Behavioral Targeting's Growing Pains: Part Two Of A Three-Part Series

This week, OnlineMediaDaily presents a three-part series that explores the future of behavioral targeting. Today's installment examines whether consumers and marketers will welcome behavioral targeting in search engines, or whether search engines can expect a backlash.

Search engines have been on a huge growth streak, both with consumers and advertisers. In the first half of this year, search revenues soared to $2.3 billion--marking a 27 percent increase from the same time last year, according to the Interactive Advertising Bureau. At the same time, users have steadily increased their visits to search engines; in August alone, visitors conducted more than five billion searches, according to Nielsen//NetRatings.

But can that growth be sustained if consumers feel that marketers know about their searches and send ads based on them? Even if the data is not "personally identifiable" and marketers don't know consumers' offline information, some are bound to find such ads intrusive.

Consider: a simple wording change to a Google privacy policy last month prompted scores of news and blog stories warning about the engine's intentions.

Some industry insiders have also said they consider BT somewhat "creepy," and are concerned that its execution techniques aren't always visible to the marketer, its monitoring techniques may seem invasive, and that it can seem to stalk users with specific ads no matter where they go.

Unlike buying against words or pages, where the placement is obvious to any client who puts in his keyword, BT has a lot of moving parts behind the scenes that serve ads invisibly to select users.

Ultimately, issues like privacy and profile accuracy may turn on how well the engines manage relationships with users and create a fair exchange of value. Will users agree to have their behaviors tracked, even anonymously, if the only payoff is a more targeted text ad in MSN? Or can engines get even deeper, more accurate, and necessarily more invasive profiles if the search results themselves become more personalized, or the data harvesting occurs on valuable tools like desktop search or even a full-blown application?

For instance, a recent partnership with Sun lets Google help distribute OpenOffice, a free, open source alternative to Microsoft's pricey Office suite. Along with its toolbar, desktop search, Gmail, and a relentless line of other free tools, Google is amassing a line of powerful freebies it could turn into behavior monitors if users agree to exchange their data for free programs. "It all depends on the mission of the company and how they approach their customers," says iCrossing's Noah Elkin. "I think it's a model consumers are becoming accustomed to."

But will other publishers become accustomed to such models? Search engines are platform, virtual utilities that are interdependent with all other content of the online space. Incorporating BT into such ubiquitous services will likely raise questions from other publishers about where and how engines do their harvesting. For instance, if a major search engine's desktop client monitors user behavior on third-party Web sites, it would be taking something valuable to a publisher--its user data.

As it stands, BT companies like Revenue Science and Tacoda financially incentivize publishing partners that come into their networks and share anonymous behavior data. Adding BT to search is a smart thing to do, admits Bill Gossman, CEO, Revenue Science, but "using a client side [app] to do that would be grabbing the third rail of the industry and standing in a bucket of water."

And just as all aspects of search engine methodology are hotly debated, there are bound to be questions about the nature, breadth, timeliness, and accuracy of the profiles that inform the segment that marketers buy. Millions of users probably start Microsoft Hotmail accounts or sign up for Google Desktop search using some false or misleading information, which could affect how they are used for targeting. "Behavioral targeting is as good and as accurate as the data itself," warns Elkin.

In addition, profiling is more an art than a science. When a vendor offers up a predefined segment such as in-market HDTV buyers or self-directed investors, that profile is based on a set of assumptions made only on the basis of click behavior, not necessarily direct questionnaires. In other words, profiling on the basis of browsing behavior is an interpretation--and just like page ranks and content matching algorithms, these procedures too will differ from vendor to vendor.

Because the challenges and complexities could be so profound, some observers think that Google and Yahoo! might hold off on incorporating behavioral targeting in search until they can see whether MSN suffers any user backlash. "This could be one of those instances of a first mover disadvantage," Unicast's Director of Marketing, David Berkowitz, says. "[MSN] might monetize it like never before, but there is more than one possible outcome here."

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