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TestimonytotheHouseCommitteeonEnergyandCommerce,SubcommitteeonCommerce,Trade,andConsumerProtection,

andtheSubcommitteeonCommunications,Technology,andtheInternet

Forthehearingon

BehavioralAdvertising:IndustryPracticesAndConsumers’ExpectationsJune18,2009

JeffChesterExecutiveDirector

CenterforDigitalDemocracy

SummaryofTestimonyPowerfultechniquesofdatacollection,analysis,consumerprofilingandtracking,andinteractiveadtargetinghaveemergedacrosstheonlinevenuesAmericansincreasinglyrelyonfornews,information,entertainment,health,andfinancialservices.Whetherusingasearchengine,watchinganonlinevideo,creatingcontentonasocialnetwork,receivinganemail,orplayinganinteractivevideogame,wearebeingdigitallyshadowedonline.Ourtravelsthroughthedigitalmediaarebeingmonitored,anddigitaldossiersonusarebeingcreated—andevenboughtandsold.BehavioralTargetingisexpectedtobecomemorewidelyusedwithonlinevideo,mobilephones,andonlinegamesandsocialnetworks,furtherexpandingitsdatacollectionandtargetingrole.Suchconsumerprofilingandtargetedadvertisingtakesplacelargelywithoutourknowledgeorconsent,andaffectssuchsensitiveareasasfinancialtransactionsandhealth‐relatedinquiries.Childrenandyouth,amongthemostactiveusersoftheInternetandmobiledevices,areespeciallyatriskinthisnewmedia‐marketingecosystem.Industryself‐regulation,itisclear,hasfailedtooffermeaningfulprotectionstoconsumerprivacy.So‐called“NoticeandChoice,”whichhasbeenthefoundationoftheself‐regulatoryregime,hasdonenothingtostemthetideofincreasingdatacollectionanduse—allwithoutthegenuinelyinformedunderstandingandconsentofusers.Aswithourfinancialsystem,privacyandconsumerprotectionregulatorshavefailedtokeepabreastofdevelopmentsintheareatheyaresupposedtooversee.Inordertoensureadequatetrustinonlinemarketing—animportantandgrowingsectorofoureconomy—Congressmustenactsensiblepoliciestoprotectconsumers.ThefoundationforanewlawshouldbeimplementingFairInformationPracticesforthedigitalmarketingenvironment.Americansshouldn’thave

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totradeawaytheirprivacyandacceptonlineprofilingandtrackingasthepricetheymustpayinordertoaccesstheInternetandotherdigitalmedia.

ChairmanBoucher,ChairmanRush,CongressmanBarton,CongressmanStearns,CongressmanRadanovich,andMembersoftheSubcommittees,IamJeffChester,executivedirectoroftheCenterforDigitalDemocracy(CDD).CDDisanon‐partisanandnot‐for‐profitorganizationbasedinWashington,D.C.Itsmissionistohelpeducatethepublicabouttheprivacy,consumerprotection,publichealthandcompetitionissuesrelatedtothenewdigitalmediamarketplace.CDD,alongwithourpartnerUSPIRG,thefederationofstatePublicInterestResearchGroups,hasplayedamajorroleattheFederalTradeCommissionondataprivacyandonlinemarketing/consumerprotectionissues.InaseriesofcomplaintsfiledattheFTCin2006,2007andearlierthisyear,CDDandU.S.PIRGpushedthecommissiontoaddressthegrowingthreatstoconsumerprivacyandwelfarethathaveemergedasaconsequenceofmanyonlinemarketingpractices,especiallybehavioraltargeting.1Ihaveworkedoninteractivemarketingandconsumerprotectionissuesformorethanadecade.AsexecutivedirectoroftheCenterforMediaEducationduringthe1990’s,Iplayedakeyrole—alongwithProfessorKathrynC.MontgomeryofAmericanUniversity—promotingprivacysafeguardsforchildren.Thatworkeventuallyledtothepassage,onabi‐partisanbasis,oftheChildren’sOnlinePrivacyProtectionActof1998(COPPA).2Iwanttocommendtheleadershipofbothcommittees,onbothsidesoftheaisle,fortheirstronginterestinensuringU.S.consumersreceiveallthebenefitsofthedigitalagewithouthavingboththeirprivacyandconsumerwelfareplacedatrisk.AsIwillexplaininmytestimonytoday,weareatacriticalmoment.Powerfultechniquesofdatacollection,analysis,consumerprofilingandtracking,interactiveadcreation

1CenterforDigitalDemocracyandU.S.PIRG.ComplaintandRequestforInquiryandInjunctiveReliefConcerningUnfairandDeceptiveOnlineMarketingPractices.FederalTradeCommissionFiling.November1,2006[Online].Availableat:http://www.democraticmedia.org/files/pdf/FTCadprivacy.pdf.AccessedMarch26,2009.CenterforDigitalDemocracyandU.S.PIRG,"SupplementalStatementInSupportofComplaintandRequestforInquiryandInjunctiveReliefConcerningUnfairandDeceptiveOnlineMarketingPractices,"FederalTradeCommissionFiling,1Nov.2007,http://www.democraticmedia.org/files/FTCsupplemental_statement1107.pdf.CenterforDigitalDemocracyandU.S.PIRG.ComplaintandRequestforInquiryandInjunctiveReliefConcerningUnfairandDeceptiveMobileMarketingPractices.FederalTradeCommissionFiling.January13,2009[Online].Availableat:http://www.democraticmedia.org/current_projects/privacy/analysis/mobile_marketing.AccessedMarch23,2009.2ForadetailedcasestudyofthecampaigntopassCOPPA,seeChapter4,“WebofDeception,”inKathrynC.Montgomery,GenerationDigital:Politics,Commerce,andChildhoodintheAgeoftheInternet(Cambridge,MA:MITPress,2007).Ihavecontinuedtofollowonlinemarketingdevelopmentsclosely,includingformybook,DigitalDestiny:NewMediaandtheFutureofDemocracy(TheNewPress,2007).

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andtargetinghaveemergedacrosstheonlinevenuesAmericansincreasinglyrelyonfornews,information,entertainment,health,andfinancialservices.Whetherusingasearchengine,watchinganonlinevideo,creatingcontentonasocialnetwork,receivinganemail,orplayinganinteractivevideogame,wearebeingdigitallyshadowedonline.Ourtravelsthroughthedigitalmediaarebeingmonitored,anddigitaldossiersonusarebeingcreated—andevenboughtandsold.AsBusinessWeekjournalistStephenBakerobservedinhisrecentbook,TheNumerati,inhisdiscussionofthebehavioraladvertisingindustry,“Lateinthepastcentury,tocomeupwiththislevelofreporting,theEastGermangovernmenthadtoenlisttensofthousandsofitscitizensasspies.Todaywespyonourselvesandsendelectronicupdatesminutebyminute.”3

OnlineBehavioralTargetingAmericansdonotknowmuchaboutwhattheindustrycallsthenew“mediaandmarketingecosystem.”Theformsofadvertising,marketingandsellingthatareemergingaspartofthenewmediadepartinsignificantwaysfromthemorefamiliarcommercialadvertisingandpromotionwehaveseenintelevision,forexample.Intoday’sdigitalmarketingsystem,advertising,editorialcontent,datacollection,measurement,andcontentdeliveryareincreasinglyintertwined.Asamajoradvertisingindustryreportonthefutureofmarketinginthedigitaleraexplained,“Theinfluxofdataintomarketinghasbeenoneofthebiggestchangestoplayersacrossthelandscape….Advertisingstrategies,campaigns,anddistributionareincreasinglybasedonpredictivealgorithms,spreadsheets,andmath….EveryWebpage’sindividualviews,everywordtypedinasearchquerybox(alsoknownasthe‘databaseofconsumerintentions’),everyvideodownload,andeveneverywordinane‐mailmaycreateonemoredatapointthatamarketercanleverageandusetomorepreciselytargettheaudience….”4Specifically,fewU.S.consumersunderstandthepowerandintentofbehavioraltargeting,which,noteseMarketer,“segmentstheaudiencebasedonobservedandmeasureddata—thepagesorsitesusersvisit,thecontenttheyview,thesearchqueriestheyenter,theadstheyclickon,theinformationtheyshareonsocialinternetsitesandtheproductstheyputinonlineshoppingcarts.Thisdataiscombinedwiththetime,lengthandfrequencyofvisits….Behavioraltargetspeople,notpages.Thatis,behavioralusestheactionsofapersontodefineitstarget,unlikecontextualtargeting,whichservesadsbasedonapage’scontents….Behavioralinformationcanalsobemergedwithvisitordemographicdata—suchasage,gender,andZIPcode….WhethertrackedbycookiesorISPs,thesortofuserdata3StephenBaker,TheNumerati(NewYork:HoughtonMifflinHarcourt,2008),p.4.4EdwardLandry,CarolynUde,andChristoperVollmer,"HDMarketing2010:SharpeningtheConversation,"Booz/Allen/Hamilton,ANA,IAB,AAAA,2008,http://www.boozallen.com/media/file/HD_Marketing_2010.pdf.

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thatbuildsbehavioralprofilestakesinsearchqueries,Websitevisits,specificcontentconsumed(suchasclicksorplayingavideo),productshoppingcomparisons,productpurchasesanditemsplacedinshoppingcartsbutnotbought.”5U.S.spendingforBTonlineadvertisingispredictedtogrowdramaticallyto$4.4billionby2012(upfrom“only$775millionin2008”).6Itisurgent,fortwocriticalreasons,thatCongressswiftlyenactlegislationthathelpsbringtheconceptofFairInformationPracticesuptodateinthedigitalage.First,wemustensurethatthefreedomofallAmericansisprotectedintheonlineera.Weshouldn’tsanctionthecreationofasurveillancesocietywherepotentiallymanypeople—andgovernment—cangainongoingandcomprehensiveaccesstowhoweareandwhatwedo.Ourchildrenandgrandchildren,so‐called“digitalnatives,”areincorporatingonlinemediaintoalmosteverythingtheydo,suchastextingfriends.Weshouldprotecttheirprivacyandensureweleaveadigitalcivillibertieslegacyforfuturegenerations.Second,consumersmustbeinfullcontroloftheirpersonaldata,helpingempowerthemastheyincreasinglyrelyontheInternettoengageintransactions,includingthoseinvolvingfinancialproductsandhealthconcerns.Aswiththefinancialsectorandacauseofthecurrenteconomiccrisis,regulatorsresponsibleforconsumerprivacyandonlinetransactionshavefailedtoadequatelykeepupwiththedirectionsofthemarketplace—placingmillionsofAmericanspotentiallyatriskwhenengagedwithonlinefinancialservices(suchasmortgagesandloans).Thisandotherhearingsareessentialtohelpinformthepublicthatawholenewworldhasemergedforconsumers:marketingisnowfueledbythemergingofonlineandofflinedatabases,purposefullydesigned“immersive”interactiveadtechniques,trackingandprofilingusersacrosstheInternet,andthegrowinguseofstate‐of‐the‐art“neuromarketing”techniquesfordigitalmarketingfeaturing(asYahooitselfdescribedinApril2009)“brainwavemeasurement,skinresponsetesting,andeyetracking.”7

5DavidHallerman,“BehavioralTargeting:MarketingTrends,”eMarketer,June2008,pp.2,11.Personalcopy.6Hallerman,“BehavioralTargeting:MarketingTrends,”p.1.7ChrisJaffeandJillStrawbridge,“MeasuringOnlineAdEffectivenessUsingAdvancedResearchMethods,”Yahoo.Apr.2009,l.yimg.com/a/i/us/ayc/aa_insights_advrschmeth.pdf.Microsoft,Google’sDoubleClick,andmanyotherdigitalmarketingcompaniesexplainthatdigitalmarketingisdifferentthantraditionaladvertising,particularlyforitsabilitytoofferanimationandmultimedia‐based“immersive”experiences.Suchmarketingtechniquesaredesignedtodeeplyengagetheconsumerwiththecontentofthemarketingmessage.See,forexample,MicrosoftAdvertising,“EmotionalSideofDigitalAdvertising,”Oct.2007,http://advertising.microsoft.com/uk/Emotional‐Side‐of‐Digital‐Adv;MicrosoftAdvertising,“MaximizeReachandresultsthroughRichMedia,”http://advertising.microsoft.com/rich‐media;DoubleClick,“DoubleClickRichMediaandVideo,”http://www.doubleclick.com/products/richmedia/index.aspx;Eyeblaster,“AboutUs,”http://www.eyeblaster.com/Content.aspx?page=about_us(allviewed14June2009).Suchtechniquesaretiedtodatacollectionaswell.

