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The Evolution of Online Advertising Technology - More Targeting, Less Privacy (Part One)
By Scott Buresh (c) 2008 Medium Blue

Please bear with me as I go through a brief history of basic
online advertising. The evolution of targeted online advertising
is interesting, because I believe the perceived harmlessness of
early advertising technology and targeting tactics lulled many
people into a sense of complacency or perhaps even false
security.

In the beginning of targeted online advertising, there were
banner ads. As many people recall, these were supposed to drive
the Internet marketing industry in its infancy. Scads of
publishers paid scads of money based on a CPI (cost per
impression) model or simply paid huge dollars for banner ads and
other targeted online advertising on well-trafficked sites.

Then something crazy happened - nothing. It turns out that the
banner advertising technology on the Internet was not the magic
bullet it was purported to be. The old way of making money based
on providing content (the way magazines and newspapers ran
advertising) just didn't seem to work in this context.

This new advertising technology was part of the reason for the
collapse of the dot-bomb era. All the talk was about
"eyeballs," "stickiness," "bleeding edge," "cradle to
grave," and several other terms that, in retrospect, would have
sounded more at home in a Wes Craven movie than in an emerging
industry. Hundreds, perhaps thousands, of business models
depended on a traditional marketing strategy working more or
less the same as it always had when introduced into a
non-traditional setting.

All the while, one company, originally called GoTo, then
Overture, and finally bought by Yahoo!, actually formulated a
targeted online advertising system that worked - keyword
advertising. Companies could bid on a per-click basis for
certain key terms, which sent valuable traffic to its website.

Obviously, the improvement in advertising technology had to do
with the model itself, which was perpetuated on relevance. By
only bidding on keyphrases that you wanted, you could only pay
for visitors who had already shown an interest in your products
or services. This targeted online advertising model was soon
copied by Google, who tweaked it and made it better.

There were not many raised eyebrows at this time, in terms of
privacy. After all, the user was the one entering the query, and
nobody suspected at the time that search engines might one day
actually create individual profiles on users. We were all just
really enjoying "having the information at our fingertips"
without the potential hazards of ink stains and paper cuts that
traditional research required.

Google then took a similar idea a step further. Instead of just
serving up targeted online advertising on its home page, the
company created a content distribution network called AdSense.
In this program, owners of websites could sign up to have the
ads placed on their sites. Google would then use a
"contextual" logic to determine which ads to place where. In
other words, Google would "read" the content on a page and
then serve up targeted online advertising in the area provided
by the site owner that was relevant to the content.

There were a few missteps with this new advertising technology
(one classic example was when the online version of the NY Post
ran a story in 2004 about a murder victim whose body parts had
been packed into a suitcase. Running alongside the story was an
ad that Google served up for Samsonite Luggage). Yet this
targeted online advertising service also caught on, with nary a
cry from privacy people. After all, you don't have to visit the
sites. And the site owners don't have to sign you up for the
service, right?

Suddenly, Gmail was offered and that raised some eyebrows.
Gmail, of course, is Google's free email-based platform. Gmail
gave people an (at that time) unprecedented 1 gigabyte of email
space (Yahoo!, if memory serves, offered 4 megs for free email
accounts and charged people for more memory). The only caveat –
Gmail would use a similar advertising technology platform as
AdSense, but it would decide which ads to serve up by reading
through your emails.

Well, this new approach to advertising technology creeped some
people out, and privacy advocates were a bit more vocal about
using targeted online advertising by parsing through people's
emails. A California lawmaker tried to introduce some
legislation preventing the practice. International privacy
groups chimed in with their own concerns. In the end, however,
the fact remained that one had to sign up for a Gmail account
and everyone that did was (presumably) aware of how the service
worked before they did sign up. So it was an opt-in system – If
you didn't want Google parsing through your email and serving
up relevant, targeted online advertising, you didn't have to
use the service.

So there we all were, happily surfing away, not a care in the
world. What most of us didn't realize was that enough free
cookies were being distributed to each of us to turn the
otherwise docile Keebler elves into tree-dwelling Mafioso
erroneously plotting a turf war.

These cookies, of course, are the ones that websites place on
your computer when you visit – little packets of information
that record your visit, and sometimes, your activity there.
Certainly, there's a legitimate reason for this. When you
return to a website, it can help if it remembers your last visit
and you can pick up where you left off. Assume, for example,
that you were making multiple purchases from an e-commerce site
and had a bunch of stuff in your shopping cart but were forced
to abandon the site before completion. It's nice to go back and
pick up where you left off without having to do it all over
again.

Digital advertisers, however, saw another opportunity for
targeted online advertising. They invented advertising
technology that would scour through the cookies on your personal
machine, figure out what you liked and disliked by looking at
the types of sites you went to, and then feed up highly targeted
online advertising based upon your browsing history. These
companies included aQuantive, DoubleClick, ValueClick, and
others. Of the companies I mentioned, only ValueClick is still
independent. Google snapped up DoubleClick, while Microsoft
snapped up aQuantive. Clearly, these companies believe in the
future of Internet advertising technology and also believe in
the long-term legality of this technology.

Now some real red flags were raised. I've written about this
advertising technology before (http://www.sitepronews.com/
archives/2008/feb/1.html) , so I'm not going to go over it
all again here. Suffice to say that some government regulators
were pretty skeptical about this new form of advertising
technology and there have been numerous suggestions for
regulation. The lack of uproar from the public, however, has not
really created any backlash for the companies in question. It
could be because there is widespread ignorance about Internet
advertising technology (and I believe there is, based on
conversations with people of average Internet experience).
Perhaps a part of it is also that privacy has been eroding on
the Internet one incremental step at a time.

To be continued in part two...
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Scott Buresh is the CEO of Medium Blue Search Engine Marketing,
which was named the number one organic search engine
optimization company in the world in 2006 and 2007 by
PromotionWorld.  Scott has contributed content to many
publications including The Complete Guide to Google Advertising
(Atlantic, 2008) and Building Your Business with Google For
Dummies (Wiley, 2004), MarketingProfs, ZDNet, WebProNews,
DarwinMag, SiteProNews, ISEDB.com, and Search Engine Guide.
Medium Blue serves local and national clients, including Boston
Scientific, DS Waters, and Wake Forest University Baptist
Medical Center. Visit MediumBlue.com to request a custom SEO
guarantee based on your goals and your data.
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