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Behavioural Targeting – "Smart" Marketing or Dangerous Privacy Violation?

Is the application of online behavioral targeting through the portal players an example of “smart” marketing, as a recent One Degree interviewee suggests or a “hornet’s nest” of potential privacy issues as Cyber-lawyer Eric Goldman suggests. You decide.
“Yahoo!”: Canada’s Hunter Madsen stated in Ken Schafer’s latest “5 Questions interview”: that:
bq. Most advertisers are dabbling in BT [Behavioral Targeting] these days … but the smartest players dived right in more than a year ago, and they’re pulling results that would surprise you.
Leaving aside Mr. Madsen’s objectivity in deciding which “players” get to be considered the “smartest”, I find it interesting that he is the second employee of a major portal to pitch me on “BT” in the last 2 weeks (albeit Madsen’s was an indirect pitch). Clearly, BT is all the rage in the portal community and it’s a race to see which portal player gets the most companies onto their proprietary system.
But, before we all run out and sign deals with the portals in an attempt to be one of these “smartest” players let’s do a quick review of what exactly is being proposed so we can make a marketing decision that is best for our companies and not for one that is best for the portals.

Let’s start with the question of what exactly is meant by online behavioral targeting. I’ll use the example that was used with me to illustrate behavioral targeting at work.
Let’s say that your company has a number of key activities that you would like every customer to do at your site; hit the homepage, register, purchase things, come back, etc. With behavioral targeting, you define these key activities and lay down “tags” (recognizable by a specific portal partner only) at these relevant spots on your site. Think of them like electronic mousetraps. As users walk across the tags, _snap,_ they are caught and a persistent cookie is installed on their hard drive which contains a recording of where they got to within your site’s experience. This recording is helpful information if a user returns to your site but usually the problem you are trying to fix is that users aren’t coming back to your site. Enter the portal play.
Each of the portals will say that they have a committed audience of (some number), where the (some number) will be really big and will likely include all of their properties and services (portals, IM, email, etc.). They will then say that with (this really big number) of regular users on their services, it is highly likely that at some point shortly after a visit to your site, most users will eventually be “catchable” somewhere in their net. When this occurs, the portal will be able to recognize the persistent cookie that was deposited from your site and can hit that user with a targeted ad from you meant to encourage them to go back to your site and do what you want them to do (register, buy stuff, buy more stuff, etc.). Voila, targeted ads based on known behavior with “pretty solid published results.”:
Sounds like a “smart” idea, right?
Before answering, let’s just be clear on what we are doing. We are making a recording of a user’s personal behavior at our site and then we are depositing this recording on their hard drive. We are likely doing so without their direct permission or knowledge. Further, we are then sharing this recording with our friend, the portal guy, and then allowing that friend to make money on speaking to this person is a way that acknowledges that we’ve shared this information. Does it still sound like a smart idea? Maybe or maybe not but certainly it presents us with some important questions to answer. Do you have the direct consent from the user to do all this? Would the user see this as a violation of their privacy if they knew what you were doing? How many web users are getting wise to these tricks and are guarding against persistent cookies being deposited in their computers or are taking issue with the companies they catch engaging in this type of marketing?
I would suggest that just rushing into behavioral targeting certainly does not give marketers an “A+” in smarts and should be well thought out before trying to catch up with Mr. Madsen’s accelerated class of marketers.
Hopefully, we get some good heated comments on this so I’ll stop here and leave you with a comment from a lawyer on this very topic. According to Cyber-lawyer Eric Goldman there’s a “hornet’s nest of laws”: that could be brought to bear on the practice of behavioral targeting if marketers aren’t careful.
Smart comments welcome.


  1. David Dougherty
    David Dougherty September 19, 2006

    Great post.
    The example that you have provided is one of behavioral “retargeting” (If anyone wants to check out an animated demo of how retargeting works – – only one form of BT, which on the surface does sound like things are getting a little more shady.
    In BT publishers provide data to advertisers, retargeting flips this relationship – advertisers, are now providing data to publishers in order to display targeted ads on the publishers sites…somewhat different.
    I would hope that retargeting should adhere to the same privacy standards as other forms of BT – websites that serve BT ads should disclose anything they are doing with the data in their privacy policies.
    I agree with you Michael, I think this needs to be ironed out a little bit more – an opt-out should be present (but I don’t know if retargeting services currently have one – could be wrong). Following consumers around the net and jumping out at them later seems like Behavioural Stalking…However, I guess you can’t deny the value in the model.

  2. ScorpioGirl
    ScorpioGirl September 19, 2006

    Thanks for bringing up these very valid points Michael. These big players offering behavioural targeting seem to have regressed back a few years in terms of privacy policies. I have to say I’m surprised that a company like Yahoo! who places such value on the user’s overall experience and privacy rights would not offer something as simple as the ability to opt-in to this behavioural targeting. But of course, why would they do this… they would just lose a huge percentage of their audience that is so appealing to advertisers. I don’t know about the rest of you, but I don’t like the idea of Big Brother watching every move I make.

  3. Hunter Madsen
    Hunter Madsen September 19, 2006

    Michael Garrity may make a good point about the kind of behavioral targeting network that he describes, which would entail the sharing of user data among websites without disclosing this to the public, and which could thereby court legal and consumer backlash. As Michael likes to say, that’s not “smart”.
    But just for the record, Yahoo! doesn’t do the undisclosed data-swapping he imagines – it would violate the trust of our users – and that wasn’t the kind of behavioral targeting (BT) that I was referring to in the One Degree interview.
    Here’s how BT works at Yahoo! As we explain in plain language to users in our Privacy policy (which is linked on every page of our website), when persons choose to access our huge array of free (ad-supported) content and services, we notice their actions on Yahoo! in the course of serving them. We take note of the kinds of things that each of them seems to be interested in – the pages they visit, the ads they click on, and so forth.
    We keep this behavioral information on hand for a number of days, on an anonymous basis (which means that we associate certain behavioral interests with a given browser, but are careful not to link that browser’s behavioral information to the identity of any specific person).
    When an advertiser seeks to distribute its message to suitable Yahoo! visitors (say, a mortgage lender trying to reach persons shopping for a low-cost mortgage), Yahoo! waits until a qualified browser requests a page of our content, and then sends the requested content to the browser, along with the relevant ad.
    Note that the advertiser is never told exactly which users (or, for that matter, which browsers) have seen its ad. We don’t share such data with others. Even so, the advertiser gets a favorable response to its message, because Yahoo! has done a good job of matching the message with visitors who’d find it intriguing.
    In our view, good service to the Yahoo! community means giving each member an experience on Yahoo! that is well personalized to his or her current interests. While we depend on ad-placements to fund our free services, we also view ads as another form of personalized content for our users. Thus, we are committed to finding ads that each Yahoo! user might actually wish to see, for a change, instead of ads that they regard as irrelevant, untargeted junk. That’s what I mean by ‘behavioral targeting’, and such ad-matching is better for both advertisers and Yahoo! users. That’s what makes it smart.

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