Your Cable Box Knows You So Well

No longer content to advertise at random, online marketers are watching what you watch, where you surf, and what you search for

by Stacey Higginbotham

The Internet has given us plenty of something for nothing, and we've comfortably allowed advertising to support that free content. After all, its a model we're familiar with from TV, magazines, and newspapers. But on the Internet, the advertising-supported content model is changing. You're not just watching the ads—the advertisers are watching you back.

Last year, advertisers spent $21.2 billion advertising online, according to data from eMarketer, and the research firm expects that figure to grow to $40.5 billion in 2011. But as consumers spend more of their time in front of computers and mobile devices, advertisers are trying to make those ads more effective by watching what you watch, where you surf, and what you search for. Call it the individualization of advertising.

But that individualization has privacy implications. Print advertising has long depended on reader surveys and statistics to direct ad dollars: Those ads in my copy of Vogue assume I'm interested in fashion and probably a woman—but they're not sure. Online, however, data accumulates as I consume media. Let's say I'm visiting Vogue online and then I switch to a parenting site, check my RSS reader to see the tech news, and search for information about postpartum depression. Add all that information together, along with my IP address, and I'm now a tech-savvy mom who lives in Austin, Tex., who may be feeling blue. Suddenly, I've become a lot less blurry in the minds of advertisers.

Beyond Cookies

Aside from cookies used to track people on the Web, technologies such as deep packet inspection (DPI), which indicates where a person surfs by looking at the information contained in the data packets, allow for really detailed profiles. Redwood City (Calif.) NebuAd has introduced technology that uses DPI to serve up "micro-targeted" ads by assigning Web users an "anonymous" number that can be differentiated from other anonymous numbers. Search engines track my visits from their site and store my search data for 18 months, which also creates a comprehensive profile of my interests.

With the spread of interactivity to mobile phones and TVs, advertisers can tell even more about me. Google is currently in negotiations to get its search bar on the home screen of Verizon Wireless phones and keep search data generated for later use. Interactive TV services now anticipate what I want to watch based on my viewing habits. Comcast, through the ownership of sites such as Fandango, Plaxo, and Daily Candy, hopes to be able to offer better recommendations to customers. It may be warm and fuzzy to marvel at how well your cable box knows you, but it can become scary when you realize that its not just the box that knows you—it's Comcast and an array of advertisers.

Individualized advertising is a big business play for content providers and advertisers. AOL spent $275 million buying Tacoda, a behavioral advertising shop, and Comcast has spent more than $500 million buying up sites. Google spent $3.1 billion to acquire DoubleClick and gain the ability to follow users around the Web.

Getting to Know Me

From a marketer's perspective, such individual attention should be a welcome change for consumers, as it reduces the number of unwanted advertisements that don't relate to their wants and needs. Steven Woods, co-founder and chief technology officer of Eloqua, a marketing platform company, says consumers don't seem to mind targeted advertising if they know their data is being collected.