US: Corporate Ad Network Monitors Web Habits
At the height of the dot-com boom, DoubleClick made itself the object of scorn among privacy advocates by trying to track Internet users individually and show them ads related to their surfing habits.
Now advertisers are circling back to the idea, but in a way that, they argue, will spare them the privacy-related outcry.
Tacoda, an online marketing company based in New York, will announce today the creation of a network of 60 Web sites, including USAToday.com and the Web site of The Tampa Tribune, that allow its members to display ads based on how people surf through the network. The difference from DoubleClick is that Tacoda's service, called AudienceMatch, will not know who those surfers are, just where they visit.
Last week, for instance, some visitors to a fall music preview story in the Life section at USAToday.com saw an ad for Beneficial Loans, a financial services company. That ad, consisting of two lines of text and a headline, was directed only at visitors who had read stories about personal finance on other newspaper sites, like those of The Virginian-Pilot and The Tampa Tribune. No personal information is sought or divulged - AudienceMatch simply traces the path of a single computer through its network of sites, using a piece of online tracking software called a cookie.
"This is different than what DoubleClick was trying to do," said David Morgan, Tacoda's chief executive. "This system uses no personally identifiable information, and no data is shared between publishers. Privacy is one of the biggest issues that will drive the success of this."
Tacoda's network tracking is one possible solution to a problem facing online advertisers: how to rise above the Web's clutter, where users are confronted by multiple ads on nearly every Web page they read, without provoking anger over privacy intrusions.
Tacoda's system also helps find niche customers among the larger online audience. A longstanding disadvantage for publishers is that there may be relatively few people in a particular class of prospective customers - those looking to buy a luxury car, for example - and so it is not efficient for advertisers to devise big campaigns and pay high rates to reach those customers. But when grouped together, Tacoda's 60 publishers are visited by roughly 100 million people monthly, or about 75 percent of the Internet audience in the United States.
Mr. Morgan said AudienceMatch is similar to Google's AdSense program, which has gained a strong following among publishers in the last year. With AdSense, marketers bid for the right to have their text messages appear near stories that have specific phrases or words related to the advertiser's product or service. When the ad is clicked on, marketers pay Google a fee.
With AudienceMatch, advertisers like Vonage, Electronic Arts, LowerMyBills.com and others bid not on words or phrases, but on preset groups, like "gadget geeks," or "car buyers."
"So in the 30 days that a person is in the market for a car, there are dozens of opportunities to reach them outside the auto content on their local site," Mr. Morgan said.
Advertisers currently pay a minimum of 25 cents each time a user clicks on an ad, but that price could rise in the auction format, Mr. Morgan said.
According to Denise Garcia, an analyst with Gartner, a technology consulting firm, this approach "enables advertisers to reach a lot more people with targeted ads, which, for them, is the next big wave."
Popular news sites like The Wall Street Journal Online, The New York Times on the Web and others have long relied on registration data and recent surfing activity of their users to deliver more targeted ads on behalf of marketers. AudienceMatch helps publishers deliver ads to a niche audience without collecting personal information. (Publishers that do collect personal information will not be allowed to incorporate it into AudienceMatch.)
Sites within Tacoda's network share an undisclosed percentage of the revenues for each ad with the publishers that provided the data about the user's surfing activity.
Ms. Garcia said she expected the service to attract advertisers, but perhaps not at the same rate as Google, Yahoo's Overture and others that offer similar, if less well-targeted, services. And although Tacoda has hoped to overcome privacy concerns, they still loom as one possible drawback, she said.
"I know these companies are managing the information quite carefully, but some consumers could find it annoying that Tacoda knows what they're doing across the network of sites," Ms. Garcia said. "I think one of the big issues we'll find over the next year is that consumers are realizing they need to protect themselves online."
Tacoda's system has its limitations. For instance, because the service tracks computers, not computer users, parents who share a PC with their teenage children could find themselves reading acne medication ads, while their children might see messages about retirement planning. Mr. Morgan acknowledged such imperfections, but said: "The effectiveness of advertising today is terrible, so you don't have to be perfect, you just have to be better."
Mr. Bouten said he believed that Tacoda's new network, which he has tested in recent weeks, should allow USAToday.com to increase the money it earns from text ads.
"It's still in the early stages, but in theory, targeted ads should improve our rates significantly over time," he said. "We're talking about two of the items that have made the biggest impact in advertising in the last two years - text links and audience targeting - and putting them together."
Some advertisers will like the new service because, among other things, it allows them to reach customers in unexpected places, according to Stuart Bogaty, managing director of mOne, an online marketing unit of WPP Group, the advertising company.
"Hitting someone with a message that's out of context can sometimes be more powerful than showing them an ad that's in the context of the page they're on," Mr. Bogaty said. "Because there's so much clutter online, you can stand out more with a targeted ad in a section of a site that's not specific to the product they may be interested in."
And at least it would be personalized clutter.