In May, Charter Communications, one of the nation's largest Internet service providers, sent letters to hundreds of thousands of its customers promising "an enhancement coming soon to your Web browsing experience." This was a heroic bit of corporate doublespeak—Charter planned to "enhance" its service by installing software on its Internet lines to scrutinize its customers' browsing habits. The company's aim: to sell lucrative ads tailored to users' interests. For instance, if Charter saw that you'd been reading lots of auto reviews, it might show you spots for new cars. The company described the plan as a benefit for users. "You will not see more ads—just ads that are more relevant to you," it said.
Charter's proposal drew an immediate outcry from customers and privacy watchdogs. In June, the company announced that it would suspend its traffic-monitoring plan. Charter's effort also sparked a wide-ranging congressional inquiry into how Internet companies are profiling users for marketing purposes. Congress has turned up an unsurprising trend: Charter is far from the only company that wants to collect and analyze your surfing habits.
Though they're all approaching it in different ways, a bunch of large Internet firms—including ISPs like Charter and AT&T and Web companies like Yahoo, Microsoft, and perhaps even Google—are crawling toward adopting "behavioral targeting" systems. Predictably, privacy advocates are pushing lawmakers to outlaw or significantly limit this sort of invasive advertising. Proponents of behavioral targeting defend the practice in much the same way Charter did—Web surfers will benefit from close monitoring of our habits because we'll soon be getting more "relevant" ads. Considering the large networks that Web companies now manage and the money they can make by selling ads tailored to your surfing habits, it seems obvious that behavioral targeting will soon rule the Internet ad market. As the targeted-ad boom approaches, we Web surfers need to prepare ourselves—and think of how we might be able to take advantage even as we have targets on our backs.
Most ads you encounter online on a daily basis are already "targeted" to you in some way. Graphical ads—like the ones you see on Yahoo, NYTimes.com, or Slate—are often served up based on guesswork about your demographic profile. The ad sales department at Slate knows the age, sex, and affluence of the magazine's readership, and it sells ads to companies that want to attract people who fit this profile. Google and other search companies, meanwhile, make billions through keyword and contextual ads, two far more precise ways to target ads. On its search engine, Google runs ads based on your search queries—type in Wii, and you'll see a paid text ad urging you to buy Nintendo's console at Amazon. On third-party sites, Google serves up ads that match text on the pages where the ads are placed. For instance, look at the copious kitchen-countertop-related spots on this Ask the Builder page about granite countertops.
But when you searched for Wii, were you looking for a new Nintendo game system, or did you want games for the Wii console you bought last week? And did you visit that page about kitchen countertops because you're thinking about remodeling your kitchen—or was it because you're looking to buy a new house? These questions get to your deeper intentions, and if Web companies could answer them—perhaps by looking at your browser history—they'd likely be able to sell ads at much higher rates. That's the idea behind behavioral targeting: By gathering and studying your actions over an extended period of time, advertisers will get a much clearer picture of what might interest you.
How might marketers get this info? For Internet service providers like Charter, the obvious method is something called "deep-packet inspection." Just about everything you do online—surfing the Web, sending and receiving e-mail, buying songs through iTunes—involves the transfer of "packets" of data between your computer and some other machine somewhere on the Internet. On their journey, all these packets must travel over Internet lines provided by your ISP. When Charter decided to start doing behavioral targeting, it contracted with a Silicon Valley startup called NebuAd, which installs an "appliance" on the ISP's network to inspect your packets.