Close-Up: Big Brother's not really watching users, honest

If behavioural-targeted advertising is to take off, consumers' fears of privacy invasion need to be allayed, Anne Cassidy says.

Do adlanders view George Orwell's 1984 as a bleak warning from history, or have they been using it as an industry guidebook?

For some, the rise of behavioural-targeted advertising is drawing unwelcome comparisons between advertisers and the nefarious Thought Police that monitor the lives and minds of the hapless inhabitants of Orwell's dystopian vision. It's an image problem that a number of advertising luminaries, who see this type of targeting as the future of their industry, are trying to quash.

Behavioural targeting works by using data collected by internet companies to direct targeted ads to users based on the websites they have already visited and subjects in which they are interested. The data is collected through a cookie, a small text file that is sent to the computer via the web browser whenever a user visits a website. This then allows brands to target individuals with more relevant ads.

Although not new, the idea has gained a huge amount of momentum over the past weeks with a slew of new developments.

Of huge importance was Google's decision to put its considerable weight behind it and launch behavioural targeting across YouTube and its other partner sites.

As was the Internet Advertising Bureau's decision to launch a new self-regulatory code on behavioural-targeted advertising, which saw its chairman issue a call to agencies to join the likes of AOL, Google, Phorm, Yahoo! and Microsoft Advertising in signing up.

The ISBA conference also turned into something of a behavioural-targeting rally when Richard Eyre, the chairman of the IAB and an evangelist of the technique, took to the stage and eulogised its merits.

The privacy issue

However, despite hailing behavioural targeting as a "game-changer" for the industry, he also knows that winning the hearts and minds of sceptical consumers will be a mammoth task, and the biggest obstacle in making behavioural targeting mainstream.

"We're on the defensive because of the bad behaviour of companies collecting data and not making it clear that is what they are doing, or the general fear that because companies are doing it, it must be for selfish reasons," Eyre explains, blaming a pervading "half-baked Daily Mail view" that if someone is collecting information on consumers they must be up to no good.

"The information is processed by a machine and the notion that someone in a behavioural targeting company could go and find my personal data is fanciful to say the least."

It's a system that has continually come under fire by privacy and civil-liberties organisations. Much of their ire has been directed towards the UK company Phorm and its Webwise system being trialled by internet service provider BT. Many were outraged when it came to light that Phorm's systems were secretly trialled on thousands of customers without their consent.

However, Phorm argues that its method, contrary to perceptions, is now the most anonymous currently available. Kent Ertugrul, the chief executive of Phorm, explains it now operates on an opt- in basis only, where consumers give their consent to be tracked. He contends his company has no personal data on consumers, stores no IP addresses and is completely anonymous. "We cannot know where you are or where you have been, it just doesn't work like that," he says.

Google's behavioural-targeting system, which it said will eventually reach 80 per cent of the global online population, has also prompted a backlash from campaigners. It has announced it will not record visits to sites listed as sensitive by the European Union such as political, religious or pornographic sites, and it gives consumers the choice to opt out. But privacy advocacy groups are calling on the search engine to make its system opt-in instead. At a Parliamentary debate last week, Sir Tim Berners-Lee, the director of the World Wide Web Consortium, equated ISP monitoring to wiretapping.

The new guidelines

The IAB guidelines stipulate companies must provide an opt-out option for users to decline behavioural ads. Jim Killock, the executive director of Open Rights Group, a privacy organisation, feels that because they do not push the opt- in choice, they are the lowest common denominator in regulation terms. "It's very sensitive information you are handing over," Killock argues. "It's what you do as a human, your likes and dislikes, your beliefs. You have to make an active choice."

But there are many in the industry who contend that opting in shouldn't have to be a prerequisite and is ultimately not what consumers want: relevant advertising.

Marina Palomba, the IPA's legal director, says: "The danger with having to opt in on every single website is that a lot of people will not get the material they want to receive. But there do need to be clear guidelines on how to opt out."

However, Palomba feels that the sheer wealth of data now in Google's possession could be a cause for concern, for competitive as well as privacy reasons. "Our concern about Google is the power it has. It's imperative that it doesn't put prices up as a result," she says.

Controversy aside, now the technology is in place, the industry drift towards behavioural targeting is undeniable. In the first UK issue of Wired magazine in April, Sir Martin Sorrell, WPP's chief executive, predicts that all online ads will be targeted in five years' time and that TV ad targeting is imminent.

Nick Milligan, the managing director of Sky Media, has also announced Sky aims to introduce opt-in "targeted substitutional advertising" (dubbed internally as Smart TV) for 2011. The ads are based on the characteristics and demographics of people who sign up to the system. It would serve targeted ads to consenting viewers in Sky+ homes.

Eyre believes the future for all media, from TV and radio to newspapers and magazines, is online and therefore all advertising will be targeted: "The more media transactions go online, advertisers can use the behavioural-targeting methodology rather than relying on old-fashioned methods," he says.

The end of the old ways

This shift means that the old planning measurements such as the diary research and ABC1 methods are starting to look obsolete. Eyre won't be mourning their loss: "The whole advertising transaction teeters on these two unreliable foundations, which we put up with only because it's the best we've got."

Andrew Walmsley, the founder of the digital agency i-level, believes the new method will create a shortcut to the right consumer. The advantages of targeting are simple, he says: "If you want to sell a lawnmower you want to find people who have a lawn."

There's also the return-on- investment issue. Despite there being no truly accurate measurement system to date, many believe that early uses have shown very positive results so far.

The vice-president of international sales for digital marketing company Wunderloop, Michael Weston, estimates that targeting is around three times more effective than untargeted ads in terms of delivering conversion. He adds: "The smartest marketers will be those who establish a dialogue and deliver relevant messages."

To the converted, the rewards are clear. But even they will concede they've got the mother of all PR jobs to convince consumers, governments and regulators that targeting does not invade privacy. Its very survival hangs in the balance.

"One big question is about the capability of regulators to understand it. They could do a lot of damage - you just have to look at the mess they made with Project Kangaroo," Walmsley says.

Another is public acceptance. Yet with transparent communication, best practice and effective regulation there is optimism that behavioural targeting can be understood and accepted, and that in the future people can be advertised to without feeling the TV is watching them, instead of the other way round.