The Dreaded Ten Letter Word: Behavioral – Targeting and Why We Do It. Part 1 of 2.

(Warning: If you are not in the advertising industry and read this, make sure you’re sitting down.)

As you might have heard in the news, advertisers can track you. Well, not you exactly.  But your computer.  And if you are the only one that uses it, we can come up with a pretty good profile of what you like and what you’re planning on buying.  It’s called Behavioral Targeting and once it was found out that some companies were holding onto way more information than they should, Congress started thinking about ways to limit that access.

And that’s a good thing.  No one wants to see what happened in that movie with Tom Cruise where they read his eye and project ads at him as he walks into a store happening any time soon.  (We have Foursquare and the upcoming Living Social Instant Deals for that.) Luckily, we have a smart industry that realized it would be better to self-regulate than to have any law passed that would stifle technology.

Let’s back up for a second. How do we collect info about you and then what do advertisers do with that info?

When you surf the web, you visit a lot of different sites.  These sites are pre-categorized through tagging in their source code.  Advertising companies (mostly networks) serve ads on these pages and drop cookies on your computer so they can keep track of where you go in order to build a profile about you.  They then aggregate all of these profiles so that when an advertiser (i.e. me) needs to target women age 25-54 with a household income of $75k+ that live in the northeast and plan on going on vacation in the next couple of months, I can go to them and have them provide me with a solution to reach that person.

I have no idea if that network is really reaching that person.  But if they have done solid tracking and have accurately categorized people and my product is something that those people want, the performance of my campaign should be really high.  I also have no intention or ability to find out the names, addresses, and credit card numbers of a person.  Well, if they don’t buy from me, that is.

And that’s really all that it is.  Since they track you as an anonymous person, they only have the ability to categorize you.   This way you’ll hopefully get ads that are relevant to you.  If you delete your cookies, advertisers are basically starting all over again and you’ll start seeing ads that you would never find useful for products that you would never want.  And if the web site you’re on is one that you really don’t want to live without but they use ads in order to fund their operation to give you that content, then why wouldn’t you want  at least ads that might be of a benefit to you?

Next week I’ll fill you in on what John Kerry and John McCain have in common, what Congress is trying to  do to combat all of this behavioral tracking stuff, how the industry is trying to self-regulate so that won’t happen, and what all of this means for consumers and ad agencies.  Stay tuned.