Web companies keep track on every click
Posted on Monday, March 17, 2008
A popular 1993 cartoon in New Yorker magazine showed two dogs at a computer, with one saying to the other, “On the Internet, nobody knows you’re a dog.” That may no longer be true.
An analysis of online consumer data shows that large Web companies are learning more than ever before the gritty details of what people search for and do on the Internet, gathering clues about the tastes and preferences of a typical user several hundred times a month.
These companies use that information to predict what content and advertisers people most likely want to see. They can charge steep prices for carefully tailored ads because of their high response rates.
The analysis, conducted for The New York Times by the research firm comScore, provides what advertising executives say is the first broad estimate of the amount of consumer data transmitted to Internet companies every day.
Privacy advocates previously have sounded alarms about the practices of Internet companies and provided vague estimates about the volume of data they collect, but they did not provide comprehensive figures.
The new analysis indicates that Web companies are, in effect, taking the trail of crumbs people leave behind as they move around the Internet and then analyzing them to anticipate people’s next steps. So anybody who searches for information on such disparate topics as iron supplements, airlines, hotels and soft drinks may see ads for those products and services later on.
Consumers have not complained to any great extent about data collection online. But privacy experts say that is because the collection is invisible to them. Unlike Facebook’s Beacon program, which stirred debate last year when it broadcast its members’ purchases to their online friends, most companies do not flash a notice on the screen when they collect data about visitors to their sites.
“When you start to get into the details, it’s scarier than you might suspect,” said Marc Rotenberg, executive director of the Electronic Privacy Information Center, a privacy-rights group. “We’re recording preferences, hopes, worries and fears.” But executives from the largest Web companies say that privacy fears are misplaced, and that they have policies in place to protect consumers’ names and other personal information from advertisers. Moreover, they say, the data are a boon to consumers because the make the ads they see more relevant.
These companies often connect consumer data to unique codes identifying their computers, rather than their names.
“What is [it ] targeting in the long term ?” said Michael Galgon, Microsoft Corp. ’s chief advertising strategist. “You’re getting content about things and messaging about things that are spoton to who you are.” The rich troves of data at the fingertips of the biggest Internet companies are also creating a new kind of digital divide within the industry. Traditional media companies, which collect far less data about visitors to their sites, are increasingly at a disadvantage when they compete for ad dollars.
The major television networks, and magazine and newspaper companies “aren’t even in the same league,” said Linda Abraham, an executive vice president at comScore. “They can’t really play in this sandbox.” During the Internet’s short life, most people have used a yardstick from traditional media to measure success: audience size. Like magazines and newspapers, Web sites are most often ranked based on how many people visit them and how long they are there.
But on the Internet, advertisers are increasingly choosing where to place their ads based on how much sites know about Web surfers. ComScore’s analysis is a novel attempt to estimate how many times major Web companies can collect data about their users in a given month.
Web companies once could monitor the actions of consumers only on their own sites. But over the past couple of years, the Internet giants have spread their reach by acting as intermediaries that place ads on thousands of Web sites, and now can follow people’s activities on far more sites.
Large Web companies like Microsoft and Yahoo also have acquired a number of companies in the past year that have rich consumer data.
“So many of the deals are really about data,” said David Verklin, chief executive of Carat Americas, an ad agency in the Aegis Group that decides where to place ads for clients.
“Everyone feels that if we can get more data, we could put ads in front of people who are interested in them,” he said. “That’s the whole idea here: Put dog food ads in front of people who have dogs.” Web companies also can collect more data as people spend more time online. The number of searches that American Web users enter each month has nearly doubled since the summer of 2006, to 14. 6 billion searches in January, according to comScore.
ComScore analyzed 15 major media companies’ potential to collect online data in December. The analysis captured how many searches, display ads, videos and page views occurred on those sites and in their ad networks.
These actions represented “data transmission events” — times when consumer data were zapped back to the Web companies’ servers. Five large Web operations — Yahoo, Google, Microsoft, AOL and MySpace — record at least 336 billion transmission events in a month, not counting their ad networks.
The methodology was worked out with comScore and based on the advice of senior online advertising executives at two of the largest Internet companies.
“I think it’s a reasonable way to look at how many touch-points companies have with their consumers,” Jules Polonetsky, the chief privacy officer for AOL, said of the comScore findings.
But Polonetsky said not all of the data at every company are used together. Much of it is stored separately. The information transmitted might include the person’s ZIP code, a search for anything from vacation information to celebrity gossip, or a purchase of prescription drugs or other intimate items. Some types of data, like search queries, tend to be more valuable than others.
Yahoo Inc. came out with the most data collection points in a month on its own sites — about 110 billion collections, or 811 for the average user. In addition, Yahoo has 1, 709 other opportunities to collect data about the average person on partner sites like eBay, where Yahoo sells the ads.
MySpace, which is owned by the News Corp., and AOL, a unit of Time Warner, were not far behind in data collection.
ComScore said it records the ad networks using different methods and that the exact ordering of these top companies might vary with a different methodology, but the overall picture would be similar.
Google Inc. also has scores of data collection events, but the company says it is unique in that it mostly uses only current information rather than past actions to select ads.
The depth of Yahoo’s database goes far in explaining why AOL is talking with Yahoo about a merger and that Microsoft is willing to pay more than $ 41 billion to acquire Yahoo.
Executives from Web companies said they have been working to inform consumers on their data practices.
These companies also noted that they have consumer-protection policies. AOL, for example, lets users opt out of some ad targeting, Google lets users edit the search histories that are linked to their user names, Yahoo is working on a new policy to obscure people’s computer identification addresses that are connected to search results, and Microsoft says it does not link any of its visitors’ behavior to their user names, even if those people are registered.
But for all these precautions, the Web giants may be treading into areas that would make their users uncomfortable — if those users knew the extent of the data collection.
A study of California adults last year found that 85 percent thought sites should not be allowed to track their behavior around the Web to show them ads, according to the Samuelson Law, Technology & Public Policy Clinic at the University of California at Berkeley, which conducted the study.
“If you said to people, ‘ Hey, do you realize that information was not just ephemeral, it ended up potentially tied to your name ?’” said Deidre Mulligan, director of the Samuelson clinic. “A lot of people would say, ‘ Wow, I guess I hadn’t really realized that. ’”
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