Smart ads are a worthy tool — if safeguards are built in
This column appeared in the April 1999 issue of The American Journalism Review.
The worst-kept secret of online advertising is this: Nobody clicks on banner ads. And that’s bad news for a Web publication’s bottom line.
At least one online newspaper is taking steps to turn that around through a technique called targeted advertising — essentially, tailoring ads right down to the individual user.
It’s a gambit worth exploring, as other Internet companies have done. But online publishers considering such a move should not minimize the importance of posting clear policies to reassure users worried about their privacy rights.
Some time in April, the Minneapolis Star Tribune‘s Web site is due to launch a new ad-targeting program. The reason? Fewer than 1 percent of visitors were clicking on banner ads, a rate in line with the rest of the online industry.
Here’s how ad targeting works: When you visit a Web site, a computer analyzes your “clickstream patterns,” or surfing behavior. Often a site can tell which pages you visit, how long you spend there, where you’ve come from, what parts of the page (ads, content, links) you click on, which pages you bookmark, print out, e-mail to a friend, save to your hard drive, and so on.
Many Web sites already track generalized patterns of visitor behavior. Targeting technologies go a step further by creating custom profiles of every surfer who visits a site from a particular computer. Most often, the Web site doesn’t know who you are, but it does know something about your surfing and buying behaviors. Over time, it can smooth your browsing experience so you can find the editorial content you want more quickly, and it can make pretty good guesses about the kinds of ads you might welcome — and place them on your screen instantly. As a result, more users click through to the ads, pleasing merchants and generating extra revenue.
In general, that’s a positive development. As an outdoors enthusiast I’m far more open to ads about sporting goods than I would be about denture cream.
But not every consumer will be enthralled by more personal and knowing ads. “I practically burst a blood vessel when I was searching on Alta Vista for statistics about woman-owned businesses and was suddenly assaulted by a pop-up ad for feminine hygiene products,” says Shirl Kennedy, author of “Best Bet Internet.”
“This scares the bejesus out of people,” acknowledges Steve Larsen, vice president of marketing and business development for NetPerceptions of Eden Prairie, Minnesota, whose other clients include Business Week Online, Amazon, CDnow and barnesandnoble.com. “Once people get used to the idea, they tend to like it. But at first blush, it seems like corporate Big Brother, and the paranoia level goes up. That’s why we’re very working closely with privacy groups.”
One of those privacy groups, Junkbusters, has sounded an alarm about the kinds of information companies collect on consumers without their knowledge. “The Internet is a wonderful tool, but it’s the greatest device for invading privacy imaginable,” says Jason Catlett, the group’s president. “People object to the amount of information kept on them and made available to others but not to them.”
Catlett points out that online companies have begun sharing data about consumer buying and browsing habits, and some have even matched that data against direct marketing mailing lists to discover users’ identities and track their buying habits.
Karen Larson, head of marketing for startribune.com, seems taken aback when asked whether her company might do that. “Oh, no, never. We have very high privacy standards. From a newspaper standpoint, the trust of our users is paramount, and we take that very seriously.”
The Star Tribune has a terrific privacy policy, but many online companies have no qualms about sharing your personal information with outsiders. A June 1998 study by the Federal Trade Commission found that 85 percent of commercial Web sites collected personal information from consumers, but only 2 percent posted comprehensive privacy policies. The FTC has promised regulation if online companies don’t begin serious self-regulation by this spring.
Whether or not online news publications plunge into ad targeting, personalization of content or electronic commerce, Web publishers should take three steps:
• Post a privacy policy that’s accessible from the site’s front page. The policy should state what personal information is collected on each user.
• Give users the option to opt out of techniques they may consider intrusive. Frequent, unsolicited e-mail promotions falls into this category. Ad targeting may or may not — it’s too early to tell — though I suspect most readers won’t raise objections once they learn about the practice.
• Let users correct, update or expunge erroneous or dated information about themselves.
Companies that adopt such guidelines will achieve a competitive advantage over companies that have weaker standards. In the end, advertising must become a service to the consumer, not a tool for control or manipulation.
Says Larsen: “If you collect any kind of personal information about people, you have to be upfront and tell them you’re doing it. The industry hasn’t figured that out yet, but it’s the only way to build the trust that’s needed between sites and their customers.”
