Public Reaction to Targeted Advertising

of California at Berkeley concludes that a two-to-one majority of Americans do not want marketers to tailor advertisements to their interests. The 1,000-person survey further indicates that nearly 90% of us particularly object to anonymous tracking of our Web-surfing for purposes of creating behaviorally-targeted ads.

Our interview today is with Dr. Joseph Turow of the University of Pennsylvania who was one of the authors.  

Despite the study’s conclusion it appears that consumers actually respond favorably to such ads. For example, both Amazon.com and Apple’s iTunes Store are hugely popular, yet both serve ads based upon our prior purchases and peregrinations within their websites. At Amazon.com the ads are presented as “suggestions”, but they are nonetheless advertisements. Such ads are thought to have some of the highest click-through rates on the Web. Similarly, the newspaper industry reports that the behaviorally targeted ads provided by Yahoo are among the most effective on newspaper websites.

Although we sense that Dr. Turow would disagree, we are inclined to believe that the survey results partly reflect a natural human tendency to reject changes that we ourselves do not initiate. For example, a dozen years ago many parents tried to deny, or restrict, Internet access to their children. Today they recognize that the Net is as indispensible as TV. Although concerns remain, parents are unlikely to totally preclude Web access to their kids.

Consider also that many terrestrial retailers have been tracking our behavior for years, but there seems to be little objection. For example, I get regular emails from Borders Books featuring special offers. Most of the time I simply delete them, but in a recent instance I was browsing at the store and recalled that I had received a 40% discount offer on any book of my choice. While at the store I read a few pages of Hallelujah Junction which is an autobiography of the contemporary classical composer, John Adams. When I got to the checkout desk, I merely showed the clerk the email discount offer on my iPhone. He said it was good enough, meaning that I did not have to print-out the coupon. In short, I saved 40% on the book.

Furthermore, while reading it at home I discovered that I could sample some of Adams’ operas (Nixon in China and Dr. Atomic) on YouTube. The YouTube samples led me to Amazon.com’s download store where I purchased the symphonic version of Dr. Atomic. Unfortunately it was only available as complete album, so I had to also buy a second composition that I really did not want.  The second selection turned out to be okay, but I resented the fact that the label forced me to buy the entire album. I feel confident that label executives would similarly resent being forced to buy a $10,000 dealer-applied rust-proofing job merely because the new car they are buying is in short supply.

In sum, everybody benefited from the behaviorally-targeted email from Borders Books. First, I got a 40% discount on a book that I would otherwise not have purchased at Borders. Second, YouTube got more traffic and a proselytizer for their Long Tail music videos. Third, John Adams connected with a potential buyer via the free YouTube samples. Fourth, the record label sold the music in the form of a $10 album instead of three individual tracks that would have generated only $3 in sales. (We may have more commentary on this in a later post).

In conclusion, the basic premise of behavioral-targeting is to place more value in what people do as compared to what they say. Thus, maybe Turow’s study is more about what people say than what they will do.

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