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In my post on Monday, I discussed the privacy concerns that have been raised in the wake of a court order, requiring Google to provide Viacom with 12TB of data that includes information on the viewing habits of individual YouTube users.

The YouTube case ties in with a broad subject that industry, privacy advocates and lawmakers have been grappling with.

That is, what privacy rights should consumers have in an age, when the technologies designed to track their online activities and to target them with advertising keep getting more invasive and advanced?

The US Senate's Commerce Committee will be holding a hearing on behavioral targeting today, demonstrating that these questions are increasingly attracting the attention of government.

A recent study conducted by research firm TNS Global at the behest of TRUSTe and issued by eMarketer found that:

"39.4% of survey participants are not comfortable with advertisers using their browsing history to serve up relevant ads, even if personal identifiable information cannot be tied to their name".

But I was less intrigued with the figure demonstrating that consumers are not keen on behavioral targeting than I was with the figure showing just how effective consumers say such targeting is.

As reported by News.com:

"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."

Ouch is correct.

After billions upon billions of dollars have been invested in the technologies that are supposed to be helping digital marketers deliver more relevant advertising to users, the fact that these technologies are apparently still failing to do so the vast majority of the time calls into question whether such investments can ever bear fruit.

Personally, I'm skeptical about behavioral targeting for the simple reason that I think the general logic behind it is flawed.

Just because my demographic profile, interests and browsing habits are known does not mean that I can be targeted effectively.

There are three primary reasons:

  • While this data allows a digital marketer to make assumptions about the types of advertisements that may interest me, those assumptions arederived indirectly and are naturally going to be quite general. They will likely fail to be nuanced enough to be as accurate as the advertiser hopes.
  • I, like many other internet users, may be adept at ignoring even the most appropriately targeted advertisements because at the time they are displayed to me, I am not receptive to them - even if they are fairly well-targeted.
  • The advertising inventory a digital marketer has available may not be well-aligned with the advertising I'm going to respond to. It's worth noting that a relatively small number of big-budget advertisers spend huge amounts of money on CPM advertising. What these advertisers are trying to sell me is often of very little interest even if the digital marketer thinks I would have an interest.

At the end of the day, I think it's worth contrasting the complexities of behavioral targeting with the simplicity of search advertising.

In the former, large amounts of data are collected and sophisticated algorithms must be applied to that data in an effort to determine what advertising the user likely "wants" to see - at the expense of privacy.

In the latter, the user essentially reveals what advertising will likely be of interest through the search terms used - with no "invasion of privacy" reasonably required.

Additionally, in the former, intent is not always present while in the latter, it quite often is.

Obviously, while search advertising is a billion-dollar market, it's relatively limited in scope when one considers all of the other "places" online where advertising is displayed.

Yet I think a valid argument could be made that search advertising is online advertising's " killer app " despite the fact that behavioral targeting is considered by some to be the " holy grail ."

That is, no matter how hard we try to improve behavioral targeting technologies, search advertising is generally the most ideal online advertising model that can be implemented.

In search advertising, the user is actively searching for something and based on the search terms, relevant advertising may be displayed. Additionally, intent does not need to be "created" because it likely already exists.

In other words, search advertising currently makes the most of the medium.

This is not to say that other models will fall by the wayside or that there isn't room for improvement and innovation.

But when it comes to enabling a wide range of advertisers - from individuals to Fortune 500 corporations - to effectively and efficiently advertise their products and services to consumers online, I think the search advertising model is hard to beat - regardless of the flaws in the popular CPC system.

Unfortunately, the increasingly invasive lengths to which companies are willing to go in an effort to make behavioral targeting work reflects the fact that these companies don't recognize that throwing more technology and data at the problem isn't likely to work.

As they say: "When you have a hammer, everything looks like a nail."

Drama 2.0

Published 9 July, 2008 by Drama 2.0

237 more posts from this author

Comments (4)

Linus Gregoriadis

Linus Gregoriadis, Research Director at Econsultancy, Centaur Marketing

I think that the amount of money that advertisers are ultimately willing to pay for behaviourally targeted advertising is a better indicator of its effectiveness than consumers' stated opinions about how relevant these ads are to them.

To my knowledge, there aren't - yet - many case studies around which show exactly how effective behavioural targeting is, but it seems that advertisers are willing to pay more for this type of advertising because it drives better results.

Publishers, networks and agencies are all clambering for a slice of the action because the basic principles behind it are very sound, even if it isn't going to make them as rich as Google.

It's true that many advertisers continue to get great ROI from search (although PPC inflation is reducing this) but that doesn't mean there is no room at the party for display advertising, any more than it spells the end of traditional forms of advertising such as television or radio.