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Protectingconsumerprivacyonlineisalsovitalifwearetoprotectconsumers,whohavealreadysufferedmassivefinanciallossesandotherpersonalhardshipsasaresultoftherecentfinancialdebacle(andwhofaceotherrisks,suchasthegrowthof“IDTheft”anddatasecurityleaks).Mortgageloans,creditcards,andotherfinancialproductsforconsumerswere—andare—beingmadeavailablethroughanonlinemarketingsystemthatisnon‐transparent,unaccountabletoindividualusers,andunfair.Theequationmustbebalanced:consumerautonomyandprivacythatcanfairlycontendwiththetremendouscloutonlineadvertisershavetodaythroughdatacollection,profilingand“micro‐targeting.”8Thereisanurgencyforaction,asthecurrenteconomiccrisisisfosteringanevengreaterrelianceontheonlinemediumbyconsumers.GooglerecentlytoldadvertisersintheUnitedKingdomthat“theslowdownwillspeedupconsumeruseofdigitaltechnology…andgreateruseoftheInternet.”9Wewillseeincreasedconsumeronlineactivityconnectedtocriticalfinancialtransactions—fromonlineshopping,banking,andbillpayingtoapplyingforloansandmortgage—thatgettotheveryheartofoureconomy.10Ifwearetoprotectconsumersfromfurtherpersonalfinancialloss,Congressshouldensurethattheonlinemarketingsystemoperatesinatransparentandaccountablemanner.Iwanttobeclearthatourcallforprivacyandotherconsumerprotectionrulesrelatedtodatacollectionandonlinecommerceisn’taboutunderminingtherolethatadvertisingandmarketingplaysinourdigital‐basedeconomy.Advertisingandmarketinghasandwillcontinuetoplayacriticallyvitalroleforourdigitalmedia.Advertisingrevenuesareacrucialsourceoffundingforonlinecontent.Marketingonlinehasenableda“long‐tail”ofelectroniccommerce,includingfromsmallbusinesses,toemergeandthrive.Weshouldbeproudoftheimpressiveleveloftechnologicalandbusinessinnovationfromthissector.Myconcernaboutthegrowingthreattoourprivacyandrelatedconsumerprotectionissuesstemsnotfromtheactivitiesofasingle—orevenseveral—majorcompaniesinthissector.Rather,itisfromtheoverallcapabilityanddirectionoftheonlinemarketingindustrywhenitcomestodatacollectionmarketingpractices.Itispreciselytoensurethegrowthofonlinemarketingandadvertisingthatconsumerprivacymustbeprotected.Consumersandcitizensshouldn’tbeaskedtoagreetosomeformof8TomAgan,“SilentMarketing:Micro‐targeting,”Penn,SchoenandBerlandAssociates,www.wpp.com/NR/rdonlyres/4D3A7EB2‐9340‐4A8D‐A435‐FDA01DD134D0/0/PSB_SilentMarketing_Mar07.p9Google,“SpeedingUpintheSlowdown,”2008,personalcopy.10“TheApril2009“comScoreStateofOnlineBanking”report,forexample,“foundthatthenumberofonlinebankingcustomerscontinuedtogrowstronglyin2008despitetheturbulentfinancialenvironment.Thegrowthwasfueledbybanks’aggressivecustomeracquisitionstrategiesandheightenedfinancialinterestamongonlinebankingcustomerswantingtokeepaclosereyeontheirpersonalfinances.”comScore,“NumberofU.S.OnlineBankingCustomersContinuestoGrowDespiteChallengingFinancialEnvironment,”21Apr.2009,http://www.comscore.com/Press_Events/Press_Releases/2009/4/2009_State_of_Online_Banking_Report(viewed21May2009).

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trade‐offwheretheylosetheirprivacyandprotectionsinordertoseeamarketplacefinanciallygrow.Withoutensuringmeaningfulpoliciesthatwillpromoteconsumertrust,onlinemarketingintheU.S.willbeunderminedbyalackofconfidence.SomeintheonlineadindustryappeartosuggestthatanylegislativeattempttoplaceconsumersinchargeoftheironlinedatawouldunderminetheeconomicroleoftheInternetmedia.ButIbelievethatbylegislativelycreatingasystemwhereconsumerscanbeassuredthattheirdataareprotectedandtransactionsarestructuredtofurtherempowerthem,trustandconfidenceinouronlinemarketplacewillgrowandthrive.Ifirmlybelievethatwecanprotectprivacyandalsoseetheonlinemarketplaceandmediumprosper.Alongtheselines,IaskedProfessorJosephTurow,Ph.D.,oftheAnnenbergSchoolofCommunication,UniversityofPennsylvania—oneofthecountry’sleadingindependentexpertsondigitalmarketing—torespondtothealarmistcallsfromsomeindustrygroupsabouttheimpactofalawprotectingprivacyonline.ProfessorTurowexplainedthat:

Farfromdestroyingtheopportunityforrevenueinthedigitalworld,amarketplacedistinguishedbyinformationtransparencyandcustomerprerogativescanhelpmovebusinessesinnew,profitabledirections.Thereasonliesintherelationbetweenconsumertrustandthebrand.Itisawell‐acceptedpropositionthatcustomertrustisatthecoreofabrand’sprofitability.Intheworldofmaterialgoods,customertrustprimarilycentersontwoattributes—theaccuracyofclaimsabouttheproductandwhetheritworkswell.Inproductsofthedigitalagethatinvolvecustomerdata,trustcentersonthosetwoattributesaswellastwoothers:transparencyregardingacompany’sspecificusesofacustomer’sinformationandthecustomer’sprerogativetoinclude,withdraw,orotherwiselimittheuseofthatinformation.Whilesomeexecutivesfearthatprovidingcustomerswithinformationtransparencyandprerogativeswillalienatecustomersandreduceprofits,itishighlylikelythatjusttheoppositewillhappen.Moreover,anappropriateregulatoryenvironmentcanencourageanewmarketthathelpsconsumersmakesenseof,andguide,thestreamsofdataaboutthem.11

StudiesShowthePublicisConcernedaboutPrivacyOnline

Surveysconductedbyreputableorganizationshavehighlightedtwoimportantfindings:Consumershighlyvaluedataprivacy,andconsumersareconfusedabout11Personalcorrespondence,14June2009.ProfessorTurowistheauthorofseveralbooks,includingNicheEnvy:MarketingDiscriminationintheDigitalAge(Cambridge,MA:MITPress,2008).

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companyprotectionsofcustomerprivacy.Fewconsumersreallyunderstandthedatacollectionsystemandtargetedadvertisingenvironmentonline.TheUniversityofSouthernCalifornia’sCenterfortheDigitalFuturefoundinitseighthannual“SurveyingtheDigitalFuture”projectthat“almostallrespondentscontinuetoreportsomelevelofconcernabouttheprivacyoftheirpersonalinformationwhenoriftheybuyontheInternet.”12ApollfromtheConsumerReportsNationalResearchCenterfound“72percentareconcernedthattheironlinebehaviorswerebeingtrackedandprofiledbycompanies.”13SurveysbytheUniversityofPennsylvania’sAnnenbergSchoolofCommunicationandtheUniversityofCaliforniaatBerkeleyLawSchool’sSamuelsonLaw,Technology&PublicPolicyClinicalsofoundconfusionaboutcustomerdataandcustomerprivacyprotectionsofferedbybusinesses.14A2008HarrisInteractivepollfoundthatU.S.consumers“areskepticalaboutthepracticeofwebsitesusinginformationaboutaperson’sonlineactivitytocustomizewebsitecontent.”15AJune2009studyfromtheUCBerkeley’sSchoolofInformationfoundthat

…mostofthetop50websitescollectinformationaboutusersanduseitforcustomizedadvertising.Beyondthat,however,mostcontainedunclearstatements(orlackedanystatement)aboutdataretention,purchaseofdataaboutusersfromothersources,orthefateofuserdataintheeventofacompanymergerorbankruptcy.Sharingofinformationpresentsparticularproblems.Whilemostpoliciesstatedthatinformationwouldnotbesharedwiththirdparties,manyofthesesitesallowedthird‐partytrackingthroughwebbugs.Webelievethatthispracticecontravenesusers’expectations;itmakeslittlesensetodisclaimformalinformationsharing,butallowfunctionallyequivalenttrackingwith

12USCAnnenbergSchoolforCommunication,“AnnualInternetSurveybytheCenterfortheDigitalFutureFindsLargeIncreasesinUseofOnlineNewspapers,”pressrelease,28Apr.2009,http://www.scribd.com/doc/15015797/USC‐Annenberg‐School‐Digital‐Future‐2009‐Highlights(viewed14June2009).13ConsumersUnion,“ConsumerReportsPoll:AmericansExtremelyConcernedAboutInternetPrivacy;MostConsumersWantMoreControlOverHowTheirOnlineInformationIsCollected&Used,”pressrelease,25Sept.2008,http://www.consumersunion.org/pub/core_telecom_and_utilities/006189.html(viewed14June2009).14ChrisJayHoofnagleandJenniferKing,“ResearchReport:WhatCaliforniansUnderstandAboutPrivacyOnline,”3Sept.2008,http://www.law.berkeley.edu/clinics/samuelsonclinic/files/online_report_final.pdf(viewed14June2009).15HarrisInteractive,“MajorityUncomfortablewithWebsitesCustomizingContentBasedVisitorsPersonalProfiles,”pressrelease,10Apr.2008,http://www.harrisinteractive.com/harris_poll/index.asp?PID=894(viewed14June2009).

