Crisis in Advertising: Privacy vs. Relevancy

This is the first part of the guest post by David Rostan, the co-founder and president of ListensToYou. With ListensToYou, David hopes to improve the online advertising market by giving users control over the ads they want to see. Prior to founding his company, David worked in marketing and strategy for technology and ecommerce companies. He has earned his MBA from the Kellogg School of Management.

If you want to take a closer look at ListensToYou to understand David's approach, you can use the invitation code "adverlab" (limited to the first 100 sign-ups).

Most consumers realize that there is a tradeoff they make between getting things they want online (anything from news to product offers) and the protection of private information. However, it is currently only framed as a tradeoff between letting companies know things about you (in a pejorative way) and getting things you want; we’re missing the opportunity to maximize everyone’s benefit through a fair, consumer-controlled transaction.

To stop the flow of personal information, users employ anonymizers, delete cookies and participate in the outcry over online privacy. This really begs the question “what are companies doing that makes users want to be invisible to them?” The answer is that companies are gathering more data and creating better predictive algorithms to reach (or trick) customers instead of listening to (or even asking) what they want.

Internet users enjoy control over content in a way not previously possible in other media. What they read and consume, the time of day or night they consume it and the format in which they view the information are highly customizable.

Yet, in the most consumer-driven medium ever, internet users are still completely left out of the conversation in one main area of internet content – advertising. While I may be able to choose a website, an author or an article, video or post, I cannot exert any control over the ads I will see surrounding my chosen content.

Publishers need to monetize their sites, but advertisers, brand marketers and publishers are all cast in a bad light when customers feel mistargeted or stereotyped or feel that their private information has been abused. Exploiting user information is not the way to build good relationships with customers: advertisers lose because people won’t click ads; brand marketers lose because users won’t form positive associations with the advertising companies; and publishers lose because mistrusted ads are a constant drag on the website’s brand and revenue source.

This “everybody loses” situation is an over-arching problem with online advertising: web users cannot control what personal information (their habits, interests, behaviors, etc.) they trade for the online activities they value (product and service offers, socializing, local event notification, etc.) and, therefore, do not get things they value or trust the ads they do get.

An Example: A user may be required to give her age (34) to register to use a website. She agrees because the website claims that this is to insure that children do not use websites without supervision – i.e. as a safety precaution – but then she sees the information used to target her with ads for children’s clothing (she’s happily single with no kids). So, the ad is not only irrelevant, but it is also a surprise to her that her age is being used in a way she did not intend. She stops looking at ads, has a mistrust of the website brand, has a mistrust of the advertiser and, even when served appropriate ads, still carries a perception that the ad is not trustworthy or not for her.

The flaws in online advertising can be described as problems of relevance and trust. Relevancy has been greatly improved by behavioral targeting (even if privacy has not), but behavioral targeting is backward-looking. If you used the internet for a recent house purchase, for example, you really know what I mean. How long will you be receiving and ignoring those mortgage ads?

Contextual ads and demographic data are also used to produce relevancy in advertising, but site context is only a stereotype and demographic information is a best-guess. Just because a 54-year old reads blogs about classical music does not mean that he wants to buy retirement property more than he wants to buy the newest Nike sneakers.

To a consumer, relevancy is not only about getting what he wants, it is also about seeing what he expects. Relevancy is about expectation and emotion, but the content and subject matter of advertisements cannot always be consistent with user’s interpretation of the content and subject matter of the website, making the user feel that the website publisher does not understand why she visits the site.

Trust is even more emotional. If the user does not feel that he has consented to the ad or the information used to serve it, he consciously or subconsciously mistrusts the brands that brought it to him.

The hot topic in trust and advertising is behavioral tracking, of course. Tracking scares consumers and may invade their privacy. A relevant ad often signals to us that THIS is the brand that is tracking me the most, which is bad for any brand. Further, consumers have no control over or protection from unwanted or inappropriate advertising content: they have been removed from the discussion and forbidden from making those decisions.

This lack of empowerment, itself, destroys trust whether the online ads are “appropriate” or not. Even widely respected online publishers suffer the consequences because they have no way to lend their own brand credibility to the ads served on their sites. Publishers are often unable or unwilling to vouch for all ads that are served and, even if that were not the case, there is no understood signal to do so.


  1. Maaan, can ya do a 100-word version? Us ain't used to no long posts here.

  2. This is a really great approach, I talk about for a longer time now aswell - great to see a service who starts doing it!

    Just one idea: it would be great to this that kind of service in combination with OpenID! So that when I use a OpenID to login into a website, I can also offer this website the data I create with "ListenToYou".

  3. good article.

    amusingly though, I read it on Google Reader on my blackberry and it was followed by a 'contextual' ad for Google apps.

    a contextual ad served for its relevance to an article on the limitations of contextual ads. nice. ;)

  4. I must say, that while I know there are people out there who do feel like their privacy is invaded when they are served these targeted ads, I do not think they are in the majority.

    I use a number of services online, for free, that I would not be willing to pay for if I had to. To be served a targeted ad for a product or service that I'd likely be interested in is not such a bad thing. I either choose to ignore it, or once in a while, I'm intrigued by an ad and want to learn more. And occasionally, I actually do buy the advertised product, and am oftentimes satisfied with my purchase and grateful that I was introduced to it when I otherwise may not have been.

    When I go to the supermarket and use my Price Plus Card, I accept the fact that this data is stored, and then I get coupons on items that I frequently purchase. It's a win-win for everybody. This information may be shared out, but my identity is never revealed. And except for a few items I would classify as being more private than general goods, I don't mind their being shared as it comes back as savings to me in the end.

    But I'm not trying to just explain how I see the issue. What I'd like to know is how exactly you propose avoiding these problems? You're easily able to show some examples of worst-case scenarios of mistargeting or privacy invasion. So what's the solution? And what is the cost to the consumer in the end to retain this privacy?

    We'd probably both agree that choice is the ultimate solution. Choice to reveal the pieces of your identity that you feel comfortable revealing. But until this customization becomes available, users will have to accept giving up some data and privacy in order to receive the content they are looking to get for free.

    Unless, of course, you simply want to disable all of your cookies.

  5. I think this post hits on a clear problem in online advertising: the need to improve online advertisements ability to target who receives what ads. I agree exactly with what the post said about users being turned off by ads that have nothing to do with them. When this happens, the ad comes across as mindless spam and is a waste of an effort to reach a new customer. Some sort of software needs to be developed that targets certain ads for certain people based on their information, or at leasts a websites demographics.


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