post.  Coleman described the online news site as a “social media company,” able to “help our marketers beam their messages throughout the internet, across the galaxy, the internet, and the world.”  One of their advertisers is GE.:

Ad Age: Can you give me an example of Huffington Post’s view on social advertising?

Mr. Coleman: One example is a terrific project we did with General Electric, where GE has this whole campaign on “healthymagination.” We allowed them to run advertising on anything tagged “wellness” across our site — they were looking for positive health information. We then created a special share bar for GE, and any time you tweeted that article or retweeted that article or shared it, the ad module would go with it. So when you shared it with your friends on Facebook, the GE ad module would go there. When you retweeted it, [you’d get] the hashtag “GE healthymagination.” … We’re trying to come up with the real metrics, but we believe that the reach of the campaign is far greater off of our site, as a result of the social tools on our site.

Teens and Online Privacy: Empowering Adolescents to Control How Online Marketers Can Stealithily Target Them and Collect Data

Some commentators–and groups funded by online marketers that target teens–are worried that proposals to the FTC and Congress that adolescent privacy be protected will somehow create a system that requires forms of age verification online.  The coalition of leading consumer, child advocacy, health and privacy organizations filing comments at the FTC last week aren’t calling for the parental permission paradigm used by the Children’s Online Privacy Protection Act [COPPA] be extended to teens.  But there are many online commercial services specifically targeting adolescents–that’s their target market.  It’s those sites and services specifically focused on adolescents that we want to have better privacy safeguards.   We want those sites to be governed by an opt-in regime that gives teen users meaningful control of how their information is collected and utilized.  Those sites should be required to engage in the Fair Information Principles known as  “data use minimization.”  Commercial sites targeting adolescents should make its data collection practices fully transparent and under the control by the teen (including a truly accessible privacy policy).  In another words, a privacy safeguard regime that really should be available for everyone.  Teens are ‘ground zero’ for much of digital marketing–for examples see our site: [especially the update section].  If you look at the reports on that site, you will see that the most recent scholarly thinking is that brain development in adolescents occurs much later than what was once thought.  They don’t have the ability to effectively understand the intent of highly sophisticated interactive marketing and the corresponding data collection which underlies contemporary digital advertising. That’s why empowering them so they can protect their privacy strengthens their rights.

Google, ITA, Travel, Privacy and also Competition

Travel is a major part of the online marketing industry.  But it has lots of privacy concerns–who knows where you plan to go, spend time [in the exact location via geomapping, etc], how much money you generally spend, with your family or on business, etc.  There are a host of civil liberties issues related to commercial and government access to this data.   That’s one of the reasons why competition and privacy regulators around the world should closely critically analyze the proposed Google acquisition of travel information leader ITA Software.

Google is currently expanding its online travel advertising business–and swallowing ITA will undoubtedly boost its market share–and give it access to reams of additional data on consumers and business practices.  For example, in its Seattle regional office, Google is hiring several marketing specialists, including:

*Display Account Manager, Travel:  [“As a Display Account Manager, you’ll sell and manage advertising for the sixth-largest media property in the world and other Google display offerings. You will be a part of the team on the cutting edge of interactive marketing and media. You will drive the online video marketplace forward and engage advertising agencies and brand marketers in programs that move the needle for their companies. The primary responsibility of the Display Account Manager is to drive new business revenue for YouTube and other Google display services and products with Fortune 1000 advertisers across multiple industries.”]   They also want an Account Manager, Travel Vertical and a Display Account Executive, Travel.  Other travel online ad sales jobs are posted for London [“As a Google Industry Manager, Travel you will be working with clients to provide digital solutions for sales & marketing objectives via a variety of Google’s Search, Display and Tools. This job is a mix of finding and managing new and existing business customer relationships, and working closely with the Industry Head to develop Google’s marketplace in the Travel sector. You’ll combine digital media and deep commercial knowledge with strong presentation and communication skills. You’ll own the relationships with clients and agencies, targeting, educating and developing new clients to grow the business in unpenetrated territory.”]; Australia [Account Strategist, Travel Industry].  Plus its DoubleClick division performs travel related online marketing work.  Of course, given Google’s recently expanded role providing mobile ad targeting, via its Admob acquisition, related privacy and competition issues are also raised.