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thirdparties.16

TheEvolvingWorldofOnlineMarketingandDataCollection

Today,wearewitnessingadramaticgrowthinthecapabilitiesofmarketerstotrackandassessouractivitiesandcommunicationhabitsontheInternet.17Advertisersandmarketershavedevelopedanarrayofsophisticatedandever‐evolvingdatacollectionandprofilingapplications,honedfromthelatestdevelopmentsinsuchfieldsassemantics,artificialintelligence,auctiontheory,socialnetworkanalysis,data‐mining,andstatisticalmodeling.Behavioraltargeting(BT),theonlinemarketingtechniquethatanalyzeshowanindividualuseractsonlinesotheycanbesentmoreprecisemarketingmessages,isjustonetoolintheinteractiveadvertisers’arsenal.Socialmediamonitoring,so‐called“rich‐media”immersivemarketing,newformsofviralandvirtualadvertisingandproductplacement,andarenewedinterest(andgrowinginvestment)inneuromarketing,allcontributetothepanoplyofapproachesthatalsoincludesBT.Behavioraltargetingitselfhasalsogrownmorecomplex.Thatmodestlittle“cookie”datafileonourbrowsers,whichcreatedthepotentialforbehavioralads,nowpermitsamorediversesetofapproachesfordeliveringtargetedadvertising.WearebeingintensivelytrackedonmanyindividualwebsitesandacrosstheInternet.Behavioraltargetingandrelatedtechnologiesmayprovide“marketingnirvana,”asonecompanyexplained,butitleavesconsumersunawareandvulnerabletoanarrayofmarketingcommunicationsthatareincreasinglytiedtoourfinancialandhealthactivities.18Advancesinthecapabilitiesofdigitaladvertisingarebeingmadethroughavarietyofinitiatives.Forexample,MicrosofthasestablisheditsadLab,withofficesinBeijing,Redmond,Washington,andotherlocations,toworkonbehavioraltargetingandothertechniques.Yahoo!LabsinBangaloreworksonanumberoftopicsrelatedto“advertisingsciences.”GoogleandtheleadingglobaladvertisingcompanyWPPjustestablishedagrantprogramforacademicsto“toimproveunderstandingandpracticesinonlinemarketing.”1916“ConsumerAdvocacyGroupCommentsIntheMatterofaNationalBroadbandPlanforOurFuture,”CenterforDigitalDemocracy,PrivacyRightsClearinghouseandU.S.PIRG,FCCDocket09‐51,June2009,http://www.democraticmedia.org/node/405(viewed14June2009).17Forausefulonlineillustrationonthedatacollectionandtargetingcapabilitiesofonlineadnetworks,seeAdvertisingAge’s“AdNetworks+ExchangesGuide.2009.http://brandedcontent.adage.com/adnetworkguide09/lobby.php?id=2(viewed14June2009).18“TheRiseofOn‐siteBehavioralTargeting,”http://www.omniture.com/offer/281(viewed14June2009).19Microsoft,“adCenterLabs—InnovationsinDigitalAdvertising,”http://adlab.microsoft.com/;.Yahoo!LabsBangalore,“AdvertisingSciences,”http://bangalore.yahoo.com/labs/asceinces.html;“GoogleandWPPMarketingResearchAwardsProgrambestows11grants,”pressrelease,18Mar.2009,http://www.wpp.com/wpp/press/press/default.htm?guid=%7Be0af399a‐8450‐408c‐8ba8‐c35d31dae88c%7D.Advancesindigitaladvertising,includingthroughdatamining,artificial

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Oneofthenot‐so‐subtleironiesofthedebateaboutbehavioraladvertisingandprivacyisthatwhenmarketersaregrilledbyregulators,theyclaimBTisn’treallytargetedtoanindividualandisrelativelyharmless.Butwhattheytelleachotherrevealsamediumwithapowerfulpunch.TheU.S.InteractiveAdvertisingBureau,theindustry’sprincipaltradeandlobbyinggroup,definesbehavioraltargetingas“Atechniqueusedbyonlinepublishersandadvertiserstoincreasetheeffectivenessoftheircampaigns.Behavioraltargetingusesinformationcollectedonanindividual‘swebbrowsingbehaviorsuchasthepagestheyhavevisitedorthesearchestheyhavemadetoselectwhichadvertisementstobedisplayedtothatindividual.Practitionersbelievethishelpsthemdelivertheironlineadvertisementstotheuserswhoaremostlikelytobeinfluencedbythem.”20AmongthemanycompaniesharnessingthepowerofbehavioraltargetingtofueltheironlineadeffortsisYahoo!Ina2007presentationtoUKadvertisers,Yahootouteditsbehavioraltargetingasaformof“intelligentuserprofiling.”Explainingthatitcapturesuser“DNA”from“registrationandbehaviours”(includingonlineactivitiessuchaspageviews,adsclicked,searchqueries,andsearchclicks),Yahoousesthisinformationtofuelitsbehavioraltargeting.BehavioraltargetingcompanyAudienceScienceacknowledgesthe“massiveamountsofdata”ithasavailable“togainconsumerinsightsonanindividuallevel.”21Inadditiontotargetingusersonindividualwebsites,BTalsopermitstrackingofindividualusersacrosshundredsormoresites.Calledretargeting,onecompanyspecializinginthatapproachexplainsitis“abletodeliveryourmessagetovisitorsaftertheyhaveleftyoursiteastheysurftheWeb.Youradswillappeartothemastheysurftheirfavoriteinternetsites—everythingfrompopularnewssites,socialnetworkingsites,tovariousblogsandinformationalsites.Thesearenotpop­ups;these

intelligence,andsocialmedia“sentiment”analysis,aresupportedbyonlinemarketerssuchasMicrosoft,Google,andYahoo,atvariousspecializedacademicconferences.See,forexample,theupcomingThirdAnnualInternationalWorkshoponDataMiningandAudienceIntelligenceforAdvertising,”28June2009,inParis,http://adlab.microsoft.com/adkdd2009/(allviewed14June2009).20InteractiveAdvertisingBureau,“GlossaryofInteractiveAdvertisingTermsv.2.0,”http://www.iab.net/media/file/GlossaryofInteractivAdvertisingTerms.pdf.TheUSIABcounterpartintheUnitedKingdomdefinesbehaviouraltargetingas“Aformofonlinemarketingthatusesadvertisingtechnologytotargetwebusersbasedontheirpreviousbehaviour.Advertisingcreativeandcontentcanbetailoredtobeofmorerelevancetoaparticularuserbycapturingtheirpreviousdecisionmakingbehaviour(eg:fillingoutpreferencesorvisitingcertainareasofasitefrequently)andlookingforpatterns.”InternetAdvertisingBureau,“JargonBusterA‐D,”http://www.iabuk.net/en/1/glossaryatod.html(bothviewed14June2009).21“AudienceScienceCEOHirschSaysReal‐TimeBiddingEnablesTrueValueinMedia,”AdExchanger.com,13Mar.2009,http://www.adexchanger.com/ad‐networks/behavioral‐targeting‐audiencescience/(viewed14June2009).Formoreexamplesofbehavioralmarketingpractices,seemyblog:http://www.democraticmedia.org/jcblog/?cat=37.

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areadvertisementsthatcustomerswouldnormallyseeastheyvisitthesewebpages;onlyinsteadofarandomadbeingdisplayed,atargetedadspecificallyforthemwillbeshown.Thinkofitasfollowingacustomeroutthefrontdoorofyourstoreandaskingiftheysawthesalerackonthebackwall.Youappeartothemagainintherightplace—attherighttime.Youwillstaytopofmindandcustomerswillcomebacktoyoursiteandpurchase.”22Theuseofretargetingalsoraisesissuesrelatedtopotentialpricediscrimination,wherecertainconsumersareoffered“betterdeals”becausetheyareseenasmorelong‐term,lucrativecustomers.Inrecentpresentations,DatranMediaexplainedthatitmatches“verifiedofflinedemographicandlifestyledatawithmillionsofonlineusers”todeliveritstargetedadvertising.23Butitalsonotedthatfor“Retargeting,Notallcustomersareequal,”describingoneconsumerina“lowincomebracket”whospendsonly$24.00overaneight‐monthperiodversus“CustomerTypeB”inthe“middleincomebracket,”whospends$140.00overthreeyears.”Suchasystem—whereoneuserisdeterminedthroughavarietyofvariablestobeabetterprospectthananotherandisoffereddifferentdeals—raisesanumberofconcernsaboutaccountability,transparency,fairness,etc.24Behavioraltargetingisgrowing.ArecentstudybyDatranMedia,which“surveyedmorethan3,000industryexecutivesfromFortune1,000brandsandinteractiveagencies,foundthat65%ofmarketersuseorplantousebehavioraltargeting.”25Morethanhalfofthe1,200marketerssurveyedbyMarketingSherpasaidtheywouldincreasetheirspendingforbehavioraltargetingin2009.26BTisexpectedtobecomewidelyusedwithonlinevideo,mobilephones,andonlinegamesandvirtualworlds,furtherexpandingitsdatacollectionandtargetingrole.27

22Fetchback,“Retargeting,”http://www.fetchback.com/retargeting.html(viewed14June2009).23ScottKnoll,“TheFutureofBehavioralTargeting,”18Dec.2008,http://s3.amazonaws.com/thearf‐org‐aux‐assets/downloads/cnc/online‐media/2008‐12‐18_ARF_OM_Datran_Media.pdf(viewed14June2009).24Knoll,“TheFutureofBehavioralTargeting.”Seealso“AlwaysMakeaGoodImpression:UnderstandingHousehold&BehavioralTargetingtoMaximizeYourMediaBuys,”1Oct.2008,http://success.datranmedia.com/webinars/(viewed15June2009)25“DatranMediaAnnouncesThirdAnnualMarketingSurveyResults,”pressrelease,27Jan.2009,http://corporate.datranmedia.com/newsandpress/press.php?id=01272009(viewed14June2009).26MarketingSherpa,“NewData:Year‐EndSurveyShowsROIandBudgetsbyTactic,”4Feb.2009,http://www.marketingsherpa.com/article.php?ident=31037(subscriptionrequired).Nearlyhalfinthissurveysaidtheywouldspendmoreonadsfosteringgreaterinteractivity(so‐called“richmedia”).27“BehavioralTargetingAdSpendPoisedtoGrow,withHelpfromOnlineVideo”MarketingVox,23June2008,http://www.marketingvox.com/behavioral‐targeting‐ad‐spend‐poised‐for‐growth‐with‐help‐from‐online‐video‐039399/;“YahootoBringBehavioralTargetingtoMobile,”MarketingVox,21May2009,http://www.marketingvox.com/yahoo‐to‐bring‐behavioral‐targeting‐to‐mobile‐044141/;“BehavioralTargetinginSecondLife,”AdvertisingLab,28Apr.2007,

