Targeted Ads Raise Privacy Concerns

Wall Street Journal – 7/8/08 – Cable and phone companies say their growth increasingly depends on being able to deliver targeted advertising to their Internet and TV customers, but criticism from privacy advocates is threatening that strategy.

In the past few weeks, phone operator CenturyTel Inc. and cable provider Charter Communications Inc. shelved plans to use ad-targeting technology from Silicon Valley start-up NebuAd due to privacy concerns raised by their customers and lawmakers.

Last week, another cable company, Denver-based Wide Open West, pulled the plug on NebuAd’s software, which it had used since March to track its customers on the Web and subdivide them by their browsing habits to attract online advertisers.

NebuAd is raising red flags among privacy advocates, lawmakers and others because, unlike other targeted-ad companies, which profile consumers based on their activity on a limited number of Web sites, Internet-service providers like cable and phone companies can use NebuAd technology to track consumers wherever they go on the Web. A similar company called Phorm is making inroads in the British market.

Both companies say the data they use is anonymous and can’t be traced back to individuals. The technology categorizes consumers as they surf the Web. Marketers then buy ads to appear online before certain subgroups of consumers when the technology recognizes their encrypted identity.

Wednesday, the Senate Commerce, Science and Transportation Committee plans a hearing on the privacy issues raised by online advertising. Critics, meanwhile, are questioning whether the practices used by NebuAd and other ad-targeting companies violate wiretap laws, which prevent carriers from monitoring customer communications.
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FCC to Study Product Placements on TV

The Wall Street Journal 6/23/08 – WASHINGTON — Federal regulators are beginning an effort to crack down on stealth advertising in television shows, a move aimed at letting consumers know when companies have paid to use their products as props.

This week the Federal Communications Commission is expected to open a formal proceeding about new rules requiring more disclosure of product placement, a technique that has become a critical tool for Madison Avenue.

Some of the best-known deals include Coca-Cola Co.’s placement on Fox’s “American Idol,” where TV viewers frequently see Coke cups on the judges’ table and hear frequent mentions of the brand.

Fox is a division of News Corp., which owns Dow Jones & Co., publisher of The Wall Street Journal.

Regulators say they’ve become more concerned about the issue as TV executives seem to be using more product placements to reach viewers, who are using digital video recorders to skip commercials.

The rules wouldn’t bar the practice of product placements or other in-show advertising designed to reach consumers who skip commercials. Regulators are mostly interested in improving the amount of disclosure advertisers and producers will have to provide for consumers during the TV programs.http://online.wsj.com/article/SB121417741810895461.html