On 1 November the Center for Digital Democracy (CDD) and the U.S. Public Internet Research Group (US PIRG) filed a complaint with the Federal Trade Commission, calling for an immediate, formal investigation of online advertising, consumer tracking, and targeting practices. (A copy of the 50-page filing is available online [PDF below], along with an accompanying press release.) Current privacy policies are inadequate, CDD and US PIRG believe, failing as they do to inform users what data are being collected and how that information will subsequently be used. Nor are consumers prepared for the sophisticated technologies and techniques--ranging from user tracking and Web analytics to behavioral targeting and audience segmentation--that online advertisers employ in their effort to create personalized, "one-to-one" marketing campaigns. Needed is a policy of opt-in and full disclosure, in which Internet users are fully apprised of the data collection practices of the sites they visit, along with a requirement that companies secure a visitor's explicit consent before collecting any personal information. Currently, the ad and marketing industries enjoy the advantage of automatically (and surreptitiously) collecting whatever data they desire, without disclosing the extent and subsequent use of the data collected.
In their call for the FTC to address these important issues (by investigating and exposing unfair and deceptive practices, issuing the necessary injunctions to halt those practices that violate consumer privacy, and establishing policies to prevent such abuses in the future), CDD and US PIRG identified four areas of particular concern:
While these are complex areas that involve sophisticated (and often transparent) technologies, it's possible to get a better sense of how online advertisers monitor, track, and target us online by visiting their websites, to get a glimpse "behind the curtain" of the new online marketing machinery.
Included in the discussion below are links to many of the key players in the online advertising industry, focusing on those, including Microsoft, whose marketing practices routinely threaten the privacy of millions of Internet users.
Online advertising today is built on an elaborate system of surveillance that tracks, compiles, and analyzes the movements of Internet users. Listed below are some of the most active companies involved in such tracking and analysis:
Atlas: "We've developed our technology to capture actual user behavior on a web site, such as which fields users interact with, how far down a page they scroll, or how engaged are they with the web page. Our experts analyze the data and deliver a compelling story about what users are doing, why, and provide action steps that you can implement to drive top line revenue and contribution to your bottom line."
ClickTracks: "ClickTracks lets you see buyers from many different aspects, allowing you to see their entry points, the paths they take and things they do on the way to the checkout—giving you valuable knowledge that you can put into action."
Casale Media, whose InterestPoint retargeting component of its AdGlobal campaign delivery platform "involves positioning an invisible pixel on heavily trafficked areas of your website, and/or at various stages along the purchase process (e.g. homepage, checkout). With the pixels in place, InterestPoint is able to anonymously observe consumers' actions while they are browsing your website."
JumpTap, which "offers a robust Recommendation Engine tailored specifically to mobile subscribers. By monitoring search, transaction and browsing history, JumpTap enables wireless operators to provide recommendations to subscribers for cross-sell and up-sell opportunities. The Recommendation Engine determines trends and likelihoods of browsing and purchasing behavior...."
24/7 Real Media, whose Pixel Tracking technology "determines the precise impetus for a particular user action," while its Page Path Analysis "allows you to find specific path fragments inside your visitor's unique full paths," and its Next Page Flow Reports "analyze how your visitors flow from one page or item to the next."
BlueLithium, whose AdPath technology allows advertisers to "follow prospects across the 1,000+ site BlueLithium network and serve them messages that bring them back, either to complete a transaction or up sell them on a service or additional product."
Microsoft, which acquired DeepMetrix in May 2006, tracks user movements across its various Web properties by employing DeepMetrix's LiveSTATS.BIZ technology for click-stream analysis, in order to "uncover navigation patterns and common paths that lead to desired actions." Those actions are further tracked through the Ad-ID system, which "... provides the foundation for advertising digital trafficking and tracking, as well as digital connectivity."
Behavioral Targeting is the means by which online advertisers zero in on prospective customers by tailoring advertising content to a particular user's needs and interests, as tabulated and inferred, and based on that user's prior online actions. "On?]site Behavioral Targeting," explains online advertiser Touch Clarity, "recognizes all visitors each time they return, remembers everything about their previous visits, and can leverage that previous behavior to deliver even more relevant and targeted content and promotions which increases their likelihood to purchase substantially." Among the companies employing such tactics are the following:
ValueClick Media's "behavioral targeting solutions give you the ability to identify and communicate with specific users based exclusively on their past web browsing behavior."
