Yahoo's SmartAd Raises Privacy Concerns

This week, Yahoo unveiled a new advertising program that allows its clients to tailor ads to individual Web surfers based on their own unique search history, geography, and demographic information including age, sex, and occupation.

Yahoo hopes that SmartAds, announced Monday, will give the once high-flying Internet company a leg up on its dominant competitor Google by providing firms with unprecedented access to the habits and hobbies of Web surfers.

With Yahoo's SmartAds platform, if you list San Francisco as your location in Yahoo weather and run a Yahoo search for Las Vegas, Yahoo will automatically generate an ad displaying real-time rates for flights from San Francisco to Las Vegas.

Are you from Chicago with a search history that indicates an interest in SUVs? Yahoo has an ad for you, too -- perhaps one with prices and inventory levels at the dealership just down the road.

But as companies like Yahoo compile and save increasingly detailed information about people who visit their sites, do these efforts constitute a threat to your Internet privacy? And even if they do, should you be concerned if they let you save time and money by bringing you the products that you want when you want them?

According to some industry observers and privacy advocates, including Paul Stephens of the Privacy Rights Clearinghouse, the answer to both questions is yes.

"I absolutely believe it is a threat to privacy," Stephens told ABC News. "[SmartAds] is disconcerting because it's compiling all sorts of information about you, things that you may have done a year ago on a Yahoo site, that you may have completely forgotten about."

By targeting ads not only to a particular search term, as Google's AdSense program does, but also incorporating a user's history and profile information with Yahoo, SmartAds goes a dangerous step further than its competition in creating that complete user profile, Stephens said.

But according to Solveig Singleton, a senior adjunct fellow at the Progress and Freedom Foundation, a market-based tech policy think tank, these privacy concerns are overblown. So long as companies like Yahoo and Google continue to keep financial records private, internet users can only benefit from the advance of technology.

"There's no reason that this would create any additional security concern," Singleton said. She disagrees with privacy advocates like Stephens who, she said, "often overlook that advertising and marketing really do serve consumers. It's not some kind of trickery."

Individually Customized Advertisements

Yahoo's SmartAds platform delivers its individualized ads by culling information from the 500 million people who visit the Yahoo Web site each month, according to company spokeswoman Gaude Paez. The new technology is a boon to advertisers, she said, because they no longer have to draw up advertising campaigns aimed at a wide demographic that includes millions of people, but can have their ads tailored to each individual surfer.

With the new program, companies provide Yahoo with the graphics and other information for the ads, and Yahoo does what Paez calls the "heavy lifting" of creating thousands of ads, each targeted at a specific user based on that person's search history and any other identifying information they provide to Yahoo, particularly if they are logged in to the site with a registered username.

The program has been launched on Yahoo sites for advertisers in the travel industry including two of the three major U.S. airlines, who declined to be identified by name. Yahoo will then expand the program to include automobile and retail companies, as well as its partner Web sites including eBay and Comcast.

How Concerned Should You Be?

Paez said that users should not be concerned about privacy, pointing to Yahoo's privacy policy prominently available to all visitors of the site, and arguing that while advertisers want to target individuals, they do not need information as specific as their name. Yahoo's current policy is to retain consumer data for no more than 18 months before identifying information is removed from it, she said.

But, according to Eben Moglen, a professor at Columbia Law School who is opposed to new advertising programs like SmartAds, over the years, consumers have convinced themselves that because they are being offered products that they may want the information gathering is harmless, even though in reality it is not.

"The existing commercial Web is becoming the most intensively surveilled part of human existence, period. Your click stream along with all your electronic records ... can be aggregated by those who have the money to pay [for them]," said Moglen, who is also the founding director of the Software Freedom Law Center. "The current design of the existing commercial Web is not a private place."

Both Moglen and Stephens said these new advertising methods eventually aim to connect with users on a subconscious level, providing them with advertisements for what they want perhaps before they even know they want it.

"In the aggregate all these innocuous pieces of information [compiled by SmartAds] paint a picture of you as a consumer that is so complete that nobody could possibly have all this information about yourself other than you and perhaps your spouse," Stephens said.

But Singleton dismissed many of these concerns, saying that in the long run users will take the onus for protecting their privacy into their own hands by devising new ways to protect their identity -- or, if they care enough, by switching over to another, more secure Web host.

These difficult questions of Internet privacy are likely to only loom larger and more complex as time passes and companies follow Yahoo's lead of offering increasingly personalized advertisements based on detailed personal information.

But if you are concerned about your Internet privacy, what can you do to protect your identity today? Moglen suggests avoiding Web sites that require a log in, and using different Web sites for different needs -- perhaps Yahoo for your email and Google for your Web searches so that "the totality of the information that any one company has about you is not as extensive" as it otherwise might be.