Behavioral Targeting and Privacy: Friends or Foes?

Most people would find banner ads less annoying if the ads were more relevant to their interests or needs, ClickZ News reported last week. The article highlighted findings from a study conducted by the Ponemon Institute, a privacy research firm.

This is intriguing for two reasons. First, it immediately makes me think of behavioral targeting. Second, over 55 percent of those same consumers say they don’t want the Web sites they visit to collect personally identifiable information (PII).

Despite the apparently paradoxical nature of the finding, it isn’t all that surprising. Consumers, like advertisers, are obsessed with the “know.” They’re comfortable using technology to search for information and want to find everything online having anything to do with them (whether we’ve reached new heights of self-realization and manifest destiny is another story). The growing trend puts privacy under the microscope. Consumers are increasingly aware of online tracking capabilities.

How do we, as agencies and marketers, respond to this paradoxical consumer demand and create a better experience for them?

The Full Monty Is Better Than the Half-Moon

I believe in linear communication. If I honestly tell you my likes and dislikes, you’re expected to reciprocate this respect and share with me the offers that best cater to my needs and interests (and vice versa).

Direct, honest communication leads to mutual respect and builds trust, both in business and personal relationships. It minimizes speculation and improves clarity.

Advertisers realize today’s consumers (especially Gen Y) are much more knowledgeable than their predecessors. This audience is no longer satisfied to just see a magic show. They want to know how the magic is done and who the people behind the scenes are.

This trend, of course, fundamentally changes the way advertisers communicate with consumers. Messaging is more direct and no-frills, with a more sophisticated and interpretive sense of humor. There’s less hidden agenda. Consumers are obsessed with information and detest the unknown.

This trend leads me to believe fully disclosed personal information can actually improve and protect consumer privacy.

Most behavioral targeting vendors rely on some degree of personal information to gain insights into consumers’ online behaviors, whether PII or clickstream data. The full monty of consumers’ personal information is the most effective way to understand those targets’ needs and communicate with them in a direct manner.

The Opt-in Privacy Concept

A reluctance to provide personal information is human nature. It’s fear of the unknown. Consumers don’t necessarily understand the implications of providing more personal information. They fear personal data will be stolen by identity thieves or result in a spam bombardment.

Sure, a few bad apples have tainted even respectable online properties. And, marketers haven’t done enough to explain the benefits to consumers. Let’s not be discouraged by a few blots in the history book. Let’s move forward. Welcome to opt-in privacy!

What if behavioral targeting were a self-opt-in platform in which consumers were empowered to switch targeting on and off at whim? Like TiVo, consumers could program their settings and areas of interests into a personally identifiable ID card. It would empower them to control whether they want to browse under the radar or be targeted by relevant banners.

Don’t act so surprised. Opt-in privacy exists in real life. We can put up a “do not disturb” sign at the hotel, screen with caller ID, and use DVRs to select only TV shows we want to watch.

Why can’t we do the same online?

Personal information should be managed and updated by consumers themselves. The only way to receive relevant advertising is to openly disclose your interests and purchase intentions. This is beneficial for advertisers because as ad relevance increases, conversion rates will likely follow.

What Does This Mean for Online?

Behavioral targeting’s growth is contingent not only on agency support. It ultimately rests on consumer approval and adoption. We all know consumer adoption takes time. To fundamentally change consumers’ perception and definition of privacy is no easy task. But by honestly communicating with consumers, marketers can redefine privacy.

Consumers need to be educated. Ironic and counterintuitive as it sounds, the only way to increase ad relevance is if they provide more personal information. This can actually increase their privacy. They must understand the values and benefits of providing more personal information.

As marketers, we can’t abuse the trust. Revenue Science is currently working on a trust-privacy protocol to help ameliorate some skepticism and broken pledges. Many other prominent players are likely doing the same.

Privacy has always been a sensitive topic in behavioral targeting due to the Big Brother associations with user-activity tracking. Remember the controversy DoubleClick stirred up in 2000? The giant third-party ad server was accused of privacy invasion by collecting PII and combining it with online surfing behaviors. Maybe history is repeating itself as behavioral targeting reemerges, but I’m confident things are different this time.

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