Controversial behavioral targeting techniques draw resentment

The Office of Fair Trading (OFT) has provided the Internet companies one last-gasp opportunity to self-regulate the practice of ‘behavioral advertising’, albeit with a rider that it will chalk out concrete plans to sternly crack down should expected industry action prove insufficient and ineffective.

Tenets of behavioral targeting

Online behavioral targeting is a technique employed by online advertisers and publishers to enhance the effectiveness and focus of their campaigns. The technique hinges on using data collected on a user’s broad web-browsing behavior like the pages he or she has visited or the searches made, to decide which ads to display to that person.

In other words, browsing habits of web users are tracked with ‘cookie’ files that are placed on their machines after a first visit to any site. This helps deliver online advertisements to the user. The technique is used to target adverts that are based on an individual’s likely interests. Behavioral marketing exercise can be initiated on its own and also in conjunction with some other form of targeting that is largely based on factors, such as demographics, geography or the surrounding content.

Sharp reactions from advocacy groups

The usage of this technology by top Internet firms like Google and Yahoo has drawn sharp reactions from advocacy groups in the US, some of which have already filed a complaint with the Federal Trade Commission (FTC). They have urged an investigation into ‘the rising privacy threats’ courtesy instant analysis of users’ behavior online.

The UK Office of Fair Trading began an investigation last August into how controversial behavioral targeting company Phorm, Google and Microsoft utilize data gleaned on the personal information and habits of users to target Internet advertising. The director (IT Risk and Assurance team) at Ernst & Young, Seamus Reilly, stated firms may face intense scrutiny from regulators, if consumers aren’t given the chance to discard behavioral advertising. He added: “Organizations that don’t deliver such transparency will increasingly find themselves under scrutiny from data protection commissioner especially as customers’ awareness grows.”

Heather Clayton of the OFT Consumer Market Group has mentioned that they are keen to engage with industry and consumer groups as well while behavioral advertising is still in its relative infancy. We need to take steps before targeted pricing establishes itself, so that the market can develop in a way, which protects online consumers from unhealthy practice, he feels.

Self-regulation on behavioral adverts desirable

After a thorough study of targeted advertising and pricing practices followed on the web, OFT felt that more steps could certainly be taken to give consumers necessary information about how their personal data is collected, collated and used online. According to the study, such advertising sure offers tangible benefits to users like free access to useful content. However, there are potential privacy concerns arising from misuse of personal information. The spread of targeted pricing practice, on basis of earlier purchases or one’s geographic location, might cause strong consumer resentment, it asserted. The OFT concluded that industry self-regulation leading to clear notices along with behavioral adverts as well as offering people the option to opt out was desirable.