Zedo offers its clients "… precise targeting and delivery. You can target by attributes including detailed geographic area, content area, time of day and day of week. ZEDO supports surround sessions where users can see just one advertiser's ad for a day."
Future Now's "Persuasion Architecture provides a detailed process for persuading your visitors to take the actions you want them to take. Nothing is left to chance. You design persuasive paths based on personas to provide visitors with the information they want, when they want it, in language that speaks to their individual needs. Persuasion Architecture makes it possible for you to create business-specific personas that reflect the demographic, psychologic and topologic dimensions of your audience...."
Specific Media: "Behavioral targeting from Specific Media gives advertisers access to users who are not just searching for information about their product, but searching on sites that mean they are looking to perform a transaction. With our Behavioral Targeting Index we score each user as they traverse the web and assign a score as to the likelihood of a purchase in over 3300 categories. Behavioral Targeting from Specific Media turns online behaviors into actionable data for our advertisers…." According to an interview with SpecificMEDIA's Tim Vanderhook, "We have the unique ability, via behavioral targeting, to target a user with a known interest in a category and control the frequency and timing of a given advertiser to that user no matter what content they are consuming, which ticks the interaction rates up."
Claria, creator of a "proprietary behavioral marketing platform," offers "the ability to ride along with consumers as they surf the Web. That allows us to display targeted ads based on actual behavior and deliver incredible insights. Fully understand consumer behavior across millions of Web sites. Conduct detailed Web analytics and quantitative research across the Web. Deliver precision targeted ads and information to Claria's tens of millions of consumers."
Microsoft is actively integrating behavioral targeting into its vast portfolio of Web products and services, including a technology, according to Marketing Vox, "that neither Google nor Yahoo can yet offer: the ability for advertisers to filter the people exposed to their search ads by demographic information. Marketers will be able to target one ad to men, another to women, and use additional information such as age and location. Microsoft has been tracking this information for years through its various sites, including MSN, Hotmail and others, keeping a vast database on tens of millions of individuals, each assigned a user ID Microsofties refer to as a GUID, or global user ID. Past internal Microsoft plans to use the GUID have been shelved due to fears privacy advocates would set about characterizing the technology as a dangerous and invasive use of personal information."
For over ten years now, the World Wide Web has been the most diverse and democratic media platform, but online marketers have a far different vision for the future of the Web--an ad-driven system that may give us the illusion of free choice, but one whose options are actually pre-configured according to segmented demographic profiles. A number of companies are devising audience segments based on the intelligence gathered through online surveillance techniques:
Tacoda Systems divides its online targets into 31 "behavioral segments," including such categories as Family Planners ("Newly engaged couples research and plan weddings; expecting parent explore information about pregnancy; and parent's [sic] investigate preschools, parenting techniques and childcare"); Family MDs ("People who are concerned about family health well-being and research medicines; plan fitness programs and search for information about specific health conditions"); and Shopaholics ("Obsessive shoppers who indulge in reading shopping reviews, consult price comparison Web sites, monitor auctions and online classifieds Web site keeping an eye out for that 'must have' item").
24/7 Real Media's OnTarget segments include Money Makers, Big Spenders, African American, Globetrotters, and Health Specific, and the company also promises that "our specialists will also develop custom behavioral targeting segments based on your specific objectives."
Omniture offers its clients Advanced Segment Insight, "a technology that allows our customers to visually construct segments using behavior-based and demographic segment criteria...."
ClickTracks' Visitor Segmentation allows marketers to "group visitors who share certain criteria, then see how they behave similarly (and differently) from other visitors. From campaign to clickthrough to checkout, you'll see what they're up to."
Microsoft promises its advertising clients that "You can easily target customer segments by using adCenter to model their online behaviors. Microsoft adCenter technologies provide an excellent way to classify adCenter customers' behaviors and then segment and cluster the customers in ways that help you to understand them more clearly." As its recently acquired DeepMetrix explains, customer profiles "can range from simple (visitors from North America), to specific (visitors referred from Google using the AdWord 'plush slippers'), to elaborate (visitors from the 2-for-1 e-mail campaign who have made 4+ repeat visits, examined the product 'Bear Paw Slippers,' but have not yet purchased)."