There aren't many companies that would take the risk of switching off all their offline and online display advertising and rely purely on paid search for sales and word of mouth for consumer mindshare.

Different types of marketing and advertising (and different media or channels) serve different purposes, and the most sophisticated advertisers are working out how they are working in conjunction, rather than just thinking about the last click.

I agree that Wunderloop, Revenue Science and Phorm may not be the new Google, Yahoo or MSN, but technology which makes advertising more effective is to be welcomed (assuming that consumer privacy is respected and protected). Behavioural targeting will soon become a given of online advertising rather than a differentiator assuming that public hysteria is avoided.

Whether behavioural targeting is bad for consumers is open to debate. There has been some negative PR in this area but it's a question of education and perception as much as anything else. Behavioural targeting comes in different shapes and sizes. I agree that the search model has beautiful simplicity but fears around data collection could just as easily be applied to Google.

over 8 years ago

Drama 2.0

Drama 2.0, Chief Connoisseur at The Drama 2.0 Show

Linus: I think you make some valid points.

One point that I would disagree with is that "the amount of money that advertisers are ultimately willing to pay for behaviourally targeted advertising is a better indicator of its effectiveness than consumers' stated opinions about how relevant these ads are to them."

There is no shortage of "dumb" advertisers who throw money at ineffective campaigns (both online and offline). Thus, in this case, I wouldn't rush to the conclusion that just because advertisers are willing to spend more money here means that it's driving results that are significantly better. On Madison Avenue a lot of buys get made with less-than-credible justifications.

I think the efficacy of behavioral targeting is worthy of more research. It would be interesting to:

1. Comparing consumer perceptions about targeted display advertising to actual advertiser results.

2. Including other measurements (i.e. brand recall, etc.) in the analysis.

I'd argue that behavioral targeting is already a given in online advertising but as the privacy complaints mount, there will be challenges and if the results from these campaigns are not proven to be significantly better, brands may want to ask: why are we paying more for results we're not getting and why are we using advertising techniques that consumers (and lawmakers) don't like just to achieve these less-than-desired results?

Finally, you are absolutely correct about Google, but I think a distinction should be made: Google does not *need* to collect nearly as much data as it does to deliver effective search advertising.

over 8 years ago


Donald Hamilton

I too was extremely intrigued by the figures showing how effective consumers believe behavioural targeted advertising is. Not in the least because I simply do not understand how consumers can know when they are being served a targeted ad as opposed to a random one? Targeted ads do not appear with a disclosure notice stating they are there as a result of targeting so I am confused as to how the survey was conducted. Perhaps I’m simply missing something here but do let me know the answer if you have it.

I also think that the statistics presented are somewhat misleading – in particular that stating ‘only 12.6 percent of respondents said that more than a quarter of the targeted ads they were delivered were relevant ‘. When those of us in the online advertising game talk about consumer responses to adverts, we get excited about 0.4% click-through rates so, in context, a 12.6% positive response to 25% of the adverts is actually pretty exciting to see. Behavioural targeting never claimed to have all the answers nor to offer a complete solution – BT is concerned with improving relevance, not offering a magical solution - you’ll never get ads which are 100% relevant for 100% of the people all the time.

The issue of improving relevance becomes even more important when we think about the current economic climate. Advertising budgets are being slashed and people don’t want to spend a penny more than they have to. BT offers companies a way to pay for less ad space - rather than throwing thousands of ads out there and hoping a lucky few hit the right people, BT sends out less to consumers who are more likely to react positively to the ad. It reduces wastage and as people begin to understand this, BT’s popularity will soar – especially if we enter a recession which unfortunately seems to look alarmingly more likely ever day.

I also wanted to mention search advertising and your claim that it is ‘the most ideal online advertising model that can be implemented’. I agree that there is a place for search advertising and also that it can be extremely effective. However, it is a mistake to lump search advertising and BT together simply because they are both ‘digital’. In actual fact both are offering a solution to two very different advertising needs – creating desire for a product and promoting your particular product over that of your competitors. As you rightly state, people who are exposed to search adverts have already engaged with a product – they’ve already made up their mind that they want to buy a camera, a new mobile phone or visit a spa for the weekend. A BT ad on the other hand is often there in order to make people aware of a product they are not necessarily currently in the market for – its aim is to create brand awareness so the next time that person decides they want a new pair of sunglasses they might just remember that ad they saw last week and then search for it. Used in conjunction, search and BT would surely be a formidable duo.

over 8 years ago



I also wanted to mention search advertising and your claim that it is ‘the most ideal online advertising model that can be implemented’. I agree that there is a place for search advertising and also that it can be extremely effective.

about 8 years ago

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