In other media, such as broadcasting, advertisers engage in targeting by purchasing advertising time during programs that those who buy their products are most likely to watch. The Internet presented new challenges and opportunities for advertisers to reach their target audiences.
Technology has been developed that allows advertisers to target advertising to individual web users. This is seen as an advantage for advertisers, because, rather than aiming their ads at groups of people who visit a particular site, their ads are aimed at the individual user. This maximizes the odds that the user who sees the ad will be interested in the product or service it touts.
Targeting advertising to individuals involves gathering information about that individual’s web surfing habits. The collection of this information has raised concerns among some over the privacy of web activity, particularly if the data collected are personally identifiable. Some have alleged that online advertisers are violating privacy laws by collecting these data.
Online advertising providers, such as DoubleClick and NebuAd, have developed the ability to target ads to individual Internet users who would be most interested in seeing those ads. These techniques are known generally as “behavioral advertising.” Behavioral advertising delivers ads that are geared toward specific Internet users by tracking certain, though not necessarily all, web activity of each user and inferring each user’s interests based on that activity.
The going rate for some targeted advertising products can be several times the rate for a generic one because consumers can be six times more likely to “click through” a targeted banner advertisement than a non-targeted one. This differential will likely increase as targeting becomes more refined and more capable of predicting preferences, intentions and behaviors.
- While online advertising rates are highly variable, this calculation is based on “generic” ad “cost per thousand impressions” (CPMs) being roughly $1–3, while targeted advertisements are estimated to command above $10 CPMs. Even more specialized types of advertising, such as targeted “cost-per-click” and search-based advertising, have been estimated at even higher rates.