Texans for Economic Progress

Behavioral Advertising 101

Consumers Have Little Control Over Online Privacy

What is Behavioral Advertising?

The Federal Trade Commission defines online behavioral advertising as “the tracking of a consumer’s activities online, including the searches the consumer has conducted, the web pages visited, and the content viewed in order to deliver advertising targeted to the individual consumer’s interests.”

Behavioral advertising can benefit consumers by harnessing the vast content of the Internet and delivering customized ads as part of a consumer’s unique online experience. However, privacy and consumer protections are of major concern because behavioral advertising tactics are largely invisible to consumers. They don’t know they’re being tracked. They haven’t given their permission to be tracked. They can’t easily stop the practice. And they don’t know how – or by whom – their information is being used. Right now, consumers have little control over their online privacy.

How does it work?

Online advertising networks and search engines can track personal web searches and surfing activities by dropping “cookies” on individuals’ computers. A cookie is a small file that that uniquely identifies your Web browser and tracks where you go and what you see on the Internet…empowering advertisers to more strategically place ads in a user’s online path. Some cookies are innocuous and make using the Internet easier. For example, after you register on a Web site, a cookie allows the site to remember your username and password or allows you to review your recent purchases.

Why Should You Care?

However, online advertising networks and search engines use cookies to collect information about you without notice or your consent. You don’t even have to register with a site to be tracked. These cookies are attached to your hard drive and record your IP address (your computer’s unique online signature) in an ad server. Later, when you’re surfing the Web, the cookie acts like a homing device, reporting which sites you visit and when, and what you’ve browsed while you were there. This information allows an ad company to build a customer profile of your online browsing habits…tracking your movements, logging the articles you read, the purchases you make, the ads you click. All without your knowledge or permission.

Who Else is Watching You?

Sometimes Internet Service Providers (ISPs), ad networks and search engines collect information about your online activity and then pass the information along to third parties who use your information to generate online advertising customized to your online behavior. We like to think of our IP addresses as retaining a degree of anonymity, separate from our other personal information. But online ad servers could match your IP address to your other personal information collected by their partner Web sites. Feasibly, they could match up your IP address, browsing history, email address, phone number and home address.

What’s the Fix?

Behavioral advertising in and of itself is not a bad thing, if used properly. The Internet is a vast and unwieldy world. Services to tailor an individual’s online experience can be rewarding, so long as the user gives the green light. Privacy must be purposeful. All Internet players including ISPs, online advertising networks and search engines, should embrace policies that allow consumers to actively “opt in” to behavioral advertising programs…not enroll blindly because they failed to “opt out.” Upfront, consumers should know what information will be collected, how it will be used, and who will use it, and how it will be kept secure. Without explicit permission, a consumer’s online activities and personal information should be off limits for behavioral advertising activities. Consumers should be in control of their privacy.