As a revealing article from online advertiser Touch Clarity [registration required] explains, "The way Internet technology works inherently means that every interaction is now part of a recordable conversation." Such "conversations" are not simply being recorded, however. They are also being compiled, analyzed, and combined with other data, online and off. Few online travelers realize that their communications are now routinely monitored and analyzed for marketing purposes, including the efforts of the following companies:
Coremetrics' "Lifetime Individual Visitor Experience Profiles, or LIVE Profiles... are the single most accurate and comprehensive source of online data available today, representing a complete record of all individual visitor interactions with client web sites."
Touch Clarity's TCT visitor profiles "typically contain over 100 variables about each individual…. Even on the first visit, we learn the time of day, day of week, which referring site the visitor came from, which creative they clicked on, or the search term they entered, their IP address and corresponding company information. Technographic factors such as the browser type, operating system and screen size are also observed. When the customer returns, we add to the profile data on which parts of the website they have viewed in the past, what they are looking at now, which tools they have used, Zip or postal code where available…."
Unica tells its clients that "… you will want to learn as much as possible about individual visitors, including their names, companies, email addresses, telephone numbers, and geographic location so you can leverage this information for targeted content and marketing activities. You will also want to see what each of these individuals did on your web site, such as whether they filled out online forms, made purchases, or if they fall into any other visitor behavior segments that have been defined for your web site."
Omniture's SiteCatalyst 13 Visitor Interaction Profiling compiles a broad range of data, over time ("Lifetime Visitor Profiling") and across distances ("Nomadic Profiling"), as extensive databases of millions of users online are monitored and analyzed.
DeepMetrix, which Microsoft acquired in May 2006, offers a sophisticated data mining package: "With LiveSTATS.BIZ, you can view the clicks streams for every visitor segment that you profile. As a result, you can analyze the click streams for first-time visitors, loyal customers, visitors from effective or ineffective promotions, visitors from a specific country like the USA or Poland, and so on.... Drill down to the session-level of any visit. See IP addresses and timestamped action sequences for each visit. View a complete history of visits by any visitor to analyze past purchases, current interests, and completed promotions. Zoom in on specific visitors and unusual visits that require your detailed attention."
No other company utilizes invasive advertising practices more aggressively than Microsoft, via its Digital Advertising Solutions/adCenter marketing apparatus, which includes the MSN Web portal, Windows Live search engine, Hotmail e-mail service, Messenger instant messaging network, Xbox 360 gaming system, Office Online productivity suite, Windows Mobile software platform, Microsoft TV online video service, Spaces blogging service, and Soapbox videos. All of these holdings have been molded, moreover, into a single-minded data collection and personalized digital marketing system, bringing Microsoft's near-monopoly software platform to bear on virtually all aspects of online communications, from Web content and streaming media to e-mail and instant messaging.
As a May 2006 company press release explains, "Microsoft adCenter is designed to ultimately provide advertisers a one-stop-shop experience, whether buying search, contextual, or display ads across a number of Microsoft properties." In announcing the launch of adCenter in the U.S., Microsoft CEO Steve Ballmer emphasized "the importance for advertisers of providing powerful tools and audience intelligence in an easy-to-use, accessible way, and that Microsoft's network of online sites and services will deliver to advertisers a range of audiences with very different demographics that advertisers will be able to reach in one consistent way." According to Ballmer, adCenter promises "real audience intelligence and targeting capabilities," including "demographics, geographics, and dayparting pilot with behavioral targeting," along with the integration of DeepMetrix's LiveStat analytics.
