• by Wendy Davis , Staff Writer @wendyndavis, July 21, 2008

A few years ago, when lawmakers were focused on crafting legislation to outlaw spyware, behavioral targeting also found itself caught in the crosshairs. The politicos' attitude: "A little collateral damage is fine if we can solve this problem."

So said Dave Morgan, an early pioneer in behavioral targeting. As part of the keynote address at the OMMA behavioral targeting conference this morning, he recalled how behavioral targeting almost got swept up in anti-adware/spware bills. "We brought it on ourselves," he said. "We sold the spyware. We put it on these Web sites... We created that problem and we let it go on."

Some of those bills would have included legislation regulating third-party tracking cookies, which behavioral targeting companies rely on to know what Web sites people have visited. At the time, behavioral targeting was cookie-based; companies like Tacoda, Revenue Science and others used cookies to track people across a limited number of sites and then serve them ads based on their presumed buying preferences.

Those anti-spyware bills ultimately died, possibly because the Federal Trade Commission and some state attorneys general brought enforcement actions that made new legislation unnecessary. But Washington is still looking at behavioral targeting, and this time as a problem in itself. "It's no longer about keeping behavioral targeting from getting pulled into spyware," Morgan said. "Now it's behavioral marketing that they're after."

Morgan blames the new ISP-based targeters -- companies like Phorm and NebuAd -- for the shift. Those companies don't rely on clickstream data to track people. With access to every site that people visit, or every search query they enter, these companies are in a position to create far more detailed user profiles than older behavioral targeting companies. That's a prospect that isn't sitting well with advocates or Washington. "I don't think it passes the creepy factor," Morgan said. "This market isn't ready for stuff that doesn't pass the creepy factor."