The calm before the storm: Relevant advertising meets privacy concerns

As the country unwinds from Inaugural festivities, we once again hear rumblings about internet consumer privacy, and what the new administration might bring to the table. The Obama administration continues the digital love affair that started with the campaign and continues with the President forging new security territory by insisting on keeping his Blackberry and email, and granting YouTube a free cookie pass on Whitehouse.gov, which previously prohibited persistent cookies.

Jules Polonetsky, co-chair of the Future of Privacy Forum said, "With this administration, how data is handled is going to be far more central than ever before. We have people enthusiastically interacting with the government -- wanting Barack to be our Facebook friend -- yet we don't have an accountable figure to help shape information policy." Another article predicts a renewed FTC focus on online advertising and privacy if Jon Leibowitz is elected FTC chairman. Industry organizations are reported to be seriously reviewing the self-regulatory guidelines proposed by the FTC in 2007.

While recent focus has been around regulating behavioral targeting, it's only the tip of the iceberg when we look at how online targeting products compile, share and utilize data in derivative works. Every time advertisers place a technology or media provider's pixel on their page, they literally hand over their data to third parties. This not only may violate a site's privacy policy, but the data may also be used to benefit competitors.

We wouldn't give our customer email list to a competitor, and yet it's common practice to use targeting technologies that produce a similar outcome, albeit at the anonymous level. When a campaign drives a customer to a site, targeting pixels can pick up data about a consumer's visit, including such information as what they put in their shopping cart. This data is then aggregated with other advertisers' campaign data to create targeting parameters that may be used by others, including our competitors. For instance, if you're Best Buy, that visitor might be labeled as "electronics aficianado" and that information then used to target an ad from Dell. Research shows that larger online retailers may have as many as 10 to 15 ad pixels on their site at a given time. Multiply that by the millions of ad impressions they purchase, and we are quickly into billions of data points compromised. Does this make sense?

Between privacy concerns and the economic downturn, time is ripe for innovation in online advertising. Look for change to come, and not just from Washington D.C.

– Layne Salter