New dawn of online ad profiling

Ad profiling, a controversial practice from the dot-com heyday, is making a comeback as some of the biggest names in publishing test new Web surveillance software, with hopes of eventually boosting revenue.

Condé Nast owner Advance Publications, for one, recently began testing a product from Tacoda Systems that promises to compile detailed information about the Web site visitors of its Advance Internet news network.

And it's got company. Tacoda, launched by the executives behind Internet ad network Real Media, said it has so far signed up at least 10 other publishing customers, including Weather.com, USAToday.com, Tribune Interactive and Scripps Networks.

Tacoda's technology is designed to give Web publishers more insight into their visitors so that they can better target their ads. At its full potential, Tacoda's Audience Management System can create profiles that include a person's age, gender, location, billing address, e-mail address, Web surfing habits and subscription information to offline publications. To do this, it draws from data-mining technology, tracking software such as cookies and Web site registration information.

Just last week, the company signed a deal with ad technology provider DoubleClick that could further boost the two-year-old company's profile among Web publishers that want to court advertisers with better audience-targeting tools. The deal essentially makes it easier for companies that employ DoubleClick's widely used ad-serving system to also use Tacoda's profiling software.

"Our system enables publishers to build profiles of individual audience members based on their interactions with the site," said Dave Morgan, CEO of Tacoda and founder of Real Media, an advertising technology company that is now part of 24/7 Real Media.

Profiling, an early online advertising technique that went out of fashion due to privacy concerns and poor execution, is on the rebound, thanks in part to new players and to technology that aims to address previous shortcomings. Among other things, it limits an Internet company's visibility to a single Web site and any affiliated sites, mitigating privacy concerns about previous Web tracking methods.

Many publishers are now digging deeper into their visitor demographics in order to boost ad sales, but they're still trying to get a handle on the data. New York Times Digital, the online arm of The New York Times, recently started to offer profile-based advertising on its sites, for example. Alan Schanzer, managing partner at ad agency The Digital Edge, said his firm targets online ads at profiled visitors of specific sites. "The net result can be a more efficient buy with less waste," Schanzer said.

In another sign of the advancement of profiling, 24/7 Real Media in January bought Web analytics company Insight First. 24/7 said it planned to allow Web publishing customers of its ad delivery technology, Open AdStream, to tap Insight's software for analyzing the effectiveness of online marketing campaigns. In addition, 24/7 Real Media's technology now allows its ad-serving customers to more easily use Tacoda.

Then and now
The DoubleClick-Tacoda deal carries echoes of DoubleClick's own profiling past.

DoubleClick, Engage and others sold and delivered advertisements across thousands of sites on the Web. Their systems used technology to track the behavior of unidentified people visiting those sites, allowing them to build intelligence on the preferences of Web surfers that could help sell more targeted ads.

Privacy watchdogs reacted vehemently when DoubleClick hinted that it had plans to combine information from its online data gathering service with data from acquired offline marketer Abacus Direct. The plans were later scrapped amid criticisms that the system could tie Web surfing history to names and addresses without individuals' permission, exposing them to potential embarrassment or worse.

And, wanting to focus on its digital media assets service, competitor Engage left the online advertising business late last year.

Doug Knopper, DoubleClick's head of advertising, contrasted Tacoda's profiling products with the industry's past efforts to track customers, saying new profiling tools limit visibility to just a portion of the Web.

"What the industry got in trouble for was profiling and finding patterns of behavior across the entire Web. From our perspective, this is not an effort to (do that)," he said. "Tacoda can segment your audience to deliver more relevant ads--DoubleClick helps execute on that."

Tacoda's software does not cover the entire Web, but it does provide intelligence on activity within a single site, and can include dozens of affiliate sites. For example, Weather.com could use the software to track visitors to the weather section of partner sites, including Yahoo and ABCNews.com.

Hypothetically, Tacoda could deliver a pharmaceutical ad to someone who is visiting Yahoo's weather page who in a subscription survey revealed that she is allergic to pollen. Yahoo might consent to this, if it hasn't sold that ad space, and could split the ad profits with Weather.com.

Right now, at least one Tacoda news publishing customer is testing a merger of online and offline customer information in order to better accommodate advertisers across print and Web properties, according to the company, although Tacoda declined to say which one.

