Zappos knows what you did last summer. Or maybe what you did last time you were on the Zappos website. The shoe seller is just one of many companies that tracks customer activity online to serve more relevant advertising.

Such tools have has the ability to make product searches much easier online. But they also creep some people out. And behavioral targeters need to figure out the difference before regulators really start paying attention.

Zappos ads are so smart that they remember past searches and offer similar product images to consumers as they surf the web. For instance, if you go on Zappos searching for black patent pumps, Zappos will then taunt you on various websites with ads featuring glittering heels you probably shouldn’t be purchasing right now (not that I know this from personal experience).

That can get frustrating for writers trying not to spend money. But others don’t like Zappos keeping tabs on them at all. Like Michael Learmonth, who was searching for short pants recently (aren’t those shorts? I don’t know). Learmonth writes at AdAge:

“I abandoned the search and did something else. That’s when the weirdness started.

In the five days since, those recommendations have been appearing just
about everywhere I’ve been on the web, including MSNBC, Salon,
and The Guardian. The ad scrolls through my Zappos recommendations:
Hurley, Converse by John Varvatos, Quicksilver, Rip Curl, Volcom.
Whatever. At this point I’ve started to actually think I never really
have to go back to Zappos to buy the shorts — no need, they’re
following me.”

This isn’t a new reaction to behaviorally targeted ads. But it gets to a point that could be problematic for online marketers — even when ads are pertinent to specific consumers, they may not appreciate them. 

Zappos is testing the limits of targeting with these ads. The company isn’t using particularly personal information in these ads. And it has been sending similarly personalized emails for awhile now. But seeing Zappos deals in a pre-approved format like that eliminates some of the privacy issues, because consumers have asked for such information. It’s different when a person does a product search and then spends days or weeks being followed online by that abandoned shopping cart.

A strong argument for behaviorally targeted ads online is that more relevant ads are better for consumers and brands. But what if consumers don’t want personalized ads — even when they are relevant?

The Wall Street Journal is now conducting an investigation into the market of behavioral targeting that is sure to turn up some inflammatory data. The first article in the series, for example, is titled “The Web’s New Gold Mine: Your Secrets.”

David Moore, chairman of 24/7 RealMedia Inc., an ad network owned by
WPP PLC, gives the standard industry explanation of BT to the Journal:

“When an ad is targeted properly, it ceases to be an ad, it becomes important information.”

But that doesn’t always seem to be the case. Of course, Learmonth’s issue with the Zappos’ ads could just be a question of tone. When consumers become more accustomed to targeting, perhaps ads like Zappos will be everywhere. It’s not an unlikely scenario to imagine that consumer privacy will shift to accept ads like this. 

Already, Zappos says that the response to the ads have been trending more positive than negative. Jim Kingsbur, head of marketing leadership at Zappos,
writes at AdAge:

“Given the breadth of feedback we’re seeing, we’ve been focusing on
trying to give people as much control as possible over the experience
so they can tailor it to their own personal preferences.”

Zappos already gives viewers plenty of explanation about these ads. There is a “Why are you being shown this banner?” link and Criteo, which works with Zappos on the ads, has a clear opt-out page.

But if we’ve learned anything about online privacy, it’s that people generally don’t bother with things like privacy settings. However, they are vocal about not liking being followed online.

Take for instance some of the statistics that The Wall Street Journal tosses around:

“Researchers at AT&T Labs and Worcester Polytechnic
Institute last fall found tracking technology on 80% of 1,000 popular
sites, up from 40% of those sites in 2005.”

Those figures sound disturbing. Even though they don’t elucidate whether those 1,000 popular sites are surreptitiously tracking consumer behavior or simply remembering passwords and other activities that make online surfing easier. And they’re sure to get some people (and regulators) riled up about targeting again.

Behavioral targeting may have brought in $23 billion in ad spending last year, but the market is still fraught with problems. And the Zappos example shows why. Even when behaviorally targeted data is accurate and relevant, people may still decide to freak out. 

Image: AdAge