The future of behavioral targeting is in danger. With an ongoing Congressional investigation and growing privacy concerns, it looks as though consumers and regulators are not keen to have advertisers track web surfing behavior online. But there's another side to the story — does behavioral targeting even work?

The idea is that by following users online, they can get a clearer idea of people's buying habits and serve more relevant advertising to them. If that is not true, the case for behavioral targeting falls apart. And if preliminary results from Google's nascent attempts are any indication, BT does not appear to be working for the search giant.

According to Jim Brock, founder of PrivacyChoice, chairman of Attributor, and former senior VP at Yahoo, Google's “interest-based advertising” only reaches about 25% of AdSense sites. 

When Google launched the service in March, the company went out of its way to distance itself from behavioral targeting, pitching "interest-based advertising" as a way to serve more relevant advertising.

At the time, Nicole Wong, Google's deputy general counsel, wrote in a blog post:

"Providing [interest-based] advertising has proven to be a challenging policy issue for advertisers, publishers, Internet companies, and regulators over the last decade. On the one hand, well-tailored ads benefit consumers, advertisers, and publishers alike. On the other hand, the industry has long struggled with how to deliver relevant ads while respecting users' privacy."

But so far, it looks like Google's approach to the matter isn't showing impressive returns. Brock divided the number of links to Google’s privacy policy (227,000), a requirement for the behavioral targeting program, by 1 million — the number of AdSense publishers listed in the company’s third-quarter earnings — to find that only about a 1/4 of publishers are using the service. That does not bode well for its future.

"Interest-based advertising" may have only been around for half a year, but if publishers were excited about the opportunity, it should be getting some traction by now. Publisher and advertiser privacy concerns may be one reason that they're not signing on, but if it was really making them money, those concerns would be short lived.

As TechCrunch puts it:

"If these ads were performing significantly better than regular AdSense ads, there would be a stampede to adopt them more broadly."

Meanwhile, Brock's research has found that Google has so far been slow to actually track user interests to target. So far, Brock has found that only one in four Google users has interests that Google has deemed valuable to advertisers.

In light of the considerable downsides of behavioral targeting (privacy concerns and a gross consumer misunderstanding of what happens with their personal information online), it needs to prove its value to advertisers to have a fighting chance in Congress.

Considering the shift toward sharing personal information publicly online, it seems likely that advertising will shift toward using information voluntarily shared online. Meanwhile, Google failing to succeed in BT is not a complete indictment of the practice, but unless BT is bringing in greater revenues for advertisers, it hardly seems worth fighting for.

Meghan Keane

Published 30 October, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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