Behavioral Targeting in advertising

BEHAVIORAL TARGETING IN ADVERTISING

By Rita Aliperti

Introduction:◦Advertising is often times used by companies to make consumers more aware of their products and services.

◦Advances in technology allow companies to track consumer behavior in order to tailor ads viewed by the user in order to expose them to products they may be interested in.

◦This is known as behavioral targeting.

What is it?◦Behavioral targeting is a method of tracking the behaviors of internet users in order to expose them to ads tailored to their preferences.

EX: If I like a brand or a product on Facebook, I will begin to see ads for related or similar products on other websites that I visit.◦Advertisers track behaviors by using “cookies”. ◦Cookies are small text files including tracking technology that is able to collect detailed data about a user’s web behavior.

What are the benefits?◦ Boost sales for the marketers. ◦ More likely that the person will be likely to actually buy the product. ◦ Allows the marketers to experiment with prices and offers in order to determine which

offer is more favorable to consumers. ◦ Helpful in gaining new customers. ◦ Allows marketers to determine who would make a potential new customers◦ Effective in gaining customer loyalty. ◦ Customers now receive more ads for products they are interested and less unwanted

ads for products not fit for their needs. ◦ Consumers receive special offers which will often times save the customer money along

with greater amounts of information about certain products that they may have need or want for that may not be available to the customer otherwise.

What are the concerns?

◦Invasion of privacy.◦Unfair pricing.◦Risk of identity theft.◦Inaccuracy of ads.

What are the regulations?◦The FTC proposed that the companies must clearly state to the consumer that

their data is being collected and use upon each transaction that this applies. ◦The customer must be given the choice to allow their data to be collected.

Businesses are also required to protect the information of their customers from third parties.

◦The companies are to inform consumers when using their information for any purpose other than what they were initially informed about and consented to. If the company wishes to use the customer’s data any differently than they initially intended to, they must receive content.

◦ It has been proposed whether companies should be able to use “sensitive data” on users with consent, or whether companies may not use sensitive data at all.

Conclusion:◦ Due to behavioral, companies are now able to tailor ads for specific consumers.◦ This results in gaining new customers, maintaining loyal customers and

boosting overall sales and also benefits consumers by exposing them to advertisements for products or services that they may actually be interested in.

◦Customers are often concerned with their privacy being violated as they remain unsure of where their information is going and what it is being used for.

◦ Ads created using this method are also often inaccurate. Humans play different roles in their everyday lives, making it difficult to determine specific user information based solely on purchases.

◦ Because of the many concerns, the FTC has made it a point to set guidelines that regulate what businesses are allowed to do with their customers’ personal information.

Work Cited:◦ Alreck, Pamela L., & Settle, Robert B. (2007). Consumer reactions to online behavioural Tracking and targeting. Database Marketing & Customer Strategy Management, 15(1), 11-23.◦ Chen, Jianquing, & Stallaert, Jan. (2014). AN ECONOMIC ANALYSIS OF ONLINE

ADVERTISING USING BEHAVIORAL TARGETING. MIS Quarterly, 38(2), 429-449.◦ Greengard, Samuel (2012). Advertising Gets Personal. Communications of the ACM,

55(8), 18-20.◦ Jia, Jack (April 8, 2008). Behavioral Targeting: Why This Hot Technology is Burning its

Users. Retrieved from http://www.webpronews.com/behavioral-targeting-why-this-hot-technology-is-burning-its-users-2008-04

◦ Rich, Jessica L. (December 20, 2007). FTC Staff Proposes Online Behavioral Advertising Privacy Principles. Retrieved from http://www.ftc.gov/news-events/press-releases/2007/12/ftc-staff-proposes-online-behavioral-advertising-privacy