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TheRoleofBTinFinancePerhapsthemostcautionarytaleabouttheneedtoprotectconsumerprivacyonlineariseswhenexaminingtheroleofonlineadvertisingandthefinancialmarket.By2011,101millionadultswillbebankingonline—manyevenusingtheirmobiledevicestoengageinpersonalfinancialtransactions.28AsevidenceoftheplightAmericansfeeltodayabouttheirfinanciallosses,itisperhapstellingtoexaminehowthecrisishaseffectedwhattheyaresearchingforonline.AccordingtoonlinemarketresearchcompanycomScore,lastDecembertherewere“searchesusingtheterm‘unemployment’(up206percentto8.2millionsearches)and‘unemploymentbenefits’(up247percentto748,000searches)…termsrelatingtopersonalassetsituations,including‘mortgage’(up72percentto7.8millionsearches),‘bankruptcy’(up156percentto2.6millionsearches),and‘foreclosure’(up67percentto1.4millionsearches).”29Duringtheheightofthehousingboom,thetop‐25mortgagecompaniesbyadvertisingspendingdolledoutenormoussumsononlineadvertising,especiallydisplayadvertising.FourmortgageorfinancialcompanieswereinthetoptenofonlineadvertisingspendinginAugust2007,accordingtoNielsen:LowRateSource(#1),ExperianGroup(#3),InterActiveCorp(#4)[whichthenincludedLendingTree.com]andCountrywideFinancialCorporation(#5).30Consumerswerefacedwithincreasingexpendituresbymortgageandloancompaniesforonlinemarketing.Forexample,from2005to2007,onlinemortgageservicescompaniesCountrywideFinancialandLowRateSourceincreasedtheironlineadvertisingspendingfrom$18.3to$35.5and$17.9millionto$51.7million,respectively.31Meanwhile,mortgagecompanies,anxioustohaveaprominentplaceinsearchengine

http://adverlab.blogspot.com/2007/04/behavioral‐targeting‐in‐second‐life.html(allviewed14June2009).28LisaE.Phillips,“BankingandBillPayingOnline:ChasingThoseDigitalDollars,”May2007,http://www.emarketer.com/Report.aspx?code=emarketer_2000412.Formobileapplications,see“BankingandPayments,”MobileMarketer,http://www.mobilemarketer.com/cms/news/banking‐payments.html(bothviewed14June2009).29“Americans’OnlineSearchBehaviorPointstoSignificantIncreaseinPersonalFinancialTurmoil,”pressrelease,24Feb.2009,http://www.comscore.com/Press_Events/Press_Releases/2009/2/Economic_Search_Terms(viewed14June2009).30“Nielsen/NetratingsReportsToplineU.S.DataforAugust2007,”www.nielsen‐online.com/pr/pr_070910.pdf;PeterKafka,“WhatMortgageCrisis?FinancialAdsKeepPouringOnline,”SiliconAlleyInsider,10Sept.2007,http://www.businessinsider.com/2007/9/what‐mortgage‐c(bothviewed14June2009).31Nielsen/NetRatingsReport,Top10AdvertisersbyEstimatedSpending,December2006;April2007;andAugust2007.

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advertising,bidupsearchtermslike“refinancingmortgage”and“mortgagerefinance.”Amongthe“highestpayingkeywords”forGooglein2006involvedmortgagerelatedinquires,withthe“mostaggressiveusersofkeywordadvertising”doneby“asbestoslawyers,ambulancechasers,andmortgagebrokers.”32Theroleofonlineleadgeneration(so‐called“triggerleads”)andtheuseofbehavioraltargetingformortgagesandotherloansrepresentapotentiallycriticalthreattotheprivacyofdigitalconsumers,whosedataareusedwithouttheirclearunderstanding,letalonecontrol,ofsuchsurveillance.Forexample,LightspeedResearchpromisesmarketersa“fullwalletviewacrosscustomers’manyfinancialservicesrelationships,”providing“unparalleledinsightintoconsumers’useofcredit,debit,bankingandalternativepaymentproducts.Wepassivelygatherinformationfromtheirfinancialaccountsandmergeitwiththird‐partybehavioraldatasets,survey‐basedattitudinalinsights,andindustryexpertise.”33Suchcomminglingofonlineandoff‐linedata,providingveritablestripsearchesofconsumers’economicstatusandmarketplacebehavior,hasbecomecommonplace,thankstocompaniessuchasTargusinfo.“WiththelargestrepositoryofUSofflineconsumerinformation,”thecompanydeclares,“Targusinfoisuniquelypositionedtotakeonlinetargetingtothenextlevel….Itsdatarepositoryisupdatedtentimesdailyandincorporatesmillionsofdatapointsacrossmorethan100dynamicallychangingdatasources.”34“…Targusinfohasbuiltafoundationofdatafromthenation’stelecommunicationsproviders,”thecompanyadmits,“makingourinformationexceptionallyprecise,relevantandactionable.Drawingfromaproprietarynetworkofmorethan90datasources,Targusinfousespatentedprocessestolinktogetherthemostcompleteandaccuratename,addressandphonedatapossible.”35So‐called“triggerleads,”partoftheonlineindustry’s“leadgeneration”business,arealsoapartoftheonlineadenvironment,givingmarketers

32Financialservicescompanieswerereportedtohaving“doubledtheirspendingonInternetadvertisingduringthepastfouryears,”withpredictionsoffurthersignificantincreases.“OnlineSpendingtoBalloonatFinancialCo.s,”MortgageAdvertisingInsider,5June2007,http://www.mortgagedaily.com/NewsAlertArchives/AdNewsletter060507.html;BernsteinResearchestimated30percentofonlineadspendingfor2008wouldfromfinance,realestateadinsurance.LaurieSullivan,“Bernstein:OnlineAdRevenueToGrow,”OnlineMediaDaily,11Aug.2008,http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=88244(bothviewed14June2009);“MostexpensiveGoogleadkeywordslisted.”CoryDoctorow.Boingboing.com.26March2006.http://www.boingboing.net/2006/03/26/most‐expensive‐googl.html(viewed16June2009).33LightspeedResearch,FinancialServicesBrochure,http://www2.lightspeedresearch.com/uploads/Financial_Services_Brochure.pdf(viewed22May2009).34Targusinfo,“TakingOnlineTargetingtotheNextLevel,”Mar.2009,http://marketing.targusinfo.com/AdAdvisorLearningCenter.html(viewed22May2009).35KimGarner,“HowtoMasterCustomerAcquisition:On‐DemandLeadScoring,”Apr.2008,http://www.targusinfo.com/documents/LeadScoring.pdf(viewed22May2009).

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theabilitytotargetconsumersbasedonthefinancialactivityat“nearrealtimespeedandprecision.”36Omniture,anonlinemarketingandWebanalyticscompanythathasworkedwithsomeofthelargestsubprimelendersinthemortgageindustry,includingCountrywideFinancial,isaleaderinbehavioraltargeting.Throughits“foundationalproduct,”SiteCatalyst,thecompanyprovides“actionable,real‐timeintelligence”abouttheonlinebehaviorofusersvisitingtheirwebsites.37Omniture’suseofbehavioraltargetingillustrateshowthispowerfulapproachisdifferentfrommoretraditionaldirectmarketing.Itexplainsthat

On‐siteBehavioralTargetingleverageshighlyautomatedtechnologythattakesadvantageofthesameWebanalyticsdatayouaremostlikelyalreadycollecting,suchasreferringsite,referringsearchengineandkeywordphrase,timeanddayofvisit,machinepropertiessuchasIPaddressandbrowsersettings,alongwithcompleteindividualvisitorclick‐streamdata.Thesystemefficientlyorganizestheanonymousdatatobuildindividualvisitorprofilescontainingthehundredsofdatavariablesthatoccurduringavisitor’svisittoaWebsite,eachwithsomesmallamountofpredictivevalue.Highlysophisticatedmathematicalmodelstheninterpretthesevariablesinreal‐timeandassembletogethertheircollectivepredictivevaluetodetermineexactlywhichpieceofcontentorpromotionismostlikelytoengageeachvisitor,andthenservesthatcontentwhilethevisitorisstillonthesite,keepingtrackoftheentirecontextofeachpieceofservedcontent.TheOn‐siteBehavioralTargetingsystemthenmeasuresifthevisitorrespondedtotheservedcontentinthemannerpredicted.Byefficientlylearninginrealtimefromanydifferencesbetweenthepredictedresponsebehaviorandactualresponsebehavior,thesystemcontinuouslymakesitselfsmarterforthenextdecision….

36See,forexample,EquifaxMarketingServices,“TargetPointAcquisition,”www.equifaxmarketingservices.com/pdfs/TargetPoint‐Acquisition‐F06.pdf;EquifaxMarketingServices,“High‐TechIndustry,”http://www.equifaxmarketingservices.com/high‐tech‐industry.htm.Oneonlinemarketingexplainedwhyonlineleadgeneration(OLG)ispreferabletoanofflineapproach:“WithOLG,marketersareguaranteedtobegettingnew,freshdataandtheydon'thavetoworryaboutitsrelevance—itisguaranteedtobeuptodate.Asthedataisbrand‐newanduniquetothem,itwon'thavebeensittinginadatabaseforyearswhilethepersoncouldhavemovedtheirhouse,changedtelephonenumbersorevenchangedtheirname.Andduetotherigorousdata‐cleansingprocessesofOnlineLeadGeneration,everyleadisguaranteedtobefullycontactable—thereareno‘deadleads,’andallthecontactdetailsarefullychecked.”ChristopherPetix,“EconomyCallsForOnlineLeadGeneration,”OnlineMediaDaily,10Feb.2009,http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=99943(allviewed14June2009).37Omniture,“OmnitureSiteCatalyst14:Real‐Time,High‐PerformanceAnalytics&Reporting,”http://www.omniture.com/offer/170(registrationrequired).

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On‐siteBehavioralTargetingleverageseachindividualWebvisitor’sobservedclick‐streambehavior,bothonthecurrentWebvisitandfromallpreviousvisits,todecidewhatcontentislikelytobemosteffectivetoservetothatvisitor,inordertoachieveadesiredandmeasurablecommercialobjective;suchasincreasingrevenue,conversion,orclick‐through.Itthenmeasuresitseffectivenessandreportsbacktheliftandyieldthatitdelivers.On‐siteBehavioralTargetingismarketingnirvanainmanyways,asitclosestheloopinreal‐timewhilethevisitorisstillonyourWebsite.38

Bankrate.comactivelyengagesinbehavioraltargeting,explainingthat“aconsumercomestoBankrate.comandreadsthreehomeequityarticles,calculatesthebenefitsofahomeequityloanvs.aHELOCandlooksatratesfora$50khomeequityloan.Thisconsumerhasshowntremendousinterestandintentinsecuringahomeequityproduct.Asanadvertiser,younowhavetheabilitytocontinuecommunicatingwiththisconsumeracrosshundredsofwebsites.”39Bankrate.com’swebsiteplacestrackingcookiesinonlineusers’browsers,whichthentrackspageslatervisitedbythem.Bankrate.comconsumerswhoview“amortgagestory,ratetable,orcalculatorwithinthelast120dayswillbetaggedandplacedintheMortgageBehavioralTargetingBucket/Segment.”WhensuchaconsumervisitsasitewithintheBankrate.com’sbehavioraltargetingnetwork,theywillreceivemortgageadvertising.Bankrate.comoffersbehavioraltargeting‐enabledservicesforMortgages,HomeEquity,CreditCards,andDeposits(CDs/Investment/Checking/Savings).InitsWebpageexplaining“WhyBehavioralTargeting,”Bankrate.comnotesthat“Nowyoucanexpanduponthisfinitetargetandfollowtheseuserswithyourmessageoncethey’velefttheBankratesite,butwhiletheyarestillverymuchin‐market….”40

TheEmergingArrayofBehavioralMarketingApplications,including“Predictive”BT

BT’sabilitytolockinindividualusersisalsobeingfueledbyconnectionstoofflinedatabases,aswellasotherprofilingtechnologies.Forexample,Acxiom,themarketingdatabasegiant,nowoffersarangeoftargetingtoolsforonlinemarketing,

38Omniture,“TheRiseofOnsiteBehavioralTargeting,”http://www.omniture.com/en/products/conversion(registrationrequired).39“BehavioralTargetingFAQs,”Bankrate.com,http://www.bankrate.com/mediakit/ad‐behavioral‐faq.asp(viewed14June2009).40“BehavioralTargeting,”Bankrate.com,http://www.bankrate.com/mediakit/ad‐behavioral.asp;“BehavioralTargeting:HowDoesitWork?”Bankrate.com,http://www.bankrate.com/mediakit/ad‐behavioral‐how.asp(bothviewed14June2009).

