Helen Gawor Helen is Managing Director of Connect Insight, the digital research consultancy founded in 2007. Connect Insight specialise in helping businesses use digital research and data to support commercial and brand strategy. Previously Helen headed up the Commercial Strategy team for Orange and had responsibility for B2B marketing and media research. At Connect Insight Helen works with advertisers, agencies, publishers and industry bodies both in the UK and further afield. Read the full biography here.

Direct Hit

How ad targeting benefits us all

23rd August, 2011

With all the chatter about EU Cookie Directives, and concerns about internet privacy, behavioural targeting has recently come under the spotlight.

For those unfamiliar with behavioural targeting, it is basically a way for advertisers to deliver an ad to a web page based on your browsing history. So a classic example is visiting a retail site to search for a new pair of shoes. The next day when you check the headlines on your favourite news site, an ad appears for the retailer in question reminding you of their great offers on shoes or even a picture of the specific pair.

This type of retargeting consumers is evolving all the time and now includes using marketing emails and more recently search engines. Google has just announced that they will be serving ads based on previous search activity after a successful beta test. Google cite cases of 40% uplift in brand awareness and 400% uplift in sales conversions from targeting in this way.

There is no doubt that this is an online advertising success story, and appears to be where online advertising has found its USP. US trade body, Network Advertising Initiative, conducted research last year showing that even though behaviourally targeted ads cost twice the amount of run of network ads, they are more than twice as likely to convert sales. Targeted ads achieve an average conversion rate of 6.8%, compared to 2.8% run of network.

So while the industry has been honing these technologies and reaping the commercial rewards, the consumer has been left feeling somewhat nervous about what we know about them and how we are using their data.

The UK has led the way in Europe as to how we deal with the EU Directive, and is one of only 3 countries to have made motions to commit this to law. The other two countries, Estonia and Denmark do not have guidelines as comprehensive as those drawn up by the UK Information Commissioner’s Office, and in fact Denmark has more recently put their guidelines on hold pending review.

Its worth pointing out at this stage that it is because of consumers’ concerns about targeted ads and privacy that the EU has taken measures to try and regulate use of cookies. However, the realities of full compliance to this directive will manifest themselves in a way that will be intrusive and time consuming for internet users. Consumers will need to be alerted and asked frequently for permission to receive a cookie. The cookie’s usage will need to be explained and the consumer will need to take action. With the volume of cookies used by websites to make our browsing experience fast, seamless and flowing, this will be quite a departure for some internet users.

In fact, organizations putting the new rules in place ahead of the May 2012 deadline for compliance are starting to realize the full impact of requiring fully informed consent to cookie usage. Earlier this month The Information Commissioners Office (ICO) complained of a 90% fall in its own recorded traffic following implementation.

Media reports on cookie usage and internet privacy are largely covering issues of bad practice, and even the most informative articles intended to educate have a slightly suspicious undertone. Consumers have therefore been conditioned to believe that cookies are a bad thing and misinformed that the internet is full of tricksters after their personal browsing information.

There is still widespread misunderstanding amongst consumers about the role of cookies and behaviourally targeted advertising. Back in 2009, IAB UK and law firm Olswang published a study into consumer attitudes to online behavioural advertising (OBA). They found that 72% of consumers were unaware of OBA, although only 46% said they were unaware after the concept was explained to them. At that time 38% could recall examples of being targeted in this way.

Although 23% found OBA appealing, this rose to 38% when respondents were told that their personal data was not collected or stored. A more significant 74% found OBA appealing when told that they could control whether they were targeted and by whom.

Control does seem to be the major issue here, especially since 92% said they wanted to be notified of use of OBA. It is this perception of lack of control that has exacerbated privacy concerns. At the end of the day, consumers prefer targeted advertising and are prepared to trade off some information for free use of content online. In a consumer study published by US behavioural targeting compliance specialists Preference Central last year, targeted ads were top of consumers’ wish list and privacy was an issue for only 10% of respondents. This obviously rose significantly when you started discussing behavioural targeting following your internet usage.

It’s time the digital ad market stopped being so inward looking, and started to really talk to consumers about cookies and how they are used by advertisers. There are some good initiatives already, but you have to really know what you are looking for to find out about them.

IAB UK launched Ad Choices, which serves to educate consumers about behavioural targeting, the companies involved and how they are regulated. You can even switch off cookies from the behavioural targeting companies to block them from your browser. It’s a great initiative, but how many consumers know about it? We need an Ad Choices champion to really start a positive dialogue with consumers.

This could perhaps be done via an industry body such as the IAB in conjunction with the Information Commissioner’s Office. The consumer needs to understand what behavioural targeting means for them by a trusted source. Many of the online businesses involved in behavioural targeting will be familiar to consumers, such as Google, Microsoft and Yahoo. Many specialists, however such as Audience Science and Crimtan will be an unknown entity. Transparency and trust will help us move towards a workable compromise between consumers and behavioural advertisers.

So what’s next? Behaviourally targeted TV ads. Sky has already been targeting ads on their iPlayer based on your browsing history as well as what they know about you as a Sky customer, including your postcode. They intend to roll this out on TV to their Sky HD+ customers by 2014. There will be consultation with customers and the ability to opt out. It’s therefore possible that internet behavioural targeting will benefit from the halo effect of a broadcast brand adopting this technique; a brand that many of us have a pre-existing relationship with and who know far more about us than our online shopping habits.

What is clear is that keeping consumers opted in to these technologies depends on how we convince consumers that behavioural targeting is not a dark art, and demonstrate how it truly benefits them.

Helen Gawor

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