The Internet can be useful to businesses for marketing purposes. Through the Internet, businesses can sell and communicate with customers. The Internet also allows businesses to identify and learn about their customer base.
Additionally, many customers expect that a company they interact with in the physical world will also have an online presence. What consumers may not be aware of is how all of these purposes interact. When a business meets your need of having a website with store hours and directions, it may also meets its need of determining how many customers may want to go to a particular store branch.
Web bugs. Many websites use Web bugs to track who is viewing their pages. A Web bug (also known as a tracking bug, pixel tag, Web beacon, or clear gif) is a graphic in a website or a graphic-enabled e-mail message. The Web bug can confirm when the message or page is viewed and record the IP address of the viewer.
An example you might be familiar with is an electronic greeting card. Hallmark and other companies allow you to request that you be notified when the recipient views your card. The sites likely employ Web bugs to tell them when the recipient viewed the card.
Online Privacy Tip: You can defeat e-mail Web bugs by reading your e-mail while offline, an option on most e-mail programs. Some e-mail systems avoid Web bugs by blocking images that have URLs embedded in them. You might have seen the message “To protect your privacy, portions of this e-mail have not been downloaded.” This message refers to Web bugs. You can choose to allow these images to be downloaded, but they likely contain Web bugs.
Direct marketing. Consumers may notice that online newspapers and other businesses have boxes asking you if the site can save your account information for future transactions. Whether it asks you for permission to save your information or not, you can bet that your information is being stored and used by the marketing department.
Websites have increased their use of direct marketing. Direct marketing is a sales pitch targeted to a person based on prior consumer choices. For example, Amazon may recommend books that are similar to others you have purchased.
Use of your information for marketing is not limited to companies you do business with. Many companies sell or share your information to others. If you sign up for a free magazine subscription, the company may share your information with affiliates. This is similar to what happens with traditional junk mail, but since you have entered the information yourself into an electronic system, sharing with other businesses can be done rapidly and cheaply.
To avoid spam laws, most sites ask your permission to send you future information and offers. However, this permission is often presumed and the permission box already checked. To avoid the use of your information this way, always uncheck boxes that state that you agree to receive periodic offers and information.
Behavioral marketing or targeting refers to the practice of collecting and compiling a record of individuals' online activities, interests, preferences, and/or communications over time. Companies engaged in behavioral targeting routinely monitor individuals, the searches they make, the pages they visit, the content they view, their interactions on social networking sites, and the products and services they purchase. Further, when consumers are using mobile devices, even their physical location may be tracked. This data may be compiled, analyzed, and combined with information from offline sources to create even more detailed profiles.
Marketers can then use this information to serve advertisements to a consumer based on his or her behavioral record. Ads may be displayed based upon an individual's web-browsing behavior, such as the pages they have visited or the searches they have made. Advertisers believe that this may help them deliver their online advertisements to the users who are most likely to be influenced by them.
Behavioral information can be used on its own or in conjunction with other forms of targeting based on factors like geography or demographics. Marketers have developed an array of sophisticated data collection and profiling tools which monitor and analyze our online activity. Over 1300 tracking companies utilize more than 2800 tracking scripts to deliver advertising that is targeted consumers' online activity.
Typically, behavioral targeting is accomplished through use of a cookie, flash cookie, device fingerprinting, or other technologies that identify a user or device. Whatever the technology used, it attempts to personalize ads based upon the user's online history and possibly other external data.
Behavioral marketing is much more sophisticated than so-called “contextual marketing” by which marketers target users with ads that are served based solely upon on a given web page's content. In February 2009, Federal Trade Commission (FTC) issued a report, “Self-Regulatory Principles for Online Behavioral Advertising.” The report examined behavioral marketing and proposed principles to govern industry self-regulatory efforts.
In March 2012, the FTC issued a report setting forth best practices for businesses to protect the privacy of American consumers and give them greater control over the collection and use of their personal data. In the report, the FTC also recommended that Congress consider enacting general privacy legislation, data security and breach notification legislation, and data broker legislation.
The March 2012 FTC report calls on companies handling consumer data to implement recommendations for protecting privacy, including:
- Privacy by Design - companies should build in consumers' privacy protections at every stage in developing their products. These include reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy
- Simplified Choice for Businesses and Consumers - companies should give consumers the option to decide what information is shared about them, and with whom. This should include a Do-Not-Track mechanism that would provide a simple, easy way for consumers to control the tracking of their online activities
- Greater Transparency - companies should disclose details about their collection and use of consumers' information, and provide consumers access to the data collected about them.