Do online ads breach consumer privacy?

online advertising How many times a day do you have to click “Skip this ad” in order to read any content online? Quite a few, I’m guessing. Internet advertising supports many websites (except Bizmology, of course), but there’s a new issue in the Internet privacy debate about online advertising, specifically, personalized ads.

With personalized ads, Internet advertisers gather personal information about you through your browser history to determine your demographic and generate ads they hope you’ll click on. As a woman, for example, I would get display ads for female-centric products, and the websites I visit would exempt me from ads for beer or “male enhancement” pills.

Advertisers believe these types of targeted ads are just an extension of what media buyers already do with television. After all, that’s why you don’t see commercials for toys and cereal on the History Channel or Wilford Brimley’s ads for Liberty Medical on the Cartoon Network.

But critics say the data collection process violates online privacy. Some people, even if they don’t think they have anything to hide, don’t want their Internet history used to support market research. Others prefer targeted ads — we all buy stuff online, so why not keep the ads relevant? I’d rather see the latest spring fashions from Bluefly.com than some “Make $$$ working from home” site anyway. Users who don’t want their Internet activity tracked can opt out with the Do Not Track option, but up until a few days ago I didn’t know this was an option.

There is an effort under way to offer a Do Not Track button on all browsers. Until that happens, the Wall Street Journal notes that “even people who clicked on the button were still being tracked because advertisers and tracking companies hadn’t agreed to honor the system.” This would change if the FTC mandates the Do Not Track button, much like they did with the Do Not Call registry. (A more comprehensive beta version on the Digital Advertising Alliance’s website lists what companies are tracking your computer.)

Of course, Internet advertisers who rely on consumer data to develop ads and generate revenue are reluctant to sign off on the Do Not Track idea. According to ZenithOptimedia, a division of advertising behemoth Publicis, $64 billion was spent on digital ads in 2010. Advertisers say much of the content online is free because of advertising, and if users opt out, websites might start charging to view their content.

“If we move too far one way, the people supplying the free content will get together and say we aren’t going to supply the content for free. It’s not like the publishers will offer free content to people who visit their site but don’t want ads tracking them,” Exponential Interactive CEO Dilip DaSilva told the New York Times in 2010, right after the Do Not Track concept was introduced.

Exponential Interactive, which filed to go public last week, has a database that maps over 300 million web pages with more than 50,000 different taxonomies to track user tastes and behavior. Advertisers use the database to display relevant ads. While the company would love for Internet users to embrace targeted ads, it also offers users the choice to opt-out of their data collection efforts on their own website.

Tracey Panek

Tracey Panek retired from journalism at the ripe old age of 29 to work for Hoover's, where she enjoys writing about international and publicly traded companies.

Read more articles by Tracey Panek.

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