Tracking Consumers on the Web: Smart Targeting or a Little Creepy?

What you do when you aren’t searching— the other 95 percent of the time you spend online—is pure gold to advertisers. And companies such as Yahoo!,, Voila, and Naseej are busy mining that gold, helping advertisers to target ads based on just about everything you do on the Internet. Yahoo!, the Web’s most visited destination, has an estimated 131 million monthly unique visitors to its sites. By dropping “cookies” onto every Web browser that calls up one of its sites, Yahoo! has amassed a staggering amount of data about its users.

Yahoo I’s head of research and data, Usama Fayyad, rides herd on the 12 terabytes of user information that flow into Yahoo!’s servers every day. Fittingly, Fayyad is a former rocket scientist whose résumé includes a seven-year stint at a jet propulsion lab. He’s an intense numbers guy who went on to found two data-mining companies, one of which he sold to Yahoo!. Fayyad and his group crunch all that online user data, blend it with information about what people do on Yahoo I’s search engine, and feed it into models that predict consumer behavior. This has led Fayyad to an important conclusion: What you do on the Web reveals far more about you than what you type into a search box.

Interestingly, however, many consumers don’t seem to mind. Occasionally, the monitoring of discussion groups itself becomes a topic of online conversation. In one online car forum, a discussion of BuzzMetrics (a Nielsen company that specializes in tracking consumer-generated media, including online exchanges) and its research for General Motors produced no objections—just disbelief that the carmaker could listen to their conversations and still produce such unappealing products. Consumers often moan that companies do not listen to them. Perhaps the monitoring of discussion groups can provide an answer to that problem.46

Consumers may also have been taken in by previous “research surveys” that actually turned out to be attempts to sell them something. Still other consumers confuse legitimate marketing research studies with promotional efforts and say “no” before the interviewer can even begin. Most, however, simply resent the intrusion. They dislike mail, telephone, or Web surveys that are too long or too personal or that interrupt them at inconvenient times.

Increasing consumer resentment has become a major problem for the marketing research industry, leading to lower survey response rates in recent years. Just as companies

Armed with this mass of data, Yahoo! often sells ad space based not on a site’s content but on an individual consumer’s online behavior. Say you spent time at Yahoo! Autos sizing up cars based on fuel efficiency, then clicked over to Yahoo!’s Green Center to read about alternative fuels, then looked at cars on eBay (which has a partnership with Yahoo!). Fayyad can probably predict your next move. In fact, he says he can tell with 75 percent certainty which of the 300,000 monthly visitors to Yahoo! Autos will actually purchase a car within the next three months. And the next time you visit Yahoo! Sports or Finance, you’ll likely see ads for hybrid cars.

Also moving quickly into online display advertising are a special breed of behavioral targeting advertising agencies, such as Tacoda ( and Revenue Science ( To get an even broader view of what consumers are thinking and doing online, such agencies track consumer behavior across multiple Web sites. These companies “are, in effect, taking the trail of crumbs people leave behind as they move around the Internet, and then analyzing them to anticipate people’s next steps,” says the analyst. This lets them merge audience data from one group of sites with ad placements on another. So if you surf home lawn and garden sites, don’t be surprised to see ads for Scotts lawn products the next time you visit Or if you seek car-buying advice at sites such as or, expect to see some ads for the very types of cars you researched the next time you visit your favorite ESPN site to catch up on the latest sports scores.

But what about consumer privacy? Yup. As you’ve no doubt already considered, that’s the downside and the biggest danger to the rapidly expanding world of behavioral targeting. As the practice becomes more common, it faces growing consumer backlash. One observer calls it “the dark art of behavioral ad targeting”—eavesdropping on consumers without their knowledge or consent. “When you start to get into the details, it’s scarier than you might suspect,” says the director of a consumer privacy rights group. “We’re recording preferences, hopes, worries, and fears.” A coalition of privacy groups has already asked the U.S. Federal Trade Commission, for example, to consider a “Do Not Track” list (akin to telephone Do-Not-Call lists) to let consumers opt out of behavioral ad targeting.

Some companies are addressing such privacy issues on their own. For example, AOL recently launched a campaign to educate consumers about online behavioral targeting and promises improved technology for opting out of personalized ads. “We want to make the opt-out process as simple and transparent as possible,” sales AOL’s chief privacy officer. Google has pledged to make the data it collects anonymous after 18 months and to expire cookie files after two years. has gone even further, pledging to make Web searches and cookies anonymous after 18 months and to give users the option of deleting their search histories using a tool called AskEraser.

Despite privacy concerns, proponents claim that behavioral targeting benefits more than abuses consumers. “What we have here is person-centric marketing,” says the CEO of Tacoda. “That’s been the holy grail of brand advertisers for a long, long time.” Behavioral ad targeting takes information from users’ Web browsing behavior and feeds back ads that are more relevant to their needs and interests.

Although the practice may seem sinister to some consumers, advertisers like what they see so far. According to one survey, more than half of marketers already use behavioral targeting and another third plan to start this year. U.S. companies alone spent $350 million on behavioral targeting last year and will spend an estimated $1.65 billion annually by 2009. According to one research firm, dollars spent on behavioral targeting yield a 37 percent return on investment.