For its part, Advance Internet said it merely wants to see if it can improve ad effectiveness by combining site registration information with Web surfing histories. Such information could be used to determine, for example, that an Ann Arbor, Mich., man, age 25, has recently been reading its online automotive classifieds. That, in turn, would let the site serve up a Ford ad when he goes to the Advance-affiliated sports pages--with hopes of improving the chances of a click.

"We are interested in learning more about our users, to provide added value to advertisers," said Advance Internet President Peter Weinberger, who emphasized that the site ensures that visitors remain anonymous by collecting only age, gender and ZIP code information during registration. "The long-term strategy is to charge a higher (rate for such ads) based on the quality of the person we can deliver to the advertiser."

Privacy vs. dollars
Privacy advocates said profiling has been largely discredited, and doubted that a new wave of products will turn the tide. Richard Smith, an Internet privacy and security consultant, said that the two big problems with profiling are that it's inexact, and that advertisers are unaccustomed to targeting customers though profiles. Rather, they target audiences by their demographics.

"During the Internet bubble, hundreds of millions of dollars were wasted on the holy grail of profiling as a method to make more money off of Internet advertising," Smith said. "No one could make it work then, and I don't think it will be any different this time around."

Smith said he had little concern about the practices of Web publishers collecting data on consenting individuals in order to send targeted advertisements to them. But the nut of the privacy issue, he said, is that anytime profiles are amassed, there runs the risk that they could fall into other hands.

"If you're just going to show ads with them, that's no big deal, but what else is going to happen with them? Will law enforcement get their hands on them some day?" he questioned.

Doubts aside, Net publishers that are eager to please advertisers are now salivating over transforming bits and bytes of data about their visitors into added dollars and cents. In some cases, the behavioral data is combined with personally identifiable information that can help add to the customer's profile and boost the value of targeted advertisements.

As increasing numbers of Web publishers are turning to forced registration, deep profiles that link online and offline data could become more common. A hypothetical profile could be as follows: Jane, 20 to 25 years old, from Phoenix, a loyal site visitor, frequently clicks on ads. Using a broadband connection, Jane surfs content related to skiing and business topics.

"The biggest difference with what was done before is that we (now) enable people to collect and use even personally identifiable information, which is where the value is. Most of the systems before only permitted the tracking of anonymous behavioral data, which was not particularly valuable for advertisers or publishers," said Morgan.

And as publishers become more sophisticated, he added, they can tie Tacoda's technology to other types of customer databases. For example, if a site collects a deep registration database, it may be able to tie its online registration with its offline subscription database. "They can start achieving the holy grail of making their online and offline products work together."

It's in a Web publisher's interest to respect its readers' privacy, because its own integrity is at stake, he said. Customers will return to brands they trust. The onus is on the Web publisher to be upfront with consumers and to give them notice and choice about data-collection practices, he said.

This runs in contrast to previous profiling plans floated by ad networks DoubleClick and Engage, which had called for "nonconsensual harvesting," or the gathering of data about people without their permission, according to Morgan.

Weather.com, which has been testing Tacoda's software during the past year, said the software is already useful. In March, the company started using it to show one advertiser, garden supplier Scott's, that it could deliver a promotion to a certain amount of people at least once, gauging metrics commonly known as reach and frequency. Online publishers have been scrambling to quantify Web ads this way, because traditional advertisers use the metrics as a standard way to meet goals for an ad campaign.

"We can say, 'Here's how many people saw your campaign, and here's how many times they saw it,'" said Joe Fiveash, senior vice president of product and business development for Weather.com. "We realized that the information that we have about the people who use our site is an important asset. If we know they're an allergy sufferer, we make it easy for them to get pollen information."

Weather.com is sensitive to privacy concerns, so it doesn't at this time use all of Tacoda's tools, Fiveash said. For example, rather than using tools that could personally identify someone such as Jane of Phoenix in order to send her a relevant ad, the company is creating more generic visitor composites. The company admitted that there can be too much data to handle when profiling.

"This is something that's fairly new. Collecting that data is pretty intensive; forget about slicing and dicing it," said Terry Blevins, vice president of finance and advertising operations for Weather.com of Tacoda's technology. "It will evolve over the next couple of years."