Targeted advertising has become increasingly common in the digital age. Many companies now track user data and online behavior to deliver customized ads based on demographics, interests, browsing history, and more. While targeted ads allow companies to market to their ideal customers, some argue that the extensive data collection required violates privacy rights.
What are targeted ads?
Targeted ads, also known as personalized ads, are advertisements tailored specifically to an individual based on data collected about that person’s interests, demographics, browsing history, and behavior online. Companies track users across websites and devices to build detailed profiles on each person. They then use that profile data to deliver customized ads to each individual user.
For example, if a woman frequently browses websites about parenting and buys baby products online, she may start seeing ads for diapers, strollers, and other baby-related items across the websites she visits. Someone who often reads about or searches for sports may see more ads for athletic clothing and equipment. The goal is to serve each person ads more likely to be relevant based on their apparent interests.
How do companies target ads?
Companies use a range of techniques and data sources to target ads to specific users:
- Browsing history – Tracking which websites a user visits and what they view or click on.
- Search history – Recording search terms entered to gauge interests.
- Purchase history – Collecting data on what users have bought online.
- Location data – Accessing a user’s location via smartphone GPS.
- Demographic info – Gathering details like age, gender, income level.
- Social media activity – Analyzing posts, likes, shares for interest cues.
- Email content – Scanning email messages and open rates.
- Loyalty programs – Adding data from grocery store cards or other memberships.
- Browser fingerprinting – Using system details to identify specific devices.
In many cases, users must agree to a website or company’s terms of service to allow tracking for ad targeting. However, some data collection happens without consent through methods like tracking cookies and browser fingerprinting.
What data do companies collect for targeted ads?
The types of user data collected by companies for targeted advertising include:
| Category | Examples of Data Collected |
|---|---|
| Demographics | Age, gender, marital status, income level, education, household size |
| Interests | Hobbies, sports, topics read or searched for, social causes |
| Shopping habits | Products viewed or purchased, brands preferred, frequency of purchases |
| Browsing history | Websites visited, pages viewed, links clicked, search queries entered |
| Location | City, state, zip code, real-time GPS coordinates |
| Device usage | Type of device, operating system, browser, applications used |
| Social media activity | Pages followed, posts liked, content shared, friends and followers |
This data enables companies to categorize users and predict what types of products, services or offers would appeal to each individual.
Pros of targeted advertising
There are some potential benefits to targeted ads for both companies and consumers:
- More relevant ads – Users may find ads for products they actually want or need.
- Improved sales – Companies see higher conversion rates from better targeted ads.
- Subsidized content – Website publishers earn from serving targeted ads.
- Lower priced products – Targeted ads allow companies to earn more and potentially charge less.
- Customized deals – Consumers may get personalized coupons or special offers.
By aligning ads more closely to user interests and habits, targeted advertising provides content users may find more useful and provides value to advertisers through higher engagement. The added revenue stream may also enable subsidized content that website publishers could not afford otherwise.
Cons of targeted advertising
However, there are also a number of drawbacks to targeted ads and the extensive data collection required:
- Privacy violations – Companies build detailed user profiles without full consent.
- Unexpected profiling – Behavior taken out of context may lead to inaccurate targeting.
- Discrimination – Ads could exclude groups improperly based on data correlations.
- Security risks – Centralized databases of user data could get hacked.
- Annoyance factor – Many find excessively tailored ads creepy or invasive.
- Misuse concerns – Governments may leverage user data in unethical ways.
- Behavior influence – Targeted ads could manipulate, pressure, or addict viewers.
Critics argue that the extensive, non-transparent data gathering required for targeted ads conflicts with privacy expectations. The tracking may enable discrimination, manipulation, or other harms that negatively impact individuals and society.
Is targeted advertising illegal?
The legality of targeted advertising depends primarily on whether it complies with relevant privacy laws. Requirements and restrictions vary between jurisdictions.
In the United States, targeted advertising is legal as long as companies disclose their data collection practices and allow users to opt out of tracking. The FTC requires truth in advertising and transparency for consumer data usage.
The European Union has stronger privacy rules under the General Data Protection Regulation (GDPR). Targeted advertising must have explicit informed consent with a lawful basis. Users have the right to access their data and object to profiling.
Some jurisdictions now have laws specifically regulating targeted ads. For example, California’s CCPA imposes limits on using data from children for targeted ads.
While most targeted advertising remains legal with proper disclosures, attitudes are shifting. Better consumer protections may lead to tighter regulation if current practices continue to raise privacy concerns.
Should the use of targeted ads be reduced?
Many privacy advocates argue that current targeted advertising practices warrant stronger regulation. Potential approaches to reduce concerns include:
- Opt-in only tracking – Require explicit consent to gather user data for ads.
- Limited data retention – Set time limits for keeping user data.
- Aggregated analytics – Restrict individual-level tracking and profiling.
- Contextual ads only – Limit targeting to page content rather than user identity.
- Centralized privacy controls – Enable users to manage tracking preferences consistently.
- Do Not Track option – Universally recognize DNT browser signals.
More transparency and visibility into how personal data gets used for targeting could also help alleviate privacy reservations. If users can easily access their ad profile and opt out, some may find that an acceptable tradeoff for free online content funded by relevant advertising.
What do users think of targeted ads?
Surveys show targeted ads generate mixed reactions among internet users:
- 15% find targeted ads “very useful”
- 40% consider targeted ads “somewhat useful”
- 45% believe targeted ads are “not too useful” or “not at all useful”
About 65% of people find at least some value in targeted ads providing relevant recommendations. But nearly half feel indifferent or negative towards having their online activity tracked and monetized.
Regarding privacy impacts, a 2021 survey found:
- 72% worry how companies use the data collected about them online
- 57% believe targeted advertising invades privacy and should be more regulated
- 51% feel helpless to stop companies from collecting their personal data
While some consumers appreciate personalized ads, many feel uncomfortable with the extensive behind-the-scenes tracking and profiling involved. They want more transparency, control, and oversight.
Conclusion
Targeted advertising provides some benefits but requires extensive collection of user data that raises substantial privacy concerns. While most targeted ad practices remain legal, consumers and regulators are advocating for stronger privacy rules and protections.
Companies relying on behavioral ads may need to shift to less invasive practices before growing public discomfort leads to new legislation restricting data use. More user control over how personal information gets leveraged for targeting would help balance utility with privacy.