Still, it won’t be easy to maintain consumer trust while at the same time walking the fine line between personalization and privacy. And as more and more companies enter the behavioral targeting ad space, the chances of the tactic getting a bad name grow. “We have something new and powerful,” says Tacoda’s CEO, “and there are likely to be people who abuse it.” Abusive or beneficial, it’ll be a hard sell to consumers. As one analyst observes, following consumers online and stalking them with ads just “feels a little creepy.”

Sources: Based on information found in Paul Sloan, “The Quest for the Perfect Online Ad,” Business 2.0, March 2007, pp. 88-92; Thomas Claburn, “Call Off the Wolves,” InformationWeek, November 12, 2007; Brian Morissey, “Limits of Search Lead Some to Web Behavior,” Adweek, March 27, 2006, p. 11; Sam Matthews, “Behavioral Targeting Still Not Appreciated,” New Age Media, December 14, 2006, p. 2; Brian Morissey, “Aim High: Ad Targeting Moves to the Next Level,” Adweek, January 14, 2008, pp. 49-50; Louise Story, “To Aim Ads, Web Is Keeping a Closer Eye on You,” New York Times, March 10, 2008; and Jonothan Lemonnier, “Contextual Targeting Boost Loyal Following,” Advertising Age, April 14, 2008, p. 7.

face the challenge of unearthing valuable but potentially sensitive consumer data while also maintaining consumer trust, consumers wrestle with the trade-offs between personalization and privacy. Although many consumers willingly exchange personal information for free services, easy credit, discounts, upgrades, points, and all sorts of rewards, they also worry about the growth in online identity theft. One study found that 62 percent of consumers express concern over personal privacy when buying online, an increase of 47 percent over a year earlier. So it’s no surprise that they are now less than willing to reveal personal information on Web sites.47

The marketing research industry is considering several options for responding to this problem. A One example is the Council for Marketing and Opinion Research’s “Your Opinion Counts” and “Respondent Bill of Rights” initiatives to educate consumers about the benefits of marketing research and to distinguish it from telephone selling and database building. The industry also has considered adopting broad standards, perhaps based on the International Chamber of Commerce’s International Code of Marketing and Social Research Practice. This code outlines researchers’ responsibilities to respondents and to the general public. For example, it says that researchers should make their names and addresses available to participants. It also bans companies from representing activities such as database compilation or sales and promotional pitches as research.48

Many major companies have now appointed a “chief privacy officer (CPO),” whose job is to safeguard the privacy of consumers who do business with the company. IBM’s CPO claims that her job requires “multidisciplinary thinking and attitude.” She needs to get all company departments, from technology, legal, and accounting to marketing and communications working together to safeguard customer privacy.49

The credit card company American Express, which deals with a considerable volume of consumer information, has long taken privacy issues seriously. The company developed a set of formal privacy principles in 1991, and in 1998 it became one of the first companies to post privacy policies on its Web site. Its online Internet privacy statement tells customers in clear terms what information American Express collects and how it uses it, how it safeguards the information, and how it uses the information to market to its customers (with instructions on how to opt out).50

In the end, if researchers provide value in exchange for information, customers will gladly provide it. For example,’s customers do not mind if the firm builds a database of products they buy in order to provide future product recommendations. This saves time and provides value. Similarly, Bizrate users gladly complete surveys rating online seller sites because they can view the overall ratings of others when making purchase decisions. The best approach is for researchers to ask only for the information they need, to use it responsibly to provide customer value/and to avoid sharing information without the customer’s permission.

Misuse of Research Findings

Research studies can be powerful persuasion tools; companies often use study results as claims in their advertising and promotion. Today, however, many research studies appear to be little more than vehicles for pitching the sponsor’s products. In fact, in some cases, the research surveys appear to have been designed just to produce the intended effect. Few advertisers openly rig their research designs or blatantly misrepresent the findings; most abuses tend to be subtle “stretches.”

For example, the choice or wording in a survey can greatly affect the conclusions reached. One Black Flag survey asked: “A roach disk … poisons a roach slowly. The dying roach returns to the nest and after it dies is eaten by other roaches. In turn these roaches become poisoned and die. How effective do you think this type of product would be in killing roaches?” Not surprisingly, 79 percent said effective.51

Recognizing that surveys can be abused, several marketing associations—including the European Marketing Confederation, Marketing Research Association, and the Council of American Survey Research Organizations (CASRO)—have developed codes of research ethics and standards of conduct. For example, the CASRO Code of Standards and Ethics for Survey Research outlines researcher responsibilities to respondents, including confidentiality, privacy, and avoidance of harassment. It also outlines major responsibilities in reporting results to clients and the public.52 In the end, however, unethical or inappropriate actions cannot simply be regulated away. Each company must accept responsibility for policing the conduct and reporting of its own marketing research to protect consumers’ best interests and its own.

Author: Kenneth Fillmore


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