• by Steve Smith , Staff Writer @popeyesm, August 31, 2007

The world's biggest online auction house knows a lot about its users' bidding, browsing and buying habits, and now eBay is leveraging this knowledge in behavioral ad targeting both on and off the site.

In addition to serving ads to active buyers within eBay, the company buys inventory elsewhere. EBay recently started testing a retargeting program on AOL, MSN, RightMedia and others that use a member's on-site history to target relevant ads by its many Power Sellers. Tacoda is one of the technology and network providers involved in the deployment, which would seem to give AOL's new acquisition a mammoth e-commerce client. As Scott Shipman, eBay's senior counsel, global privacy practice, and Kasey Chappelle, director of the marketplaces division, tell us, the company couples this BT rollout with a new AdChoice opt-out program. AdChoice is hoping to chart the next stage in privacy and behavioral targeting by making the model as transparent as possible and the opt-out option clear and ever-present.

We should point out by way of accuracy that eBay's AdChoice is not the first on-ad opt-out program in the BT space. Last year we covered AlmondNet's use of opt-out opportunities on ads and CEO Roy Shkedi's call for all BT network to adopt similar practices.

Behavioral Insider: What is the extent of eBay's ad program?

Scott Shipman: There are two pieces that we cover with the AdChoice program. Off-eBay ads are created by eBay with the idea of driving traffic to eBay. Advertising on eBay up until recently have been very sparse and through relationships with Google internationally and Yahoo domestically. We are about eight to ten months into programs where they host ads for us on our site. The key notion, as you can imagine, is that we don't want to cannibalize the activity on the site and direct people off of the Web site. So we are very sensitive to where they appear and the content they are advertising.

Behavioral Insider: What role does BT have in this advertising?

Shipman: BT within the ad space both on and off eBay really focuses on one major area which is making the content more relevant to the viewer. From a cannibalization standpoint on eBay, naturally we want the ads to be as customized as possible on eBay because, one, we want to make sure that either it is as relevant or tailored as possible to the individual so we don't cannibalize the site itself. Off of eBay generic ads certainly would fall on deaf ears. The idea is that the more information that we can use based on your activity on our Web site, then the more relevant the ad is going to be to you, and the more likely you will come to eBay.

Kasey Chappelle: Some of the things we are doing off-eBay involve retargeting where you are traveling to a site after being to eBay and we place an eBay ad there that is going to change depending on what you have done in the past on an eBay site.

Behavioral Insider: What kind of segmentation is possible as you track off of eBay?

Shipman: It is category type of data, bidding data, the types of items you may be bidding on or browsing on within the eBay system. When you leave eBay certainly we don't have reach into the Internet like the search providers do. What we know about are items you are bidding and browsing and listing and selling in certain categories, so we can pass that information into a profile. When you are out on the Internet and are about to see an eBay ad we can associate that affinity with the ad.

Behavioral Insider: Explain AdChoice.

Shipman: The salient piece to the AdChoice system we have created is in essence to say, when you see an ad on the Web site or off, you actually have some control over what content appears, and that is what is new. The ads themselves on the site have been on the site since we inked those deals [with Yahoo and Google] months ago. What is new is as we start to roll out the BT components, [we see that] consumers and the FTC are very concerned about targeting -- are you sharing information with a third party, how is the information being used? The key component we have put in place is the patented AdChoice program that allows users to see directly on the ad a label that says 'Advertisement (about)' [on-site]. The off-site ad says 'AdChoice.'

Behavioral Insider: What is distinct about this opt-out program?

Shipman: Consumers who click on those links go directly to a page that lets then state a preference whether they want their eBay data used to target that ad to them. So unlike other programs out there we have seen in the news, this is not the Network Advertising Initiative [NAI] opt-out. This is an eBay-specific opt-out and it is the eBay data. The eBay page explains the AdChoice program, that we care about your information and how you are targeted and marketed to. And if you would prefer that we don't use your information to target ads to you, you can tell us that you would prefer a generic ad and not have ads targeted to you. And you opt out immediately.

Behavioral Insider: Any early response from users?

Shipman: Off-site they just turned on the BT component. We have seen a tremendous uptick in conversion, which you would expect. What we haven't seen is an increase in complaints. We haven't seen customers enraged about customized ads. We haven't seen increases in opt-out rates. For us that means we're adequately providing choices and empowering [users] to make a decision, and that they feel comfortable with that. Now we're still early on in the program and obviously we will continue to monitor how things move forward, but it is a positive step.

Behavioral Insider: How are you managing to communicate the BT model and then the pros and cons of opt-out to a user in such limited space and within our limited attentions spans?

Shipman: One reason we have a variance between the on-eBay and off- eBay ads is to see what words work best. Whether the consumer is used to "Advertisement" and a parenthetical "about." We did an email announcement to 150 million users back in June. How many read that and our description of the program? What type of brand awareness does the consumer have around that AdChoice link? It is not mouse print. We like "AdChoice" because it is fairly descriptive that it is providing a choice about the ad. If you think about it, a company with a good privacy reputation like eBay with a word like "AdChoice" in an ad leaves only a few options.

Behavioral Insider: How do you see AdChoice moving privacy practices forward?

Shipman: It is okay to trust your customer and be transparent. That idea rings loudly for eBay. Providing that choice, I think, helps with the trust piece. It allows your customer to think, this company trusts me and respects me enough to let me make my own decisions, and provides an easy tool from every ad to do that. The NAI has been around for a long time, and many would argue it is not the latest technology for behavioral targeting but for general email and other types of marketing. Many argue that a next step is needed for BT. We believe that providing an on-ad link to enable customers to opt out of is that next step.