In September 2006, Microsoft launched its new Digital Advertising Solutions initiative, in an effort to combine the company's broad range of content and advertising products and services into a one-stop shopping center for advertisers. As the following capsule summaries suggest, Microsoft's new online advertising juggernaut will be a formidable one:
• Windows Live
According to Chris Dobson, Microsoft's vice president for international media sales, "Windows Live will bring all the elements of the consumer's digital life seamlessly together in one place, that's accessible at any time, anywhere and from any device, extending Microsoft's online audience beyond search and MSN to the delivery of software and services over the web. This expansion of Microsoft's digital properties will give advertisers new opportunities to connect with consumers as never before. They will not only be able to reach an extended and highly engaged audience through the new Windows Live products, but they will also be able to take advantage of new and innovative advertising opportunities to reach different audience groups across the wider Microsoft media network in the future, including MSN (MSN.com), Office Live, Xbox Live, Microsoft.com and Media Center."• MSN Messenger
"Every month," according to Microsoft, "more than 155 million active users log in to the MSN Messenger service. The new theme packs in MSN Messenger 7.0, which include backgrounds, emoticons, dynamic display pictures and Winks, provide marketers with more compelling opportunities to position their brands at the heart of the consumer's online experience in a tangible and viral way."• MSN Spaces
"MSN Spaces," Microsoft explains, "is a new service through which millions of consumers can share their stories with their friends and family or the entire world." "Interaction with users on Windows Live Spaces means you can reach your target audience as they open and share their lives with their online community of friends."• Hotmail
An estimated 100 million e-mails are sent every day with MSN Hotmail, the largest Web-based e-mail service that attracts over 31.6 million users each month. More than simply a communications platform, however, Hotmail has also become a key part of Microsoft's personalized advertising juggernaut: "Hotmail technology allows you to target the audience most likely to respond to your advertising message. Whether you run a Rich Media ad placed on the login page or an inline text ad on the Inbox and Sent Mail pages, your message receives high visibility with an audience ready to interact." Microsoft adds that "marketing on MSN Hotmail gives you the double impact of huge reach combined with precise targeting! You can connect with consumers on MSN, whether they are tech-savvy teens or affluent, globe-trotting baby boomers. MSN offers a variety of hotmail ad targeting, including ability to target via 'Age, Agent, Client, Connection Speed, DMA, Gender, Hotmail Occupation, State/Province, TimeZone, User Country/Region, User Language.'"• Xbox
In an effort to reach younger users, Microsoft is exploiting its Xbox gaming platform as an advertising medium. "We can now deliver real-world timed and targeted ads into more than 75 million game sessions worldwide, providing monetary streams for game publishers and enhancing realism for players," the company explains.• Soapbox
Microsoft has seized the growing popularity of user-generated video as a new advertising platform: "The Soapbox service will have the same types of connections to other Microsoft services. For example, when someone uploads a new video to the service, people on that person's instant-messenger buddy list will see a small 'gleam' next to the Soapbox user's icon, letting them click through to see the video." That video, as with Microsoft's other online products, will also feature personalized advertising.• Windows Mobile
"Get your message across anywhere," Microsoft tells its advertising clients, offering new means to reach consumers via wireless devices. "The highly integrated Windows Mobile software platform provides a variety of options to help users connect with the people, information, and entertainment that matter most to them—anytime, anywhere. Let your target audience know about your hot new products by sending interactive image or text ads right to their wireless devices. Look for information about the wide range of future advertising options available through Windows Mobile."• Microsoft TV
Microsoft is still working out the details of its newest advertising platform—the "next generation of television" known as IPTV (Internet protocol television)—but it promises to deliver the same targeted and monitored messaging as its other online products: "Stay tuned to hear about dynamic new advertising options on this innovative service."--including, according to the description of a patent that the company received in May 2006, "Systems and methods for selecting and inserting advertisements in an information document displayed to a user, wherein the selection is based at least in part on television programming viewed by the user."• Office Online
With the extension of its dominant Word, Excel, and PowerPoint productivity applications to Web-based services, Microsoft is now targeting the workplace for interactive, personalized advertising: "As the world's largest corporate website, Office Online attracts millions of unique users in the U.S. each month. Be one of the first advertisers to target the highly engaged, well-educated, professional audience that relies on this web extension of the Microsoft Office suite of products."
As CDD and US PIRG make clear in their FTC filing, the U.S. digital media system is at a crossroads. Over the next few years, as the distinctions between online and "old" media blur still further, there will be a ubiquitous interactive environment. So, too, in this fluid, new environment, with all manner of data compiled and analyzed, will the distinction between anonymous and personally identifiable information disappear. For these reasons it is critical that the FTC act now to protect the interests of the public. The FTC must require notice of all information collected, and full disclosure of how that data will be used. The commission should ask Congress to pass federal legislation requiring affirmative consent for all data used—which must be regularly updated and re-approved by users. An all-embracing opt-in should be the minimum standard. All data collection and e-commerce marketing techniques must be unbundled, disclosed, and given affirmative consent by users.