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Marketers need to tread carefully when contemplating behavior based advertising

Posted by John Horniblow on Jul 17, 2009 in General, Online Media |

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Reposted from http://blog.label.ch

The behavioral advertising tracking platform Phorm hit the news again last week as the UK ISP Talk Talk followed a move by BT (British Telecom) when they canceled their trials with the company.

It comes as no surprise to me. Phorm has developed technology which collects information on web use in order to serve Internet users with highly targeted adverts and serves ads to people based on their web-browsing behavior. Relying on deep packet inspection, in which every data packet is opened and examined, Phorm builds a profile of consumer’s web-surfing habits. The service surreptitiously tracks and interpolates their behavior without disclosing itself or without asking permission.

BT (British Telecom) had conducted two trials of the Phorm technology, without obtaining the consent of the broadband customers involved, leading to allegations of illegal activity from its customers, peers and privacy campaigners. This led to a lawsuit initiated by the European Commission against the UK government for failing to comply with European data protection laws.  Apparently BT completed a further trial in December 2008 and following further and obvious consumer backlash, it deleted its forums discussing the technology.

Phorm is not a consumer-based service, or entertainment or publishing network that provides an obvious value to the consumer by servicing a need.  Its an online advertising network that centers around gathering intelligence and contextual serving of advertising, Phorm’s mistake is that it doesn’t use the good manners approach of asking the consumers permission (the 1st step in any relationship based marketing is to ask permission) so it is in breach of any trust a consumer might have in the platform.  Here in lies its problem, collecting intelligence on a consumer’s browsing habits or behaviors, without them knowing is an invasion of privacy.  Google, also cited over privacy concerns in recent years, currently collects and stores information from each search query, holding information about the search query itself, the unique IP address and details about how a user makes their searches.  Google is different to Phorm in that it doesn’t intercept and spy on content a person is browsing, but its not benign either. It stores the search behavior and attaches it to an identifiable IP address.

The controversy surrounding Phorm’s technology is probably going to continue but I don’t think that this will stop the adoption of behavior based advertising; Quite the contrary.  What is apparent in Phorms case there is a clear breach of trust with the consumer and technology is viewed as “snooping” or spying technology. The only question that remains, is Phorm considered as a spyware? Uncannily spyware is  where the company has it roots and effected larger commercialization of the technology under going a name change to Phorm. They are not the only company doing this type of tracking. Consider Google’s Adsense, it calls its behavior based tracking  “interest based targeting” or DoubleClick’s DART cookies.  DART cookies are used to serve ads specific to a consumer and their interests (”interest based targeting”).  The ads served to a consumer are targeted based on their previous browsing history. In closed and permission based systems companies are able to apply simple or even complex business intelligence to apply predictive models on consumer behaviors.  This is not new nor is it “snooping”, its consensual. In CRM systems these behaviors are tracked as type of consumption, frequency of consumption, volume of consumption, and the demographics of the persons consuming, whether it’s a product or a service.  Highly targeted advertising will fast become the norm and its already is in deployment in many forms. It will become more intelligent as the web approaches the emergence of the semantic web. The mantra of right message, right time, right place will not only be online but across all digital channels. Consider these notes made in the past two weeks by  UK based Sky TV.  They are continuing to promote high-definition (HD) television—partly because even non-HD television viewing appears to rise in HD households—and because they will develop “addressable ads” for launch within two years.

The reason is purely driven by data points it knows and controls. The consumer accounts, their location, viewing times and programs are all at their finger tips.  Sky can profile the viewing interests and habits of its subscriber households, and will be able to sell ads matching those interests and charge advertisers a premium for more personalized and targeted advertising.

Marketers need to tread very carefully when it comes to personalized or more specifically behavior based advertising—and for good reason. People currently perceive it as an invasion of their privacy in online media. As the world become more connected these concerns may change, but there will be many more privacy battles and barriers to overcome similar to Phorm’s case in the near future.  In the HD TV world it will most likely not be viewed as such. TV is still a passive medium and advertising is still interruption based. In mobile it will be a serious issue, the phone is very personal , users need to control what, who has access to engage with them. In Online people don’t feel comfortable about being tracked its too much like “big brother” behavior, but are okay in disclosing small pieces of information about themselves if there a value proposition attached.

Studies  are showing that a majority of consumer are willing to provide information in exchange for personalized ads. The key will be only if marketers give them something in return. Better offers, value added services that entice a consumer to part with a little bit of information to participate in direct, relationship driven, and possibly socially driven marketing. What’s clear today is that there is a  huge distrusts , consumer and government backlash against companies that use spyware technologies to track behaviors.

Marketers beware! Ask Permission first!

This blog is published and maintained by John Horniblow AKA BladeDigital ™ : On the Cutting Edge

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[...] Consider Google’s Adsense, it calls its behavior based tracking “interest based targeting” or DoubleClick’s DART cookies . DART cookies are used to serve ads specific to a consumer and their interests (”interest based targeting”). …Next Page [...]


 

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