Silverpop - Can Behavioral Advertising Survive?
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Can Behavioral Advertising Survive?

Bill Nussey, Silverpop
by: Bill Nussey (@bnussey)
06 August 2010

When online banner ad response rates went into a free-fall years ago, some brilliant entrepreneurs responded by creating a new kind of ad network that used third-party cookies to track users. By watching and analyzing Web behavior across a range of sites, these networks could build an anonymous but surprisingly insightful view into the habits and interests of every consumer they tracked.  (To see what one of the big networks thinks about you, click here.)

Although not everyone is comfortable with Internet advertisers gathering behavioral information, as a marketer, this has never really bothered me. Far more is known about me as a result of credit agencies that track and sell my credit-card and catalog purchase information. This data is not anonymous and it's far more precise.

Nonetheless, the concerns over the privacy implications of behavioral ad networks are growing, and we may be on the verge of a wave of legislation that undermines or even kills this important, central part of the Internet economy. It may sound far-fetched that a multi-billion dollar industry that fundamentally pays for almost all the free content on the Internet could be in danger, or that users would complain about seeing ads that are more relevant. But consider that:

  • Germany is already cracking down on third-party advertising networks, requiring them to obtain each user’s opt-in before they can track Web behavior. Since presumably few Internet users will actually opt-in, these networks are facing substantial challenges.
  • The United Kingdom, which is governed by the same EU laws on privacy, is hotly debating whether the laws would really be enforced. (I'm not an expert on this, but what I've read seems to indicate that this is a possibility.)
  • A recent article titled, “The Web’s New Goldmine: Your Secrets” in the Wall Street Journal  is surprisingly alarmist on this topic. Check out this humorous response by blogger Jeff Jarvis.
  • Bowing to public pressure, U.S. politicians in 2003 enacted “Do-Not-Call” legislation, effectively shutting down the multi-billion dollar telemarketing industry. While this was a good thing in my opinion, it’s also a clear indicator that politicians will not let industry lobbies get in their way when they feel they are doing the right thing.

As concerns among consumers and politicians grow, and as I read articles like the one in the WSJ, I am starting to wonder if we may be witnessing the beginning of the end of third-party behavioral advertising. As a consumer, I like my privacy as much as anyone, but as an Internet user, I prefer free content and relevant advertising even more. I'm hoping this never comes to pass but I'm increasingly concerned.

If there is a silver lining in this, it is that most of my colleagues who read this blog are in the PERMISSION marketing business. This means that the vast majority of any tracking we do occurs AFTER we request that our users sign up and obtain their opt-in. If the legislation I've referenced comes to pass, let's hope the wise politicians of the world can tell the difference between anonymous data gathering by unknown third parties, and permission-driven relationship marketing with known brands and organizations. I've always been a staunch supporter of permission marketing and, even if the worst happens in behavioral advertising, we may well be entering a new golden age of relationship and engagement marketing because of all this.


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