A new analysis of online consumer data shows that large Web companies are learning more about people than ever from what they 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 advertisements 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 that is transmitted to Internet companies. Privacy advocates have previously sounded alarms about the practices of Internet companies and provided vague estimates about the volume of data they collect, but they did not give comprehensive figures. The 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 controversy 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 is a boon to consumers, because it makes the ads they see more relevant. These companies often connect consumer data to unique codes identifying their computers, rather than their names. "What is targeting in the long term?" said Michael Galgon, Microsoft's chief advertising strategist. "You're getting content about things and messaging about things that are spot-on to who you are."
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. Large Web companies like Microsoft and Yahoo have also acquired a number of companies in the last 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. 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 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 estimated the number of ads shown in their ad networks. These actions represented "data transmission events" — times when consumer data was 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 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, tends to be more valuable than others. Yahoo 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 about 1,700 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 Corporation, and AOL, a unit of Time Warner, were not far behind. ComScore said it recorded 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 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 Microsoft is willing to pay more than $41.2 billion to acquire the company.
Ref: http://www.nytimes.com/2008/03/10/technology/10privacy.html?pagewanted=1&_r=1