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includingonwebsites,mobilephonesandemail.41It’s“Relevance‐X”™product,Acxiomexplains,allowsittoleverage“ourexpertiseinconsumerinformationandconsumerbehavioralsegmentationtohelpmarketerstargetanddeliverpersonalizedadvertisingmessages….Relevance‐Xhelpsyoudelivertherightmessagetotherightaudiencewhereconsumersaretoday—online….Unliketraditionalconsumersegmentationsystems,PersonicXisbuiltandappliedattheconsumerhouseholdlevel,notataZIPCode™orblockgroup.”42Onlinetargetingnowalsoinvolvestheusebymarketersofsophisticatedtechniquesthatmergeuserdatawithinformationaboutourpsychologicaloremotionalbehaviors.43Forexample,MindsetMedia“letsadvertisersdefinetheirtargetson21standardelementsofpersonalityandthenreachthosetargetsonamassscaleinsimpleonlinemediabuys….AMindsetProfilewillidentifythepsychographicsthatdriveyourbrand,yourcategory,andevenyourcompetitors.”Suchtargetingisavailableoveroneadnetworkthatreaches“150millionuniqueviewerseachmonthacrossmorethan1,500sitesglobally.”44So‐called“PredictiveBehavioralTargeting”hasemerged,whichisdescribedasa“technologythattriestotargetadsnotonlybasedonpeople’sclickbehaviorbutalsoonpredictionsabouttheirinterestsandfuturebehavior.”Engagingin“real‐time”datatrackingandanalysis,predictiveBT“learnsfromuserbehaviorinrealtime”andcanbe“exploited”forinteractivemarketing.45OneU.S.predictive41Explainingitsacquisitionofbehavioralre‐targetingcompanyEchoTarget,anAcxiomexecutivenotedthatthe“acquisitiongoesbeyondthecurrentbehavioraltargetingparadigmtogiveclickscontext,leveragingthemostcomprehensivedataassetsintheindustrybycombiningprovendirectmarketingtechniquessegmentingindividualsbasedondemographics,shoppingpatternsandlifestylefactorswiththebehavioral‐basedapproachesofonlinetargeting."GiselleAbramovich,“AcxiomEntersDigitalAdvertisingwithAcquisitionofEchoTarget,”DMNews,20Sept.2007,http://www.dmnews.com/Acxiom‐enters‐digital‐advertising‐with‐acquisition‐of‐EchoTarget/article/98540/(viewed14June2009).42Acxiom,“AcxiomRelevance‐X,”http://www.acxiom.com/PRODUCTS_AND_SERVICES/DIGITAL/RELEVANCE‐X/Pages/Relevance‐X.aspx;Acxiom,“ThePowerofData:AcxiomRelevance‐XFactSheet,”http://www.acxiom.com/SiteCollectionDocuments/website‐resources/pdf/Fact_Sheets/Relevance‐X_FactSheet.pdf(bothviewed14June2009).43Formoreondevelopmentsinthebehavioraltargetingmarket,see,forexample,BehavioralInsider,http://www.mediapost.com/publications/?art_type=31&fa=Archives.showArchive;otherusefulsourcesincludeiMediaConnection,http://imediaconnection.com,andClickZ,http://www.clickz.com/(allviewed14June2009).44MindsetMedia,“MediawithAttitude,”http://www.mindset‐media.com/;MindsetMedia,“OurProducts,”http://www.mindset‐media.com/advertisers/products/;MindsetMedia,“MindsetProfile,http://www.mindset‐media.com/advertisers/products/profiles/(allviewed14June2009).45PredictiveBehavioralTargeting,“WhatisPBT?”http://www.predictive‐behavioral‐targeting.com/what‐is‐predictive‐behavioral‐targeting/.Forananimatedoverviewofpredictivebehavioraltargeting,seenugg.ad,http://www.nugg.ad/en/products/flash.html(bothviewed14June2009).

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behavioralmarketerexplainedthatitsnew“PrecisionProfiles”productuses“…awiderspectrum”ofdataforsuchtargeting,“includingwebbrowsing,adinteraction,searchandshoppingbehavior”that“resultsinmoregranularprofiles.”46Behavioraltargetingisjustonetoolusedbyonlinemarketerstogatherinformationonusers.Onlinemarketersemployanarrayofinterrelatedtechniquestotargetindividualusers,aswellastocollect(orfacilitatethecollectionof)consumerdata.47Semantic‐basedprofiling(basedonthetaggingandanalysisofWebpages)isalsoused.Forexample,CollectiveMedia’s“advancedaudiencebehaviortargeting”canusea“contextualclassificationengine”thatanalyzes“eachpageforthepresenceofover2millionwordsandwordcombinations,and[uses]thisanalysistocategorizeand/ortagpagesintoover200,000hierarchicalcategories….Personifi'suniquelypowerfuladoptimizationsolutionobservesallavailablebehavioral,contextual,demographicandotherdatatodeterminethemosteffectiveadforeachimpression….Personifileveragesthisunderstandingtodeliverthemostrelevantadstoindividualusersattheoptimaltimes.Adrecommendationsarecontinuallyoptimizedinrealtimebasedonobservedbehaviorsandresponses.”48Thecollectionofindividualdatatocreatemorepersonalizedonlineexperiences,whilepotentiallyuseful,raisesprivacyandconsumerprotectionissues.Asdataarecollected,auser’sonlineexperienceisaltered,withpagesbeingtailoredtoan“individualuser’scharacteristicsandbehaviors.”Usershavenoidea,forexample,thatx+1’s“PredictiveOptimizationEngine(POE)”ispartofa“predictivemarketingplatformthatutilizesautomated,real‐timedecision‐makingtoimprovethescaleandefficiencyoftheonlinemarketingprocess….[It]leveragessophisticatedmathematicalmodelstomakeoptimalsegmentationandtargetingdecisionsonwebsiteandinexternalmediacampaigns.POE™derivesactionabledecisionsfrommassiveamountsofcomplexdata.Usingawidevarietyofdatasources,POE™profilesend‐usersandanonymouslytrackstheironlinebehaviorandresponsiveness.Itthenidentifiespatternsinvisitorcharacteristicsandtheir

46“ValueClickMediaLaunchesPredictiveBehavioralTargeting,”pressrelease,21July2008,http://phx.corporate‐ir.net/phoenix.zhtml?c=84375&p=irol‐newsArticle&ID=1177051(viewed14June2009).47Toseehowmajoronlinemarketersofferanarrayoftargetingoptions,includingbehavioralandmobilemarketing,see,forexample,AOLPlatformA,“AudienceTargeting,”http://www.platform‐a.com/advertiser‐solutions/audience‐targeting;MicrosoftAdvertising,“AdSolutions,”http://advertising.microsoft.com/ad‐solutions;andYahoo!Advertising,“Advertiser&AgencySolutions,”http://advertising.yahoo.com/advertisers/(allviewed14June2009).48CollectiveMedia,“TargetingbyBehavior,”http://www.collective.com/targeting#behavior;Personifi,“AdNetworkOptimization,”http://www.personifi.com/ad_networks_optimization.html;Personifi,“AdNetwork:Contextual,”http://www.personifi.com/ad_networks_contextual.html;Personifi,“AdNetworkClassification,”http://www.personifi.com/ad_networks_classification.html(allviewed14June2009).

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responseactivityandultimatelydeterminesthebestcontentandoffertodisplay.”49Aswewillexplainlater,theuseof“anonymous”bysomanymarketersisatoddswiththetremendousandundiscloseddatacollectionthatisincreasinglyshapingourexperiencesonline.Theself‐learningcapabilitiesofcontemporaryinteractiveadsystemsalsoraiseimportantprivacyandconsumerwelfareconcerns.Forexample,“Meaning‐BasedMarketing”byonecompany“formsanunderstandingofthesentimentandcontextofallcustomerinteractions,includingsocialmedia,user‐generatedcontentanduserinteractions.”It“createsatargetingsystem…basedondeepprofiles,sentiment,behavior,allmajortypesofcustomersattributes,andthecontentandconcepts.”50Anarrayofotherdatatoolshasemergedthatisshapingtheexperience—andthedealsandoffers—availabletotheAmericanconsumer.Forexample,“Usingwebanalytics,”boastsonlinemarketerCoremetrics,“businessescanclearlyseeacustomer’spathfromanemailopenedtoanonlineloanapplication,andeverythingbrowsedin‐between….CoremetricsOnlineAnalyticsprovidesthemostaccurateandcompleterecordofvisitorbehavior—capturingeveryclickofeveryvisitorovertime,andstoringtheminCoremetrics’LIVE(LifetimeIndividualVisitorExperience)Profilessecuredatabase.Asaresult,marketerscanbuildacomprehensiveandaccuraterecordofonlinevisitorbehavior—arecordthatconnectsvisitorbehaviorovertime,sotheycanseeallthemarketinginteractionseachvisitorhaswiththecompany.”51

SocialMediaMarketingand“DigitalFootprints”Overthelastfewyears,thegrowthofsocialnetworkshasbeenaccompaniedbythedevelopmentofasocialmedia‐marketingfield.Socialnetworkshavenowtakenbehavioraltargetingtoanotherlevel,allowingmarketerstocommerciallytargetusersbasedbothontheironlineactivitiesandself‐disclosedprofileinformation.Fewsocialmediausersunderstandthewiderangeofdatatrackingandtargetingthatoperatesonandviathesenetworks.Ourcommunicationsonblogs,socialnetworksandotherWeb2.0mediaarenowbeinganalyzed,includingforthepurposeoftargetingwhatarecalledkeyor“Alpha”influencers(peoplewhoseopinionswaystheirnetworkofrelationships).Astheauthorsofonerecentbookonthesocialmediamarketingindustryexplained,“Thedigitallynetworkedvisitorto49x+1,“OurTechnology,”http://www.xplusone.com/solutions/technology.html(viewed14June2009).50Interwoven,“AutonomyOptimostAdaptiveTargeting,”http://www.interwoven.com/components/pagenext.jsp?topic=SOLUTION::ADAPTIVE_TARGETING(viewed14June2009).51Coremetrics,"OptimizingMarketingSpendofFinancialServices:LeveragingAnalyticsinMarketingBudgetAllocation."

