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Google To Start Behavioral Ad Targeting

Google today will step into an emerging but controversial method of targeting ads to people?? interests and online behaviors. This morning, the company announced it will begin offering these ads using what is known as behavioral targeting, which lets advertisers pitch online ads to people wherever they??e browsing based on what kinds of sites they??e visited before. ??e??e looking to make ads even more interesting,?says Brad Bender, a Google product management director.

To date, Google has not employed such targeting. Chief Executive Eric Schmidt has expressed deep reservations about behavioral targeting in the past. But his concerns centered on the hidden nature of much of the targeting to date. And Google’s brand of targeting, which it calls interest-based advertising to avoid the negative connotation behavioral targeting has acquired, will give users an unusual amount of control over whether and how they’re tracked and targeted.

Behavioral targeting, used by sites such as Yahoo and middlemen known as ad networks that brokers ads to most Web sites, uses electronic markers on people’s Web browsers called cookies to track what sites people visit. If a person has visited several car sites, for example, General Motors might be very interested in targeting an ad to her, even when she’s visiting other sites. Or if someone placed a cell phone in an shopping cart but didn’t buy it, he might be served an ad for that phone on other sites.

Google’s targeting involves placing people—or more accurately, their Web browser, minus personal information—into one or more of 600 categories, such as baseball fan or luxury car seeker. In the first couple of weeks of the program, which is in test mode, 20 to 50 advertisers approved by Google will run the ads, though the program will roll out much more widely later this year.

The targeting, which won’t include information from people’s Google searches, will occur on Google’s content network, the thousands of sites where the search giant places text and pictorial display ads related to the content of those pages. Unlike Google’s search ads, which appear next to search results and therefore indicate overt interest in a topic or products, display ads often are not targeted to people’s interests. As a result, to advertisers’ increasing dismay, they’re often ignored.

Analysts say Google’s move should help the company make a larger splash in the $8 billion display ad market, of which it has less than a 2% share, nearly all on its YouTube video site. Scott Kessler, an analyst with Standard & Poors, said it’s unlikely to have a significant impact on Google’s revenues this year. But in coming years, he added, “This has real revenue potential. It should also have a favorable impact on profit margins.”

Susan Wojkicki, Google’s vice president of product management, wrote on the official Google blog this morning that the targeting fits with the notion of Google cofounders Sergey Brin and Larry Page that ads can and should be at least as useful to people as search results and other online content:

We think we can make online advertising even more relevant and useful by using additional information about the websites people visit. Today we are launching “interest-based” advertising as a beta test on our partner sites and on YouTube. These ads will associate categories of interest — say sports, gardening, cars, pets — with your browser, based on the types of sites you visit and the pages you view. We may then use those interest categories to show you more relevant text and display ads.

We believe there is real value to seeing ads about the things that interest you. If, for example, you love adventure travel and therefore visit adventure travel sites, Google could show you more ads for activities like hiking trips to Patagonia or African safaris. While interest-based advertising can infer your interest in adventure travel from the websites you visit, you can also choose your favorite categories, or tell us which categories you don’t want to see ads for. Interest-based advertising also helps advertisers tailor ads for you based on your previous interactions with them, such as visits to their websites. So if you visit an online sports store, you may later be shown ads on other websites offering you a discount on running shoes during that store’s upcoming sale.

The idea is that if these ads can be targeted to people’s apparent interests, they will be more useful to those people and they will click on them or otherwise respond to them instead of ignoring them. Of course, Google, and many other companies using behavioral targeting, hope that they will be able to charge more for such ads. As rates for display ads have dropped in recent years, many companies have been hoping behavioral targeting would help reverse the trend.

In the last couple of years, however, behavioral targeting itself has been targeted by privacy and consumer advocates. They worry that people’s personal interests could be violated and that targeting tactics could more easily woo them into buying more products.

Google, which bought the online ad placement firm DoubleClick last year as part of a planned move into display ads, is taking several steps to avoid what some call the “Truman Show moment,” after the movie in which the Jim Carrey character suddenly discovers he’s the star of a long-running TV show in which his every move was tracked and watched by millions. As the Google blog post explains in more detail:

* Transparency - We already clearly label most of the ads provided by Google on the AdSense partner network and on YouTube. You can click on the labels to get more information about how we serve ads, and the information we use to show you ads. This year we will expand the range of ad formats and publishers that display labels that provide a way to learn more and make choices about Google’s ad serving.

* Choice - We have built a tool called Ads Preferences Manager, which lets you view, delete, or add interest categories associated with your browser so that you can receive ads that are more interesting to you.

* Control - You can always opt out of the advertising cookie for the AdSense partner network here. To make sure that your opt-out decision is respected (and isn’t deleted if you clear the cookies from your browser), we have designed a plug-in for your browser that maintains your opt-out choice.

But privacy groups think that’s still not enough. Jeff Chester, executive director of the public policy group Center for Digital Democracy, said that while giving people access to their data profiles is a “step forward,” he views it as the company trying to “dodge a privacy regulation bullet.” Indeed, there are moves in Congress to set rules on behavioral targeting.

Chester said he would prefer that Google and others require people to opt in to being targeted rather than be forced to find the way to opt out. He also plans to ask Google not to target anyone under 18 and to describe in more detail the methods by which it targets.

No doubt Google, already under a microscope for its dominance in search advertising, will be watched closely as it moves into this controversial new area of targeting. It will have to avoid a number of privacy pitfalls to maintain the trust of its users. Indeed, Google took the offensive this morning with a post on its public policy blog by deputy general counsel Nicole Wong outlining the “transparency and choice” Google says it’s offering with its own brand of targeting.

All this isn’t entirely altruistic on Google’s part. As Stacey Higginbotham points out at GigaOm, Google also gets a lot of proprietary data on people’s preferences when they add or subtract category preferences. That may be good for people as well, but make no mistake that it gives Google an advantage over other ad systems.

So Google’s moves likely won’t mollify critics much. But some privacy advocates privately admit that they won’t be able to stop behavioral targeting entirely. Google itself clearly is assuming that most people won’t mind and might even welcome more targeted ads. “Most users prefer more relevant ads to less relevant ads,” says Google’s Bender. Google won’t track sensitive categories such as health and religion.

It’s likely that the entry of Google, whose brand carries a lot of weight with consumers, will help make targeting more pervasive—if advertisers can resist the temptation to go too far.

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