How Targeted is Targeted Marketing?

The claim for targeted online marketing -- which can include mining publicly available data sources ranging from real-estate documents to motor-vehicle records as well as using cookies to track users' movements online -- is that it is superior to traditional advertising is by being interactive, it can learn more about consumers, interests and behaviors than, say newspaper advertising, which can't tell you if someone even opened the particular section where your ad appeared.

By mining clicks and embedding cookies, target marketing can overcome that information gap.

In "Mistaken Identity: A reporter learns what target marketers know about her -- and don't," Emily Steel wrote about the information that two targeted marketing firms had on her. And the problems with the underlying premise.

Here's Steel's premise: "But for all the excitement about this emerging field, as I surf the Web I'm struck by how few of the ads that appear along the way are relevant to me. The last one I remember clicking on intentionally ... was last fall. Marketers don't seem to be targeting me very effectively."

In terms of collecting user data from the Internet, here's how that work: companies make deals with thousands of sites for "permission to collect data about visitors to those sites. When a person lands on one of the sites, the targeting technology places a "cookie," or small string of tracking data, on his or her hard drive. The technology can read the codes embedded in the cookies to see which other sites in the network the person has already visited. Based on that information, it automatically decides which ads to display."

Here are two examples of why targeted marketing are not 100% accurate:

• "One reason behavioral targeting is still such an imperfect science is that firms can easily make false assumptions, especially if they are relying on Web-only information. Executives at some firms I talked with said, for example, that if I were to visit an airline site and then a bridal registry -- as I did recently -- their technology would peg me as a newlywed. In fact, I was shopping for a friend who is getting married."
• "The data that the firms collect for their clients aren't tied to individually identifiable consumers, but rather to the Internet Protocol addresses of their computers. Those addresses are then scrambled to keep them anonymous. While that pleases privacy advocates, it creates more guesswork for marketers. Advertisers have no guarantee that it's the same Web surfer sitting at the computer all the time. Families often share computers, and individuals often use more than one machine. To further complicate matters, the ad-targeting firms create a different profile for each browser that a person uses on a particular computer. The bottom line: One ad-targeting firm can be maintaining multiple profiles for the same person -- and never unify that information."

I'm not suggesting targeted marketing isn't worthwhile, just making this point: new technology continues to be a means -- albeit a much more data-driven one -- to identify consumers. But as with social media as part of a campaign to reach consumers, new technology doesn't necessarily solve the problem as it raises new issues to be solved. Social media is replacing traditional media, but it's not always a better, more efficient way -- reaching out to bloggers can be more time intensive than reaching out to reporters. I also don't think new technology can be ignored; just needs to be approached carefully to ensure it's more than a fad.