Blog Post

Will Privacy Concerns Take the Boom out of Online Ads?

[qi:014] The world eagerly awaits the Facebook’s social advertising platform, likely to be announced on November 6th at the Ad:Tech conference in New York. The new advertising innovation is said to be a rival to Google’s (GOOG) AdSense, prompting some to label the opportunity big enough to deem Facebook a (ludicrous sounding) $100 billion company.

Add to this upcoming announcement, recent frenzy of mergers and acquisitions, and private equity investments such as the $100 million infusion into Specific Media, what you have is a online advertising (bubble or) boom of unprecedented proportions.

Much of this fervor is inspired by behavioral targeting, where advertisers can use sophisticated cookie technology to highly target ads to individuals. The same behavioral targeting approach, however is beginning to risk the ire of privacy advocates and is coming under extreme scrutiny by the US Government.

Privacy Groups are proposing a do-no-track list, which is I guess a web version of the dubious, Do-not-call list. According to Advertising Age, “Privacy advocates say current standards for collecting such data, such as the Network Advertising Initiative, don’t do enough to safeguard consumers against the potential pitfalls of data collection, and that most consumers don’t understand how such data is being used.”

The debate, which so far seems to restricted to the Beltway crowd is starting to spill into the mainstream press. This being the political season, and privacy concerns being politically-popular fodder, expect to see more noise level, which might result in if nothing, increased headaches for online advertising companies.

The groups backing this Do-Not-Track-List are your usual suspects: the Center for Democracy and Technology, Consumer Action, Consumer Federation of America and the Electronic Frontier Foundation. The Federal Trade Commission is going to host a Town Hall entitled “Ehavioral Advertising: Tracking, Targeting, and Technology” starting today.

Google is responding by setting up a Google privacy channel, and attending the FTC Townhall. Other advertising industry executives such as Dave Morgan, chairman of Tacoda, a company owned by AOL dismisses their concerns and says this is an “advocate looking for a cause.” (What’s ironic, is that his dismissive attitude is in sharp contrast with his corporate master, AOL’s willingness to play ball. “We want to make the opt-out process as simple and transparent as possible,” Jules Polonetsky, AOL chief privacy officer was quoted by WebProNews.

He might be right – most of us are irritated by advertising and find that most of the time it is irrelevant. Better focus of advertising with certain degree of annonyminity is acceptable to many if not all Internet users.

But that kind of behavioral targeting might soon take a backseat to more individualistic targeting. Facebook’s social advertising plans revolve around leveraging user information and their relationship information – something that should give a chance to privacy/consumer advocates to get their bullhorns ready, volume turned to maximum.

13 Responses to “Will Privacy Concerns Take the Boom out of Online Ads?”

  1. Microsoft + Facebook = Facesoft, social advertising, a term so ugly, matching an engaging interactive activity with brand pushing is like the mailman handing you your mail in the morning already opened and giving you a quick summary of it all!

    This is the advent of a very big bubble, when we have to ask, ‘when did we come to expect everything for free?’, where is the option to pay a nominal sum, say $1 per week for Facebook and be spared the mail reading and banner ads for Russian dating agencies? How much advertising can the net sustain? Google’s effective simplicity has driven a gold rush for a slew of ever more technologically advanced systems of profiling and ad serving, but no one stopped to ask whether the consumer wants this and we are left with a glut of tech snooping and mediocrity.

    Let pay Lord Facesoft, let me pay!

  2. I don’t think the mass market will get up in arms over privacy issues online. Why not? It doesn’t really bother them.

    But start getting phone calls at home at 7:00 pm from marketers you came across online…then you’ll see an outcry.

  3. Ads presented all over the place, even when behavior oriented does not get too far. Google is successful because the ads are delivered when one is LOOKING/SEARCHING for something.

    Google holds the best card in three of these:
    Google Search/Google Maps/Google Email. Atleast for now.

    Social network is not going to make that much of a difference – proven by Myspace having more pageviews, but far less revenue than Google almost consistently.

  4. What is with this thing about privacy invasion and all that with the Internet?

    I’ve just recently set myself up with a satellite connection due to my remote location and I am a new Interneter. I am presently learning to keep company with all sorts of fresh information from fresh people and, yet, all I keep reading about is this sneaky mucking about that I am supposedly exposing myself to when I web about.

    I found this site linked up with my own new site (we’re apparently on the same service). This web spot is singled out as a “hot” spot, so to speak, as it says on the little box to the right of my screen.

    Then, I web over here and, again, I read about this spying thing.

    For what’s it worth, I like this webbing about, as it slices away the bitter parts of the loney, foggy quiet. So, I intend to carry on nonetheless. Here’s a web spot connection link to what I think these spies can learn about me and my webbing about. cheers to you all from Blind Channel, B.C., Tadhg (it’s pronounced ‘tagged’)

  5. I think the privacy issue is going to be so big and complicated that it might not even be worth the trouble. If advertisers target us based on our Facebook profiles does this mean that no matter what sites we travel to we are going to see the same advertisements over and over again? On paper it seems like a good idea but in reality I don’t think it’s going to be that groundbreaking or even very effective, especially when you take into consideration how people are going to feel when their private profiles are going to be used by people you don’t even know, to bombard you with ads that you probably don’t even want to see… we’ll see I guess.

  6. What the biggest issue might be is that people do not realize that these companies are digging deep into your search and storing that info. Sure its all for the better serving of ads and SERPS but the average users does not know that data is being collected in such a manner. Thats why its a beltway topic becuase the average person does not even realize its happening.

  7. Google, Facebook, and a host of other bright minds understand that “The most effective way to cope with change is to help create it” (L.W. Lynett).

    Let’s hope that the outcome of this debate creates a solution that both advertisers and consumers will appreciate.