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thesesocialmediaformsleavesbehindfootprints,shadowsandtrailsofhisorherindividualcollectiveendeavoursintheformofdata;datathatenablesnewtypeofmarketingandcommunicationbetweenandwithinconsumercommunications….Overtime,thisprocesswillleadtoanunderstandingoftheparticipant’sdigitalfootprint.”52ProductssuchasNielsen’sBuzzmetrics,BuzzLogic(“conversationadtargeting”),Ripple6andRadian6arepartofthisnewdigitaldatacollectionapparatus.53So‐calledthird‐partyapplications,includingsmallpiecesofsoftwareknownaswidgets,“phonehome”informationabouttheirusers,contributingtoindustry’sdatacollectionpractices.Forexample,RockYou,whichhascreatedpopularapplicationsavailableonFacebookandothersites,recentlylaunchedits“SocialVideoAdsandCrossPlatformVideoDistribution”service.Thedataitcollectswithvideo,itsays,“gofarbeyondimpressions.Audienceinteractions(views,stops,rewinds,sharing)aregaugedbythemillisecondandresponsecanbemeasured,inrealnumbers.Advertiserswhocancombinethatdatawithbehavioralordemographicprofiling,toreachexacttargets,getamazingresults.”54Anothercompany,Clearspring(whichmakesmanypopularwidgets),explainsthatitprovides“detailedreal‐timeanalytics…tounderstandwherevisitorsareviewingyourwidget,whereitisspreadingfromandhowpeopleareinteractingwithit.”55Kontagentisa“Facebook‐fundedPartner”thatcandeliveran“accurateunderstandingofthedemographicsofasite'susers,howtheusersaresociallylinked,andwhatsocialinteractionsoccuramongthesite'susers.”56Itcan“track”

52AjutJaokar,BrianJacobs,AlanMooreandJoukoAhvenainen,SocialMediaMarketing:HowDataAnalyticsHelpstoMonetizetheUserBaseinTelecoms,SocialNetworks,MediaandAdvertisinginaConvergedEcosystem(London:Futuretext,2009),pp.2,19.53See,forexample,Radian6,“SocialMediaMonitoringandEngagementforAgenciesandtheEnterprise,”http://www.radian6.com/cms/solution;BuzzLogic,“GetYourAdsinFrontofPassionateConsumers,”http://www.buzzlogic.com/advertisers/conversation‐targeting.html;NielsenOnline,“MillionsofConsumerareTalking—AreYouListening,”http://www.nielsen‐online.com/products.jsp?section=pro_buzz;Ripple6,“RevolutionizingResearchThroughOnlineConversations,”http://www.ripple6.com/platform/socialInsights.aspx;SureshVittal,“TheForresterWave:ListeningPlatforms,Q12009,”23Jan.2009,http://www.nielsen‐online.com/emc/0901_forrester/The%20Forrester%20Wave%20Listening%20Platforms%20Q1.pdf.TheInteractiveAdvertisingBureaurecentlypublished“SocialAdvertisingBestPractices,”http://www.iab.net/media/file/Social‐Advertising‐Best‐Practices‐0509.pdf(allviewed14June.2009),whichdiscussessomeofdatacapturethatoccurswithinsocialmedia,andwaysofinformingusers.54“RockYouAddsVideotoitsAdNetwork,”3Feb.2009,http://blog.rockyouads.com/?cat=20(viewed15June2009).55Clearspring,“Documentation:Reporting,”http://www.clearspring.com/docs/reporting(viewed15June2009).56Kontagent,“SocialNetworkDevelopersDemandNewClassofViralAnalyticTools,”pressrelease,23July2008,http://www.kontagent.com/about/press/social‐network‐developers‐demand‐new‐class‐of‐viral‐analytic‐tools/(viewed15June2009).

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suchdatapointsasage,gender,location,numberoffriends,pageviews,anduniquevisits.Kontagentalsotracksandmeasureswhatitcallsthe“virality”factorofasocialnetworkingapplication(suchasagame),including“invitesentperuser”and“inviteandnotificationconversionrates”(meaninghowapersonrespondedtotheinvitationtodownloadanapplication).57Behavioraltargetingisalsobeingusedinsocialnetworks.Forexample,Lotame's“behavioraltargetingtechnology…analyzesbehaviorfromconsumerswhochat‐upbrandsonsocialmediaandcommunityplatforms….”58Its“CrowdControl”product“optimizesbehavioraltargetingbycapturingpreviouslyunavailabledatabasedonengagement,whichisinherenttosocialmedia.”59AsMySpaceexplainedin2008toadvertisers,its“HyperTargeting”systemallowsittomeldregistrationdata(“personaldemographicinformationprovidedbyMySpaceuserswhentheybecomemembers”)withMySpaceProfileData(“freelyexpressedinformationbyconsumersabouttheirpassionsandinterests”).Theresult,claimsMySpace,is“Next‐GenerationTargeting.”60NorareMySpaceusersawarethattheirdataaresentofftoadatawarehouseeachdaytobeanalyzedfor“deepinsights,”including“real‐timeanalysistodrive[FoxInteractiveMedia’s]advancedtargetedadvertisingsystems.”61Suchdataminingisincreasinglypartofthestructureoftheonlinead‐targetinguniverse.Facebook,asyouknow,hashadseveralwell‐publicizedincidentsinvolvingitscollectionanduseofdata.Afteronerecentflare‐up,Facebookdevelopedasetof“principles”anda“StatementofRightsandResponsibilities”thatinvolvedadiscussionandavotebyitsusers.62ButwebelievethatFacebook(andmanyother57Kontagent,“TheKontagentFactSheet,”http://www.kontagent.com/about/(viewed15June2009).58LaurieSullivan,“Lotame'sThree‐WayBTDealMeasuresAttitude,Buzz,”OnlineMediaDaily,2Feb.2009,http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=99440(viewed15June2009).59“LotameReceivesMulti‐MillionDollarSeriesaFinancinginaRoundLedbyBatteryVentures,”pressrelease,11Feb.2008,http://www.reuters.com/article/pressRelease/idUS107393+11‐Feb‐2008+PRN20080211(viewed15June2009).60MySpaceMediaKit,2008,personalcopy.61Aster,“MySpace.comScalesAnalyticsforAllofTheirFriends,”2009,www.asterdata.com/resources/downloads/casestudies/myspace_aster.pdf;“DataWarehouseAppliancefromSunandGreenplumPowersHypertargetingforFox/MySpace,”Greenplum,24Sept.2008,http://www.greenplum.com/news/106/231/Data‐Warehouse‐Appliance‐from‐Sun‐and‐Greenplum‐Powers‐Hypertargeting‐for‐Fox‐MySpace/d,blog/(bothviewed14June2009).62Facebook,“FacebookPrinciples,”15April2009,http://www.facebook.com/note.php?note_id=183540865300;RochelleGarner,“FacebookCreatesSitePrinciplesAfterUsersComplain,”Bloomberg.com,26Feb.2009,http://www.bloomberg.com/apps/news?pid=20601103&sid=azLmshQcmBJw&refer=us(bothviewed15June2009).

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socialnetworksandrelatedsites),failtoadequatelytellitsusersabouthowtheirdataiscollectedandused.Forexample,Facebooktellsbrandadvertisersthattheycantakeadvantageofauser’sprofile:“Aprofileisanyindividual’sonlinerepresentationofself.Throughtheirprofiles,peoplesharedetailsabouttheirinterests,activitiesandevencontactinformation….ReachtheexactaudienceyouwantwithFacebooktargeting.TheFacebooktargetingspectrumrangesfrombroadreachdemographicandgeographicpreferenceslikenetworksandcollegestomoregranularandspecificprofileinterests.”AnexaminationofFacebook’smediakit—oranysimilardescriptionbycompetitors—willrevealasystembasedonadigitallydriven“viral”marketingapproach.Webelievethissystemisnon‐transparentandlargelyunaccountabletothemajorityofusers.63Muchhasalsobeensaidaboutwhatisclaimedtobetheself‐correctingnaturerelatedtodatacollectionpracticesanddigitalmedia,suchaswithFacebook.ButalthoughusersdidprotestrecentlyoverFacebook’sTermsofService,itwasthecrucialroleofconsumergroupsandthethreatofregulatoryactionthatactuallybroughttheproblemtolightandforcedthecompanytoreconsideritspractices.ItwasTheConsumerist,ownedbyConsumersUnion,thatplayedthemajorroleinidentifyingFacebook’sproposedchanges,whichwereinfluencedaswellbyapendingcomplaintthatwasgoingtobefiledattheFTCbytheElectronicPrivacyInformationCenterandotherprivacygroups.64

OnlineAdExchanges:DataBoughtandSoldin“12milliseconds”ThemonetizationofourdataandonlinebehaviorsisnowbeingboughtandsoldinmarketplacesthathavesofarbeenoperatingwithoutthescrutinyofregulatorsorCongress.AsBusinessWeekexplained,“[A]dexchangesaresortoflikestockexchangesforonlineads.Websitesputadspaceupforauction,andadagencies,armedwithdemographicandbehavioraldataaboutthepeoplewhovisitthosesites,bidtoplaceadsfortheirclients'campaigns.”65Google,Yahoo,Microsoft,andothersrunsuchexchanges.Microsoft’sAdECNadexchangedescribesitsprocess:“Advertisers…specifyinadvancethetargetingtheywant,andhowmuchtheyarewillingtopaywhensuchanopportunitycomesup.That'stheirbid.Theaction

63Facebook,“MediaKitforBrandAdvertisers,”personalcopy.64ChrisWalters,“Facebook'sNewTermsOfService:‘WeCanDoAnythingWeWantWithYourContent.Forever,’"TheConsumerist,15Feb.2009,http://consumerist.com/5150175/facebooks‐new‐terms‐of‐service‐we‐can‐do‐anything‐we‐want‐with‐your‐content‐forever;DouglasMacMillan,“TheComplaintAlmostFiledAgainstFacebook,”BusinessWeek,18Feb.2009,http://www.businessweek.com/the_thread/techbeat/archives/2009/02/the_complaint_a.html(bothviewed15June2009).65RobertD.Hof,“Google'sGrabfortheDisplayAdMarket,”BusinessWeek,11June2009,http://www.businessweek.com/magazine/content/09_25/b4136052151611.htm?campaign_id=rss_daily(viewed15June2009).

