Does anyone actually enjoy those pesky pop-up ads that swarm across the Internet? What if companies could specifically target individual consumers based on their tastes and preferences? That way, every pop-up advertisement would be tailored to an individual’s interest. This proposition begs the question, “How would companies manage to do such a thing?”

A company called NebuAd–and maybe several others–is working hard to answer this question. Promising “free money” to Internet Service Providers (ISPs) willing to track their subscribers’ personal web-surfing habits, NebuAd plans to help deliver ads targeted to consumer interests. ISPs, in turn, would claim a share of the budding on-line advertising market dominated by Internet search companies such as Google and Yahoo.

The system works with ISPs to scan customers’ Web traffic for patterns. Then, NebuAd ascertains which ads may appeal to those customers. For example, if a person visits a number of country music websites, the company might label that consumer an aficionado. Web sites that take part in “behavioral targeted advertising” can then be triggered to show an ad for things such as country music events or memorabilia.

Unfortunately, for NebuAd, a privacy outcry has arisen. Its would-be partners, the ISPs, were unsuccessful in demonstrating that they should be in the ad business at all, rather than merely acting as the conduit through which Internet traffic travels. One after another, telecom companies that had conducted trials using NebuAd’s ad-serving system have shelved development plans indefinitely. In interviews, executives at ISPs blamed an unfavorable climate as Congress contemplates intesifying federal oversight of this practice.

Although NebuAd says its system avoids registering visits to sites related to “sensitive” subjects like sex or health, and does not track consumers by name, questions have surfaced about how well the partner ISPs are notifying subscribers and obtaining their permission. A related question is whether the ISPs need consent from the Web sites. NebuAd’s CEO, Bob Dykes, recently stated that:

NebuAd’s service is designed so that no one – not even the government – can determine the identity of our users. That means our service for ISP users, including the ad optimization and serving system, does not collect or use any PII (personally identifiable information). In addition, NebuAd requires its Internet service provider (“ISP”) partners to provide robust, advance notice about our operations and our privacy protections to their subscribers, who at any time can exercise their choice not to participate. And, finally, we have located our servers in highly secure data centers.”

While similar British companies plan to seek explicit consent–which is known as “opt in”–before conducting trials, the U.S. providers using NebuAd had, at most, offered only a way to “opt out.” Critics say an opt-out methodology is not adequate because it “assumes consent even if the notification is in the fine print of a billing insert that most customers throw away.” However, in recent letters to Congress, the largest U.S. ISPs all stated that they have not participated. Smaller telecom companies that have performed trials with thousands of subscribers have reported a cessation of the practice. Even if NebuAd is compelled to shut down, privacy advocates believe that other companies will follow, and will adjust their tactics slightly until one succeeds.

Many would agree that a pop-up ad geared towards perceived interests would be just as annoying as the random ones that are already detested. Additionally, if Congress allows companies like NebuAd to get away with this intrusive form of advertisement, what will be next? Where will this invasion of privacy end?

Traci Galbreath

Additional Sources:

Privacy Implications of Online Advertising, U.S. Senate Committee on Commerce Science and Transportation, July 9, 2008

Internet Privacy, Wikipedia

Privacy?, Electronic Privacy Information Center

Behavioral Targeted Advertising Raising Consumer Privacy Concerns, WebMetro, August, 19, 2008

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