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Where were you online? Advertisers know

Reuters | June 20, 2007
Michele Gershberg

Personal identity has taken on a new meaning in the digital age, where basic facts like your name, address or age are far less important to some people than the collected records of what you were looking at online.

Technologies for monitoring and interpreting Internet habits as a predictor of future behavior cropped up at the start of this century, but only now are gaining momentum as the newest gold mine for Web sites and their advertisers.

Known as behavioral targeting, the premise is to follow the sites you visit and build a picture of what products may interest you, then deliver related advertising in time for you to choose your purchase.

U.S. marketers will nearly double their spending on such advertising to $1 billion next year from $575 million in 2007, according to research firm eMarketer. By 2011, behavioral targeting will surge to nearly $3.8 billion of online ads.

Industry executives say it's a boon to the consumer, who in an ideal world will only receive commercial messages that suit them personally, while enjoying online entertainment or information for free.

"As long as I'm seeing relevant advertising and as long as I am receiving free content, I am a pretty happy person," said Bill Gossman, chief executive of behavioral targeting firm Revenue Science. The company's clients have included media outlets from Reuters Group Plc to Walt Disney Co.'s ABC News and Gannett Co. Inc.'s USA Today.

To protect individual privacy, U.S. companies who sell such services say they do not link the behavioral data with the actual names and addresses of computer users.

"We have no idea of who that individual is and I don't want to know," Gossman said. "What marketers want to know is, what is their intent?"

Critics charge the technologies will only stoke corporate efforts to accumulate an ever-increasing pile of data on a person's behavior whether on the Internet or elsewhere.

"My concern as we give away ever more data about ourselves, our activities, our behavior in the world, our choices ... is that fairly rich data sets can be built up, maybe not in one place but relationally across the Web," said Adam Greenfield, a futurist and user experience consultant.

The greater danger, he said, involves the ability to match data on Web behavior with information such as a person's location, via their cell phones, or commercial transactions.

For a marketer, there is no such thing as too much information when it comes to making a sales pitch.

"The picture isn't complete until you literally plant tracking devices inside somebody's arm," said Emily Riley, an analyst at JupiterResearch. "When I go to the mall, nobody at Google is going to know what stores I have visited."

WHAT'S A DEMOGRAPHIC?

For example, a person comparing automobile brands online is likely interested in buying a car. Behavioral targeting narrows those categories further: Is the car a model that would seat a family? Did the individual inquire about hybrid vehicles, suggesting interest in protecting the environment? Did they also look for an infant's safety seat?

From that data, enough information could be gleaned about a person to know that they might be interested in not just the latest Volvo or Honda model, but perhaps biodegradable diapers as well.

"The ideal is where they literally know your preferences and what motivates you," said Riley. "That is really personalized. If we are at Web 2.0, that would be Web 3.0, where your entire personality is online."

Build a database of such people's habits and you can index their interests to create an "audience" of individuals. They may be at different places online and in the real world, but they all show a preference for environmentally friendly products, or tend to spend more money on shoes than on hats.

That proposition has turned traditional advertising, long dominated by the television commercial, on its head. In the Golden Age of U.S. advertising, a marketer could be confident that buying time for a commercial on three TV networks would reach a wide swathe of the domestic audience.

Those audiences were defined by demographic categories like age and gender. TV networks based the price of their ads on a small sample of the viewing habits of U.S. consumers, charging their highest premium for programs popular among young males.

As people now get their entertainment on everything from cell phones to video games, the audience has dispersed from their living rooms. That makes them harder to track down, but offers the advantage of more precise information once they are found.

Internet advertising agencies are reaping the advantages of these fundamental changes, largely because they help figure out where to find a specific audience and build campaigns tailored to the Internet as a medium.

"This is going to be a Golden Age of advertising," said Scott Howe, president of the DRIVEpm behavioral unit of online marketer aQuantive Inc. "It's the ability to deliver messages in sequence and tell a story. Advertising is going to become fun again. It's going to become serialized."

Howe said behavioral ad campaigns can be just as useful for filtering out certain consumers. In one campaign for a software product, the manufacturer targeted customers who selected the product for their online shopping cart but deleted it before making their final purchase.

The rationale was these customers had already shown interest in the product, and just needed some further incentive to make an order.

"It was the worst-performing campaign. It turned out these people weren't buying the software in the end because it was incompatible" with their computers, he said. The marketer then used the same list of customers to make sure they didn't receive such advertising in the future.

Just try to do that on television.

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