Hitting the target
Increased personalization of ads here to stay, despite privacy concerns
Last Updated October 3, 2007
The Pharos GPS Phone 600 All-in-One Mobile Device: an unlocked phone with built-in WiFi and Bluetooth, FM radio and digital camera/camcorder. Keying ads to GPS location could represent the next major breakthrough in targeted advertising. (Damian Dovarganes/Associated Press)
Social networking sites and advances in mobile technology are giving advertisers an unprecedented ability to focus their pitch to a very specific focus group: you.
Targeted advertising, the trend to focus on consumer niches rather than the general population, is hardly new. If you've ever signed up for a contest, applied for a credit card or subscribed to a magazine and later found yourself on a mailing list, you've been targeted as a more likely purchaser of a product or service than a randomly selected individual.
The focus of traditional targeted advertising, however, has always been smaller groups of people, not individuals. Take out a mortgage and advertisers will identify you as a homeowner. Subscribe to a wedding magazine and you could be targeted as a bride- or groom-to-be. It's not so much "who you are" as "what you are."
That may be changing, say experts, as social networking sites, more advanced search methods and the possibility of tracking consumers through mobile technology provides even greater detail on the tastes of individuals.
"Targeting is the future of advertising," said Andrew Frank, research vice-president at Gartner, an information technology research firm based in Connecticut.
"Traditionally, when you targeted a small group of people, you sacrificed your overall reach in order to get more bang for your buck," he told CBC News.
"But now tailored ads are an ubiquitous feature of all media. We're seeing it on the internet, in mobile and television, and perhaps someday on outdoor signs. And it's becoming increasingly personalized."
Big business on the net
Personalization has had the biggest success on the internet, a result of the level of consumer interaction with the medium. Search the online book retailer Amazon and the company will make recommendations based upon the books you've already purchased. Send an e-mail to a friend on Gmail and Google will show you ads that correspond to words found in your message.
Other internet companies have taken notice. In the summer of 2007, Yahoo Inc. launched SmartAds, a platform for more personalized ads, while Time Warner's AOL bought behavioural ad company Tacoda. Research company eMarketer projects that spending on behavioural targeting will nearly double to $1 billion US in 2008 and hit $3.8 billion US by 2011.
But even these advertisements focus only on snippets of an individual. Social networking websites, which compile everything from contacts to biographical detail to likes and dislikes, offer an even greater potential for personalization.
In September 2007, News Corp. became the first social networking site to sell ads keyed into users' profile pages. Fox Interactive Media head Peter Levinsohn told an investor conference that the company would only use information users have freely expressed on their pages.
"No one else in the marketplace can offer this kind of concentrated reach," Levinsohn told the Associated Press.
Social networking and user-generated sites provide an ideal backdrop for personalized advertisements, said Tim Richardson, a technology professor at Seneca College and the University of Toronto.
"Yahoo lost to Google because it was using banner ads at the top of the page while Google was placing targeted ads next to searches. If you start invading MySpace and YouTube, now you can really reach people," he told CBC News.
From 'who are you?' to 'where are you?'
While social networking sites provide advertisers with more information on who you are, mobile telephony could open the door to another key piece of data: where you are.
Increasingly, sophisticated mobile handsets are incorporating Global Positioning System satellite technology to provide users with mapping information. Tying mapping data into advertising is a natural move, said Richardson.
"One of the greatest weaknesses of marketing is you don't know location, you don't know how close people are to your store," he said.
But if advertisements were tied to a phone's GPS, the consumer might get an ad telling them not only about a sale nearby, but how to get there.
"This could be the holy grail for advertisers, the next killer application," Richardson said.
There's a market to be had in mobile advertising. According to U.S. research firm Informa Telecoms & Media, the mobile advertising market was estimated at $871 million US, or 0.2 per cent of the overall advertising industry, in 2006. But by 2011, the market will reach $11.35 billion US, according to a study published in 2006.
Consumers still leery
In principle, consumers benefit from receiving advertisements that are more relevant and so they should find them less annoying.
But that isn't the case, said Frank of Gartner.
"We're a long way away from that ideal right now," said Frank. "Consumer confidence in advertising is at an all-time low, and with targeted ads, there is a whole raft of privacy issues that hasn't been worked out."
Richardson said the lack of confidence stems from an apprehension about how the company, organization or government acquired the information.
In Canada, companies seeking to obtain private data must get permission from customers before they can distribute, store or use that data for other purposes. But those rules don't govern companies that don't have any of their operations in Canada.
In response to concerns from the European Union about the data they were accumulating, internet search companies have put limits on how long they can keep personal information accumulated from search requests, with Google and Microsoft expunging data after 18 months and Yahoo and AOL removing search data after 13 months.
Even when consumers know how and where the information is being obtained — for example, through a MySpace page or a Google search — there's still a sense that privacy has been violated, said Richardson.
"People become a little nervous if they think you know too much information about them," he said.
"If you target them too closely, it can have an adverse or opposite effect," he said.
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