Targeted Advertising is the future - tell that to the customers !

Its interesting....no sooner has Facebook had its valuation ratcheted up to 3 orders of magnitude x revenues, owing to its (putative) ability to target users based on their data better than ever before, but a whole slew of news comes out inferring that users - as we predicted they would in 2006 - are not playing ball.

Yes, the naughty customer is avoiding all that delightful Adstuff. Among their unsporting behaviours are:

- Cutting off tracking cookies fairly frequently
- Using Ad blocking software
- Protesting to their platforms - AOL is allowing users to opt out of deep tracking
- In fact, even Facebook has allowed users to log some of the "news" as spam

Now, a coalition has got together to force Ad players of the nosy kind to adopt a code of conduct for Privacy, as the idea is that people will be able to sign up for do-not-track lists, which will help shield their Web surfing habits from the prying eyes of marketbots.

Now, not all think this is wonderful. Mashable for eg says:

But it’s as if no one thought about the feasibility of enforcing restrictions on advertising companies, or how, for instance, you’d initiate an agreement to share demographic information with a user downloading an advertising supported podcast. In a world where these privacy advocates have their way, am I going to be inundated with privacy policy pop-ups every time I navigate to a new domain?

It’s simply not feasible for something like this to be executed, and even if it were, would we want the government in charge of enforcing compliance?

Of course, the Ad industry is trying very hard to get inside this tent - as the New York Times notes:

There is a silver lining for marketers, however: the AOL site will try to persuade people that they should choose to share some personal data in order to get pitches for products they might like. Most Web sites, including AOL, already collect data about users to send them specific ads — but AOL is choosing to become more open about the practice and will run advertisements about it in coming months.

This is not exactly supporting privacy though, its more testing the water to see what level of exposure customers will accept. Remains to be seen if customers will accept this - as Donna Bogatin says;

While many assert the online advertising goal is to “find tracking that consumers will accept,” Web marketers must come to terms with the reality that many, many consumers will accept NO tracking.

Funnily enough, Steve Rubel (an Edelman PR person and blogger!) summarises our view best:

Right now, the marketers can really dabble a lot and perhaps even blur the line with what's ethical. I am not saying they are nor am I condoning it. However, since this level of behavioral targeting is relatively new, the unwritten ethics rules - in theory - could be bent since a lot of consumers aren't paying a lot of attention - yet. Plus, of course, they benefit from more relevant ads.

That's all about to change. It's clear the FTC is concerned about user privacy. That's why they're hosting hearings next week.

Regardless of where the Feds decide to weigh in, the noise around mining behavioral data and patterns and the potential privacy implications is only going to get louder in the coming months. All of this is going to make consumers even more aware of just how much is being tracked. Some will begin to ask serious questions. It will be particularly interesting to see how Gen Yers react since at times they seem to not care much about their privacy. Other times, they do.

All of this will spur lots of debate in the coming months and will impact the so-called social graph and other innovations in Web 2.0. Get yer popcorn. It's going to be fun to watch.

I think that solving this will be the "killer app" for customer empowerment plays such as the VRM stuff being worked on by Doc Searls and Co.