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startswhenaviewerlandsonawebsitepage.Thattriggersasingle‐passauctionamongalloftheinterestedadvertisers.Inabout12milliseconds—asthepageisloading—weruntheauction,thehighestbidderwins,andweshowthatad….Theadvertiserknowsthathisadisgoingtobeshownonapageorasitewithcertaincontent,oratacertaintime,ortoapersonwithacertainprofile,andsoon….Wealsoofferbehavioral,includingaviewer'srecentsearchqueries,andprofile‐basedtargeting:age,gender,income….Wecull[profiledata]throughrelationshipswithourpartners.Here'showitworks:whenaviewerlandsonawebpageintheexchange,wecantellifthatviewerisknownbyoneofourpartners.Ifso,wequerythepartner,whotellsusaboutthatperson….”66

TheGrowingUseofNeuroscienceinDesigningandDeployingOnlineAdsAdvertisersareincreasinglyusingarangeofwhatarecalled“neuromarketing”techniquesdesignedtoshapeandhelpdelivermarketingmessages,includingforthedigitalmarket.Aspartoftheadindustry’s“engagement”initiative,marketers,asoneleadingonlinemarketingexecutiveexplained,areexploringhowtoharnessthe“subtle,subconsciousprocessinwhichconsumersbegintocombinethead’smessageswiththeirownassociations,symbolsandmetaphorstomakethebrandmorepersonallyrelevant.”67Marketersareusingsuchtechniquesasfunctionalmagneticresonanceimaging(fMRI),eye‐trackingstudies,galvanicskinresponse,andelectroencephalology(EEG)tofinelyhonetheirstrategiesfordigitaladvertising.AmongtheonlinemarketingcompaniesusingsomeformofneuromarketingareGoogle,Microsoft,andYahoo.GoogleusedneuromarketingresearcherNeuroFocuslastyeartotestso‐called“inVideoAds”foritsYouTubeservice.Thestudy“usedbiometricmeasuressuchasbrainwaveactivity,eye‐trackingandskinresponsetogaugetheimpactofads.”68MTVrecently“conductedathree‐daystudyofmorethan60gamersatabiometricslabinLasVegas;theyshowedtheplayersvariousadsandgames,allwhileexaminingstatslikeheartrate,respiration,movementpatternsandvisualattention….[T]heyfoundthat15‐secondpre‐rollswerethemosteffectivewaytogarneraplayer’s‘focusedattention.’”69The

66AdECN,“FAQ:TheAuction,”http://www.adecn.com/faq_3.html;AdECN,“FAQ:Targeting,”http://www.adecn.com/faq_4.html(bothviewed15June2009).67JimNail,“The4TypesofEngagement,”iMediaConnection,13Oct.2006,http://www.imediaconnection.com/content/11633.asp(viewed15June2009).68MikeShields,“Google,MediaVestTapBiometricsforInVideoAdsPlay,”Mediaweek,23Oct.2008,http://www.neurofocus.com/pdfs/neurofocus_google_taps_biometrics.pdf;MarkWalsh,“Google:ThisIsYourBrainOnAdvertising,”OnlineMediaDaily,23Oct.2008,http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=93319(bothviewed15June2009).69LaurieSullivan,“BT:CanItMeanBehavioralResponsesToAds?”BehavioralInsider,4June2009,http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=107346;DavidKaplan,“NeedToReachCasualGamers?MTVSays15‐SecondPre‐RollsWorkBest,”paidContent.org,10June

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adindustry’shighestresearchaward—theGrandOgilvy—wasawardedthisyeartoacampaignforFrito‐LaysCheetos,withmajoronlinecomponentsthatusedanarrayofneuromarketingtechniques.70

BehavioralTargetingandMobileMarketingManyofthesameconsumerdatacollection,profiling,andbehavioraltargetingtechniquesthatraiseconcerninthemore“traditional”onlineworldhavebeenpurposefullybroughtintothemobilephonemarketplace.MobilemarketersintheU.S.arealreadydeployingadizzyingarrayoftargetedmarketingapplications,involvingso‐calledrichmedia,mobilevideo,brandedportals,integratedavatarsthatoffer“viralmarketing”opportunities,interactiveand“personalizedwallpapers,”“direct‐response”micro‐sites,andavarietyofsocialmediatrackinganddataanalysistools.Behavioraltargetingisswiftlymigratingtothemobileworld.Mobiledevices,whichknowourlocationandotherintimatedetailsofourlives,arebeingturnedintoportablebehavioraltrackingandtargetingtoolsthatconsumersunwittinglytakewiththemwherevertheygo.Enpocket,aleaderin“intelligentmobilemarketing”thatwasrecentlypurchasedbyNokia,providesasoberingexampleofthepotentialofthismediumforbehavioraltargeting.Enpockethasdevelopeda“PersonalizationEngine,”whichitdescribedas“asystemofanalyticalmodelsthatscoresmobileusersbasedontheirpastbehavior.Itenablesustopredictwhichproductsandservicesacustomermightpurchasenext.Thatway,wecanprovidetherightmessage,advertisementorpromotiontotherightpersonattherighttime.Itcanalsoforecastevents,suchascustomerchurnandwillrecommendeffectivecustomerengagementstopreemptattrition.WhenintegratedwiththeMarketingEngine,theresultishighlyrelevantmarketingmessages,personalizedrecommendations,lesschurn,andhighersalesofmobileconsumables.”71U.S.consumerswill,asyouknow,increasinglyrelyontheirmobiledevicesforawiderangeofservices,includingsensitivetransactionsrelatedtofinanceand

2009,http://www.paidcontent.org/entry/419‐mtvn‐looks‐to‐biometrics‐to‐guide‐casual‐game‐ads/#extended(bothviewed15June2009).70AdvertisingResearchFoundation,“TheARF2009DavidOgilvyAwards,”http://www.thearf.org/assets/ogilvy‐09;“GrandOgilvyWinner:‘MischievousFunwithCheetos,’”http://thearf‐org‐aux‐assets.s3.amazonaws.com/ogilvy/cs/Ogilvy‐09‐CS‐Cheetos.pdf.Formoreontheuseofneuroscienceandmarketing,seeAdvertisingResearchFoundationEngagementCouncil,http://www.thearf.org/assets/engagement‐council;Neurofocus(nowpartlyownedbyNielsen),http://www.neurofocus.com/;InnerscopeResearch,http://www.innerscoperesearch.com/;andOlsonZaltmanAssociates,http://www.olsonzaltman.com/(allviewed15June2009).71Enpocket,“AdvancedProfilingandTargeting,”http://www.enpocket.com/solutions/enpocket%20platform/advanced‐profiling‐and‐targeting(viewed1July2008).

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health.Weshouldnotpermittheexpansionofbehavioraltargetingintothemobileworld(whereitwillbecombinedwithpreciselocationinformationandhistory).72

DigitalMarketing,BehavioralTargetingandHealthConsumersincreasinglyrelyontheInternetandotheronlinemediaforhealthadviceandservices.TheWeb,werecognize,isanimportantsourceforsuchinformation.Butconsumersseekinghealthinformationmustbeassuredofthehighestlevelofprivacyprotection.Pharmaceuticalcompaniesarenowusingdigitalmarketingservices—includingwhat’scalled“unbranded”socialnetworks.73Therearealsoagrowingnumberofhealth‐relatedwebsitesofferinginteractiveadvertisingopportunitiesformarketers,including“condition‐targeted”placement(facilitatedby“widgetsandviralelements”).Onlineadgiants,suchasTimeWarner’sPlatformA,havemadepresentationson“BehavioralTargetingforPharmaceuticalMarketers.”Theroleofonlinedatacollection,interactivemarketing,anditsimpactonthepublichealthrequiresseriousscrutinyfromthiscommittee,otherlawmakers,andregulators.74

DigitalMediaandMarketingDataConsolidationTheonlineadvertisingbusinesshaswitnesseddramaticconsolidationoverthelastseveralyears;majorinteractivegiantshaveswallowedleadingbehavioraltargetingandotherdatatargetingcompanies.GooglenowoperatesDoubleClick;YahooacquiredBlueLithiumandRightMedia;MicrosoftboughtaQuantiveandScreenTonic;TimeWarner’sAOLacquiredTacodaandThirdScreenMedia;WPPtookover24/7RealMedia.Asyouknow,lastyeartherewasaflurryofactivityrelatedtothefutureofYahooinvolvingMicrosoftandGoogle.Atinyhandfulofcompaniesengagedindatacollectionthattrack,profile,andtargetusacrosswebsites,mobileapplications,onlinegames,virtualworlds,andsearchenginesareplayingan72Forareviewofthestateofmobilemarketing,behavioraltargetingandrelatedconcerns,seeCenterforDigitalDemocracyandU.S.PIRG,“ComplaintandRequestforInquiryandInjunctiveReliefConcerningUnfairandDeceptiveMobileMarketingPractices,”FederalTradeCommissionFiling,13Jan.2009,http://www.democraticmedia.org/current_projects/privacy/analysis/mobile_marketing(viewed15June2009).73Forexample,DigitasHealthworkswithAstraZeneca,Pfizer,Lilly,Merckandothers.DigitasHealth,“Clients,”http://www.digitashealth.com/#/work/clients/.OgilvyHealthworldprovidesarangeofdirecttoconsumermarketingservices,includingonline.OgilvyHealthworld,“DirecttoConsumer,DirecttoClient,”http://www.ogilvyhealthworld.com/2‐5_healthworld_services_dtc.html(bothviewed15June2009).74See,forexample,WaterfrontMedia,“AdvertisewithUs,”http://www.waterfrontmedia.com/advertise‐with‐wfm.aspx;Healthline,“2009MediaKit,”www.healthline.com/corporate/media/healthline_media_kit_2009.pdf;andPlatformA/AOL,“BehavioralTargetingforPharmaceuticalMarketers,”2006,personalcopy(allviewed15June2009).

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importantroleshapingtheInternet’sfuture.Giventhetremendousdatacollectioncapabilitiesinherentindigitalmarketing,andthegrowingconcentrationofinfluencebyafew,theneedforlegislativeactiontoprotectconsumerprivacyisclear.

MulticulturalTargetingAnotherareathatdeservesscrutinyistheonlinemarketingservicesspecificallyfocusedonthecountry’sdiversemulticulturalcommunities,includingAfricanAmericansandHispanics.Thecollectionofdataidentifyingusersbywhatisassumedtobetheirethnicinterestsraisesconcernsaboutprofilinganditsimpact.WhileIfullysupportthegrowthofarobustonlineadsystemthatcreatesdiverseownershipofonlinepublishingservices,theimplicationsofethnicandracialdatacollectionpracticesmustbereviewed(includingthegrowingnumberofonlineadservicesfocusedontheSpanish‐speakingU.S.market).75

ChildrenandAdolescentsYoungpeople,especiallyadolescents,areatthevirtualepicenterofthedigitalmarketingsystem.Theyarethefocusofawiderangeofdigitalmarketingtechniques,includingbehavioraltargeting.Acoalitionofchildren’shealth,educationalandadvocacygroups,includingtheAmericanAcademyofChildandAdolescentPsychiatry,theAmericanAcademyofPediatrics,theAmericanPsychologicalAssociation,ChildrenNow,theCenterforDigitalDemocracy,andseveralothers,hasaskedtheFTCtoprohibitallbehavioraltargetingtoyoungpeopleunder18.Toseetheextentofthistargetingsystem,allonehastodoisreviewhowfoodandbeveragemarketershavedeployedasophisticatedarrayofdigitaladvertising,includingonlinegames,virtualworlds,socialnetworks,interactivevideo,andthelike.Thiscountryfacesayouthobesityepidemic,whichistakingitstollonthehealthofouryoungpeople,andwillcontributetoincreasing

75Thereareonlinemarketingfirms,includingadnetworks,focusedonwhat’scalledthemulticulturalmarket.See,forexample,AdGroups.com,whichoffersmarketerstheabilitytosegmentusingsuchvariablesasethnicity,gender,location,age,incomestatus,entertainmentinterest,blogsand“HipHopCulture.”AdGroups.com, “AdNetwork+ExchangesGuide,”http://brandedcontent.adage.com/adnetworkguide09/network.php?id=4.Majoronlinemarketersalsotargetthesegroups.See,forexample,TimeWarner/AOL’sAdvertising.com“MediaGlow”onlineadtargetingnetwork,whichreaches“96.5%ofHispanicsonline,”http://www.mediaglow.com/.PlatformAexplainsthatolderHispanicwomenarenatural“viralmarketers,”abletoinfluencepurchasesforfood,musicandvideogames.AOLPlatformA,“MeetCarmen,”http://www.platform‐a.com/advertiser‐solutions/audience‐targeting/consumer‐profiles/carmen‐age‐49(allviewed15June2009).

