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Behavioral Advertising and Privacy

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Mike Patrick

on 20 April 2010

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Transcript of Behavioral Advertising and Privacy

The Balance Between Behavioral Advertising & Online Privacy Presented By: Mike Patrick What is behavioral advertising?

Targeting used by internet marketers to increase effectiveness of campaigns
Works by collecting data on internet user's behaviors

Browsing habits
Search queries
Web site history
Online purchases
Email content

Allows companies to buy ads based on data about visitors, rather than the
content published on the site...

So how does it all work? Blue Kai

regularly records info on 160 million internet users

After data is collected BK will group web visits into catatgories of consumers

Immediatley auctions off data to marketers which use it for consumer research and ad personalization

Web companies make a profit by selling data about visitors to their site - BK takes a cut - Advertiser gets it coveted targeting

3 main participants

Ad networks
Web publisher

2010 study released by the Network Advertising Initiative

Aimed to understand the effect of BA on advertising rates and revenues

based on 12 large ad-networks

Compared BA to run-of-network advertising

Ad buying option in which ad placements may appear on any pages on sites
within an ad network.

Importance of Behavioral Advertising
BA leads to advertsing rates that are more than double the rates of RON

BA more effective with over twice the conversion

BA accounted for just over 40% of the advertising revenue in 2009 for ad-networks

Half of that revenue going directly to publishers

Stresses the importance of the online advertising market & the relationship between
advertisers, ad-networks and web publishers

The Results The Consumer's Perspective Survey of 1,000 consumers conducted by U. Penn in 2009

found that over 70% of consumers were opposed to
online behavioral tracking by advertisers

National Retail Federation surveys 2,600 online customers in late 2009

Participants asked for primary reasons why shoppers might not be increasing
online speding this year

Privacy concerns and worries about "Online Tracking" named by 0.1% (Smallest Concern)

Shipping costs named by 23% (Biggest Concern)

Response Response Critics argue people aren't worried about online privacy or tracking issues because they are not aware of it or dont understand how comprhensive the tracking can be

Jeffery Chester - Executive Director for Center for Digital Democracy
"Consumers have no idea that they are being followed online and their information is being
compiled into invisible digital dossiers"

Example - Software sold under the Sentry Family Safe brand

Offer data to businesses seeking ways to tailor their marketing messages to kids
Parents have to opt-out
Current Privacy laws restrict the collection of data on kids under 13

So what is the law when it comes to Internet Privacy & Advertising? No set laws... only guidelines

FTC guidelineS require the advertising industry to police its own marketing strategies

Being transparent & giving consumers more information and measure of control over the data that is being collected

Advertisers push for consumer education Launch of "Privacy Matters" campaign

Interactive Advertisng Bureau - Group of 375 leading media and technology companies
responsible for selling 86% of online advertising

Will run accross a broad cross section of top-teir online media outlets

Web site will be information rich area where consumers can access resources and tools
designed to help protect their online privacy

Release of "Self Regulatory Principals for Online Behavioral Advertsing"

IAB Partnered with nations largest media & marketing trade associations in releasing

Principals aim to protect consumer privacy and directly address public education

Overall represents an industry wide push to develope more effective SELF-
REGULATION of onlie behavioral advertsing practices

Peder Magee - Senior attorney in the FTC's Division of Privacy and Identity Protection

"Given changes in technology and the ability to collect, manipulate and transfer huge amounts of data, often behind the scenes, we may need to think about new approaches to privacy models"

Representative Rick Boucher - Leading the way in terms of new legislation regarding internet privacy and advertising

"Online advertising supports much of the commercial content, applications and services that are available to internet users without charge, and I have no intention of disrupting this business model. At the same time, I believe consumers are entitled to some baseline protections in the online space."

Boucher leaning towards a much simpler opt-out system for most sites

More visible & accessible

Opt-in for those that collect personal information such as ID #'s or medical & financial data

Favors having easy to find information on Web sites

informing customers of how their data is being used

how long the information is being retained

is it sold to 3rd parties?

Government Regulation What will the changes be? Conclusion Study conducted by The Futrue of Privacy Forum - Washington DC based think tank

Found that applying transparency and choice increased the percentage of those who were
comfortable with behavioral advertising from 24% to 40%

If the advertising industry can increase transparency, develop affective consumer choice mechanisms, improve data security and overall consumer awareness, then they will be less likely to face strict legislation in the future and be more likely to gain the trust of the online community, preserving the ever important business equilibrium and insuring the future growth of the Internet.

Presentation Overview Defining behavioral advertising... What is it and how does it work?

The consumer's perspective

The push for consumer education

Legal implications & future government regulation

Final thoughts
Full transcript