Tuesday, April 17, 2007

Online Ad Targeting

Google’s plan to acquire DoubleClick has refocused attention on the privacy issues in online ad targeting. Let’s be frank: in privacy terms, there are practices in the industry of online ad targeting that are good, others that are bad, and some that could be improved. I am convinced that this acquisition will start a process to improve privacy practices across the ad targeting industry. To improve them, we need to start by understanding them.

We live in an age when vast amounts of content and services are available for free to consumers. And that has been made possible by the growth of online ad targeting, which provides the economic foundations for all this. Given the enormous economic role that ad targeting now plays in sustaining the web, it’s important to analyze it very carefully for privacy implications. Of course, advertising has historically subsidized lots of services before the Internet, such as TV, radio, newspapers etc. And advertisements in those media have always been targeted at their audiences: a TV program on gardening carries different types of ads than a football match, because the advertisers assume their audiences fit different demographic profiles. Although the advertisements are “targeted” based on demographics, they remain anonymous, and hence raise no real privacy issues.

Online, the issues of ad targeting are more complicated, and in terms of privacy practices, there is a wide spectrum. On the responsible end, ad targeting respects the core privacy principles: providing notice to end-users and respecting their privacy choices. On the bad end of the spectrum, “adware”, a type of spyware, is malicious software which engages in unfair and deceptive practices, such as hi-jacking and changing settings on a user’s machine, and making itself hard to un-install. Below are thoughts about how to keep ad targeting on the responsible end of the spectrum.

Ad targeting is based on “signals”, and these signals can be either anonymous or “personally-identifiable information” (known as PII). To analyze privacy implications, the first question to ask about ad targeting is whether it is based on anonymous signals or on PII. Moreover, there are roughly two categories of signals (demographic and behavioral), and each of them can be either anonymous or PII.

Anonymous ad targeting is the most common form of ad targeting on the Internet. There are many different types of demographic signals, such as location, language, or age. For example, ads are routinely targeted to people who live in a particular location: an advertiser may wish to target people who live in Paris, which can be done based on the geolocation code in the IP address of end-users. Or an advertiser may wish to target people who speak a particular language, such as French, which can be done based on the language settings in end-users’ browsers or based on language preferences in their cookies. Or an advertiser may wish to target a young demographic, which might be done by targeting ads to sites where young people congregate, such as social networking sites. Anonymous ad targeting can also be based on an end-user’s behavior, such as the keyword search term that someone types. If I type the search “hotel in Rio”, Google may show me an ad for a hotel in Rio. This is a contextual ad, related to the search term, and based on the “behavior” of the person who typed it. It can be done without knowing the identity of the person typing the search.

Ad targeting can also be based on PII. For example, a retailer may target ads to me, as an identifiable person, because I have bought particular books from them in the past, and they have developed a profile of my likely interests. The key privacy principles which govern the collection and use of PII are “notice” and “choice”. So, any ad targeting based on PII needs to be transparent to end-users and to respect their privacy preferences.

The use of third-party cookies for ad targeting requires special care. If an end-user goes to a site, xyz.com, it may receive a cookie from that site, and the cookie would be known as a first-party cookie, since it was downloaded by the site the end-user was visiting. When a website uses an advertising network to serve ads on its site, the advertising network may download its own cookies on end-users’ machines to help target ads. Because the end-user receives a cookie from the advertising network while it is on the website of xyz.com, the advertising network’s cookies are known as third-party cookies.

Third-party cookies present particular challenges in terms of transparency and choice to end-users. Some users may not be aware that they are receiving cookies from third-parties at all. Others may be aware of receiving them, but they may not be aware of how to accept or to reject them.

The Network Advertising Initiative (“NAI”) has published a set of privacy principles in conjunction with the Federal Trade Commission. http://www.networkadvertising.org/industry/principles.asp
Among other things, they set standards for notice and choice in the context of ad targeting based on third-party cookies, which have been adopted by many of its member companies, including DoubleClick. These principles require that all websites served by these networks inform their end-users that, to quote:
1) “The advertising networks may place a 3rd party cookie on your computer;
2) Such a cookie may be used to tailor ad content both on the site you are visiting as well as other sites within that network that you may visit in the future.”
In addition to requiring notice to consumers about the use of 3rd party cookies, these NAI mandates that member advertising networks provide an opt-out mechanism for the targeted ads programs they provide.

It seems to me that these NAI principles are right to focus on notice and consent to end-users. As so often, there’s room to scrutinize the individual implementations of these principles. Amongst privacy advocates, we will continue to debate about the meaning of “anonymity”, and whether or not the types of unique identifying numbers used in the cookies of advertising networks can be linked with identifiable users under particular circumstances. There is a wide spectrum from “anonymity” to “identifiability”, so there is also a need for a constructive policy debate about the level of anonymity to be expected in online ad targeting. Similarly, there is room for a debate about the way choices are presented to end-users: Are the notices clear? Does the end-user have meaningful choices? Are the end-user’s choices respected?

Most companies facilitating online ad targeting, like DoubleClick, have operated in the background. Because they have generally not been consumer-facing sites, many consumers do not understand how they work. Google only recently announced its plans to acquire DoubleClick, so it’s too early to list any specific privacy improvements that it might try to make, although it’s not to early to start thinking about them.

I think it’s a good thing for people to become more aware of online ad targeting. It’s an industry that has operated in the shadows for too long. The attention that this deal may generate can do a lot of good. In the weeks and months ahead, I’ll be speaking with lots of privacy stakeholders, to solicit their ideas about how privacy practices could be improved in this industry. I’m optimistic that the process to improve transparency and user choice in online ad targeting has gotten a fresh impetus.

1 comment:

deincognito said...


First of all, congrats for your initiative. It is pretty nice to read your experienced "ruminations" on privacy.

I have a question. Do you thing IP addresses are PII in all cases because on the Internet exists the possibility to identify the individual linked to a dynamic or fixed addrees with the cooperation of third parties such as search engines, ISP, WhoIs directories and so on?

Geetings from Spain

Thanks in advance