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Perceptions of Online Behavioral Advertising (OBA)

Despite recent efforts at self-regulation and consumer awareness, there is still lingering doubt on whether or not users are adequately informed on data-based advertising. This article takes a closer look at online behavioral advertising and the industry’s self-regulatory privacy program.

What is Online Behavioral Advertising?

Online behavioral advertising (OBA), or online behavioral marketing (OBM), is conducted by using third-party tracking. This requires the use of a tracking device, such as a web cookie, which collects and analyzes the behavior of a computer user. It’s ‘third party’ because the tracking is most likely being done be a company other than the owner of the website that hosts the ad and the information is shared with many other companies through organizations such as ad groups or ad networks.

The user information is compiled and used to create a profile that differentiates and segments that computer user for highly targeted ads. Undoubtedly, third-party tracking is a contentious area for online privacy. Consumers in the know can be suspicious of marketers they sense are creating profiles about them without their approval. Furthermore, third-party tracking and consumer privacy is making waves with government and consumer protection groups and is even subject to regulation in certain markets.

Targeted ads aim to reach a specific segment of the market, in order to concentrate advertising resources and launch successful marketing campaigns.

There are many ways of targeting ads, including:

  • Attitudinal (interests, values)
  • Behavioral (surfing and search behavior)
    • Inferred interests (e.g. sports fans)
    • Predicted response (e.g. likelihood to click on ads for sporting events)
    • Impulse (e.g. sports news in past 30 minutes)
    • Context (site-level, section-level or content-level)
    • Daypart
    • Demographic (age, gender, geography)
    • Run of network (actually a type of non-targeting)
    • Retargeting (for sequencing ads or for reconnecting with site visitors)
    • Technographic (type of computer)

Behavioral Targeting

Behavioral targeting is the practice of delivering ads in response to users’ online activity. This form of targeting is becoming more and more common. According to eMarketer estimates, almost $1.1 billion were spent on behaviorally targeted ads in 2009 alone. This form of targeting is effective only when suing ad networks that can serve ads across many types of websites or on portals where many types of behavior are observed.

Behavioral targeting infers interest in a category based on a user’s surfing or search behavior. For instance, someone who recently visited a car website would be shown a car ad, a typical example of a brand-building campaign.

Consumer attitudes towards this form of targeting are conflicted, at best. While some consumers report that they appreciate receiving relevant, personalized ads, others are worried over the idea that their online movements and activities are being tracked. According to a study conducted by the marketing research group, Millward Brown, 67% of consumers feel more positive towards transparent brands, and are 36% more likely to buy from these brands.

Effectiveness of Self-Regulation

The advertising industry in the US operates under a self-regulatory privacy program in which advertisers place “you-are-being-targeted” icons. These icons are small images of a lowercase ‘I’ inside a triangle on its side. They usually say “AdChoices” and appear in the top corner of behaviorally targeted ads.

Upon clicking these icons, consumers are directed to a page where they can learn more about online behavioral advertising, how companies mine their web surfing history and how they can opt out of that kind of advertising. According to the Interactive Advertising Bureau general counsel Michael Zaneis, these icons are currently being displayed in about 1 trillion ads monthly.

A study conducted by researchers from Carnegie Mellon University reveals that these icons may not be as effective at raising user awareness as intended. Using data from 1,500 web users, the researchers found that “The icons, taglines, and landing pages fell short both in terms of notifying participants about OBA and clearly informing participants about their choices.”

In particular, the study revealed that most users, “… mistakenly believed that ads would pop up if they clicked on disclosure icons and taglines.” Most users (a surprising 63% of them!) believed that opting out of the ads would stop online tracking. Actually, most ad networks will only promise to stop sending targeted ads to the individuals who opt out, although some will also stop tracking those users. Finally, the report’s most surprising finding was that many people though that clicking on the disclosure icons would actually enable them to purchase ads.

Misinterpretations

In another study, also done by Carnegie Mellon University researchers, it was revealed that the majority of people aren’t able to accurately interpret the icons or landing pages. The researchers showed icons to participants, then asked them questions about the icon. Only about 10% of participants thought the icon was aimed at informing users about tailored ads. None of the respondents thought the purpose was to tell people about online data collection.  Approximately 20% of participants thought the icons were directed at advertisers. There was a very palpable ambivalence regarding behavioral targeting.

Summary

This article takes a look at online behavioral advertising (OBA), or online behavioral marketing (OBM), which relies on tracking devices to collect and analyze information about web users. Behavioral targeting uses this information to display relevant and personalized ads to users based on their profile. The article examines consumers’ attitudes towards OBA campaigns, as well as the industry’s self-regulation attempts, namely the “you-are-being-targeted” icons that appear in the corner of behaviorally targeted ads. The article references two Carnegie Mellon studies that point to a lack of awareness as to what, exactly, these disclosure icons are meant to indicate.

CIPP Exam Preparation

In preparation for the Certified Information Privacy Professional/Information Technology (CIPP/IT) exam, as well as the Certification Foundation exam (Foundations), a privacy professional should be comfortable with topics related to this post, including:

  • E-commerce personalization; end user benefits and privacy concerns (CIPP/IT; II.C.a., II.C.b.)
  • Online behavioral marketing (Foundations; III.B.j.ii.)
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