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healthcosts.Werespectfullyurgethesubcommitteestoholdaseparatehearingonprivacythreatsforbothchildrenandadolescents.76

DeepPacketInspectionandBehavioralTargetingAllofthedatacollectionandtargetedonlinemarketingpracticeswedescribeinthistestimonybecomeevenmoregravewhenanetworkoperatorispermittedtoengageindeeppacketinspection.GivenactionsbytheFCC,consumersmustrelyonahandfulofcableandtelephonenetworksfortheirbroadbandservice.Deeppacketinspection(DPI)technologiesenablethesenetworkproviderstotracktheirsubscribers’actionsonline(datathatcanthenbemergedwithextensivecustomerinformationfiles).WhenthepowerofonlineadprofilingandtargetingtechnologiesarecombinedwiththemicroscopictrackingandanalysiscapabilitiesofDPI,consumerprivacyisfurtherthreatened.

TheFailureofSelf­RegulationThepracticeswedescribehere,whicharejusttheproverbialtipofthedata‐collectioniceberg,haveallemergedwhiletheonlineadindustrywasengagedinvariousformsof“self‐regulation.”UntiltheseriesofFTCcomplaintsbroughtbyCDD/USPIRGandothers,andmostnotablyuntilthepoliticalpressurebroughtuponthatagencyforitsfailuretoaddressprivacyconcernswhenitapprovedtheGoogle/DoubleClickmerger,theonlineadindustry’sself‐regulatorysystemwasinaRipVanWinkle‐likedeepslumber.Itwasonlyafterthegrowingcallforregulatoryaction,includingfromyoursubcommittees,thatsomeintheonlinemarketingindustryfinallyadmittedthatprivacyisanissue.77Whiletherehavebeensomepromisingdevelopmentsintermsofreduceddataretentionandnewformsofopt‐inandopt‐outprocedures,theyaretheresultofregulatorypressure—especiallyfromtheEuropeanUnion’sArticle29WorkingParty.U.S.consumersshouldnothaveto

76CommentsofAmericanAcademyofChildandAdolescentPsychiatry,theAmericanAcademyofPediatrics,theAmericanPsychologicalAssociation,BentonFoundation,CampaignforaCommercialFreeChildhood,CenterforDigitaldemocracy,ChildrenNow,andtheOfficeofCommunicationsoftheUnitedChurchofChrist.OnlineBehavioralAdvertisingPrinciples,FederalTradeCommission,11April2009,http://www.democraticmedia.org/news_room/letters/Letter_re_behavioral_advertising_comments;KathrynC.MontgomeryandJeffChester,“InteractiveFoodandBeverageMarketing:TargetingAdolescentsintheDigitalAge,”JournalofAdolescentHealth,2009(inpress).Foragoodoverviewofcontemporarydigitalmarketingpracticestargetedatyouthforfastfoodsandotherhighfatproducts,see“DigitalMarketingUpdate,”http://www.digitalads.org/updates.php(allviewed15June2009).77ForanexcellentcritiqueaboutthefailureoftheNetworkAdvertisingInitiative,seePamDixon,“TheNetworkAdvertisingInitiative:FailingatConsumerProtectionandatSelf‐Regulation,”WorldPrivacyForum,2Nov.2007,http://www.worldprivacyforum.org/behavioral_advertising.html(viewed15June2009).

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relyonEU‐basedregulatorybodiestoprotecttheirprivacy.Norshouldwebecontentwithpiecemealandincrementalchangesinpoliciesduetothebuildingpressureforreallegislativeandregulatoryreform.78Blessedbyanantiquatedfederalpolicythatnarrowlydefinespersonalinformationasname,streetaddress,orsocialsecuritynumber,marketersclaimthattheydon’tviolateourprivacybecausetheymaynothavesuchinformation.Butintoday’sonlineworld,itisn’tnecessarytoknowsomeone’sactualnameorstreetaddresstoactuallyidentify—viacookies,IPaddresses,andotheronlinetargetingtechniques—howaparticularpersoninteractsonline.WearegladtheFTChasrecentlyawokentotherealitiesoftoday’sonlinemarketplace,andhasacknowledgedthatitmustaddressthisimportantissue.79Privacypoliciesareaninadequatemechanismthatfailtoprotectthepublic.AsdocumentedinarecentUCBerkeleySchoolofInformationstudyononlineprivacy,privacypoliciesaredifficulttoread;theamountoftimerequiredtoreadthemistoogreat;theyleadconsumerstofalselybelievetheirprivacyisprotected;thereisn’tmeaningfuldifferencesbetweenpolicies,leavingconsumerswithnoalternatives;andconsumersaren’treallyawareofthe“potentialdangers.”80IrecognizethatGoogle,Yahoo,andMicrosoft,amongothers,havemadesomepromisingchangesintheirdatacollectionpractices.Google,forexample,hasdevelopedaformofopt‐inforitsversionofbehavioraltargeting—whichitcalls“interest‐based.”Googleisinitiallycreatingsegmentsfortargeting,accordingtopressreports,“across20categoriesand600subcategories”(andthecompanyhasreportedlypromisedthatitwon’ttargetanumberofsensitiveareas,suchasrace,religion,sexualorientation“orcertaintypesoffinancialorhealthconcerns”).ThismovebyGoogle,ofcourse,comesafteritincorporatedbehavioraltargetingtechnologyleaderDoubleClickintoitsholdings.Googlewillbeofferingsuchbehavioraltargetingacrossbothits“textadsanddisplaynetwork.”GivenGoogle’sothertargetingcapabilities,includingonYouTube,westronglybelievethateventhisnewsystemwillfailtoadequatelyinformconsumersabouttheextentoftheir78“FederalTradeCommissionClosesGoogle/DoubleClickInvestigation,”pressrelease,20Dec.2007,http://www.ftc.gov/opa/2007/12/googledc.shtm.ThedissentfromFTCCommissionerPamelaHarbourandpressurefromprivacyandconsumergroupshelpedforcetheagencytoissueproposedself‐regulatoryprivacyprinciplesonthesamedayitapprovedthemerger.TheEU’sArticle29WorkingParty,andgenerallythestrongersafeguardsondataprotectionintheEU,hasforcedmajoronlinecompaniestoaltersomepracticestobetterprotectionprivacy.SeeEuropeanCommission,JusticeandHomeAffairs,DataProtectionWorkingParty,“OnlineConsultations,”http://ec.europa.eu/justice_home/fsj/privacy/workinggroup/consultations/index_en.htm(bothviewed15June2009).79“FTCStaffRevisesOnlineBehavioralAdvertisingPrinciples,”pressrelease,12Feb.2009,http://www.ftc.gov/opa/2009/02/behavad.shtm(viewed15June2009).80JoshuaGomez,TravisPinnick,andAshkanSoltani,“KnowPrivacy,”1June2009,http://www.knowprivacy.org/(viewed15June2009).

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datacollectionanditsimpactontheirprivacy.Norshouldconsumersbewillingtoacceptpromisesthatacompanywillnottargetbasedonpastsearchqueriesorso‐called“sensitivedata,sincesuchpoliciescouldchangeovertime.81

TheRoleoftheFTCTheFTChasbeenlargelyincapableofensuringAmericanprivacyisprotectedonline.Staffhasbeenreinedinfrommoreaggressivelypursuingtheissue,primarilytoensurethatindustryself‐regulationremainsastheagency’sprincipleapproach.TheFTCisalsoencumberedwithalackofstaffworkingonprivacyandonlinemarketingissues,includingpersonnelfamiliarwiththetechnicalcharacteristicsofcontemporarymarketing.Aswementionedearlier,itsrecentadoptionofself‐regulatoryprincipleswasmadepossibleonlybecauseofthepoliticalcontroversygeneratedbyamergerreview.TheFTCneedstohaveadditionalresources,especiallysoitcanbetterprotectconsumersfromdigitalmarketingtransactionsinvolvingtheirfinancialandhealthdata.CongressshouldpresstheFTCtobemoreproactiveinthisarena.WeareconfidentthattheFTCisnowreadytoaddressonlinemarketingandconsumerprivacymoremeaningfullythaninthepast.ChairmanJonLeibowitzhasalreadystatedhewantstoseerealprogressontheissue.HisappointmentofhighlyregardedlegalscholarandconsumeradvocateDavidVladeckasthenewdirectoroftheBureauofConsumerProtectionisapositivesignthattheFTCwillnowtakedigitalmarketingissuesveryseriously.

TheRoleofCongressWeurgeyoutoenactlegislationthatwouldensurethatconsumerprivacyonlineisprotected.ThefoundationforanewlawshouldbeimplementingFairInformation81ElyseTager,“BehavioralTargetingTakeawaysFromad:techSF,”Clickz,13May2009,http://www.clickz.com/3633682;BarrySchwartz,“GoogleGetsIntoBehavioralTargeting,Launches‘Interest‐BasedAdvertising’Beta,”SearchEngineLand,11May2009,http://searchengineland.com/google‐introduces‐interest‐based‐advertising‐beta‐16855.HowsuchasystemcanbechangedovertimetopermitgreatertargetingisillustratedbyanexchangeSchwartzhadwithaGoogleexecutive:“IaskedGooglehowdetailedcantheseadsget?Iasked,cananadvertiserpassalongaspecificadtoaspecificuser?Forexample,canIshowanadfortheSonyHDR‐XR200VifthisuseraddedtheSonyHDR‐XR200Vtotheirshoppingcartonmysitebutdidnotcheckout?Bendersaidyes,butultimatelyitisuptotheadvertiserhowspecifictheywanttogetwiththoseads.”InthesamearticlesearchexpertDannySullivanaddedthatGooglehadconfirmedithad“testedbehaviorialtargetedadsusingpastsearchhistorydata.”Googleexecutiveshadinitiallyexpressedsomereservationsaboutengaginginbehavioraltargeting.EricAuchard,“GoogleWaryofBehavioralTargetinginOnlineAds,”Reuters,31July2007,http://www.reuters.com/article/technologyNews/idUSN3135052620070801(allviewed15June2009).

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Practicesforthedigitalmarketingenvironment.NoticeandChoice,whichhasbeenthefoundationoftheself‐regulatoryregime,isafailure.Despiteself‐regulation,whatwehavewitnessedisincreasingdatacollectionanduse—allwithoutthereal,informedunderstandingandconsentofusers.Americansshouldn’thavetotradeawaytheirprivacyandacceptonlineprofilingandtrackingasthepricetheymustpayinordertoaccesstheInternetandotherdigitalmedia.ThefailuretoadequatelyregulatethefinancialsectorgreatlycontributedtotheworsteconomiccrisissincetheGreatDepression.Regulationisn’tadirtyword.It’sessentialsoconsumersandbusinessescanconducttheirtransactionswithassurancethatthesystemisashonestandaccountableaspossible.Theuncertaintyoverthelossofprivacyandotherconsumerharmswillcontinuetoundermineconfidenceintheonlineadvertisingbusiness.That’swhytheonlineadindustrywillactuallygreatlybenefitfromprivacyregulation.Givenanewregulatoryregimeprotectingprivacy,industryleadersandentrepreneurswilldevelopnewformsofmarketingserviceswheredatacollectionandprofilingaredoneinanabove‐board,consumer‐friendlyfashion.Consumerandprivacygroupspledgetoworkcloselywiththesubcommitteestohelpdraftalawthatbalancestheprotectionofconsumerswiththeinterestsoftheonlinemarketingindustry.