Oct. 25, 2011 -- Are credit card companies using your purchasing history to deliver targeted ads to you while you surf the web? So says The Wall Street Journal, which reports today on what appears to be the latest development in an ongoing debate over whether online advertising based on your surfing history violates your privacy. The lines are blurring between what credit-card companies know about your life as a consumer offline and what they know online. What should we make of all this? Is it time to freak out or will we be O.K.?
From "junk" mail to commercials you have to sit through before your favorite TV drama returns, advertising is something people love to hate, or at least complain about. But this attitude clashes with the reality of our actions. We may not admit it or be aware of it, but in general, we like advertising; if we didn't, we wouldn't buy things someone advertised to us.
One big reason is targeted advertising. When you get your mail every day, the "junk" is accompanied by mailings and catalogs you don't immediately recycle. Your eye is caught by stuff you like, and by stuff you didn't know about and like now. And you buy. Why? Because it matches your past buying patterns, which have allowed companies to target you with new and different goods and services. Targeted advertising has been around for years. It's so common that we are used to it, and get frustrated mainly by off-target ads.
Online, targeted advertising is just as effective, but it is controversial. It uses things called pixel tags, which some people are scared of. Recently the chairman of the Federal Trade Commission expressed concern about them, echoing a general murmur of concern in the press. A question regarding tracking consumers via pixel tags was posed to me when I was recently testifying before a congressional commission. I'll repeat here what I said then: Overreacting to a non-threat is as foolish as not reacting to a real one. Pixel tags are not a threat.
Pixel tags work, more or less, as sidekicks for cookies. Cookies are tiny pieces of information that websites store on a computer to enable a faster and more-tailored Internet experience for that computer. Pixel tags -- or, web beacons, as they are also known -- attach to a browser and collect information about an anonymous user's movements on the Internet.
These little beacons allow sites to provide users with ads for services and products that are relevant to them. A bachelor businessman in New York City, for instance, probably isn't interested in diapers, whereas a suburban mother of two is. Someone in Miami won't find much use for snow boots, but someone in Minnesota will. Ads get to the people who are receptive to them because those people's patterns have been established by pixel tags.
Pixel tags collect anonymous information; they have no way of knowing any personal information about the person using the computer. A pixel tag knows only that a computer has gone to certain sites.
The concern about pixel tags is valid in that they can be used by spammers and scammers as part of their illicit activities. Let's say I am a spammer and I am sending out a million emails and I would like to know when recipients look at my email as well as how many of those email addresses are valid. I could embed a unique image tag that is associated with every email address by hashing it, that way when the user opened the received email the image request would be made and I would know that this email is valid and you are now on my spam list. In fact, that is why Google and most modern email clients will not load images by default -- which is also why spammers try to get you to do so by including something to entice you to load the images.
Problem Isn't Technology but How It's Used; Solution is Public-Private Partnership
But the malefactor is the spammer, not the technology itself. What we need is a partnership between the government and companies in which the companies inform the government as to the law-enforcement ramifications of their new technologies, plus sufficient funding so the government has the resources to go after the bad guys.
Overall, we consumers are greatly benefited by pixel tags and cookies. The Internet is a vast sea of people and information. Pixel tags make it much easier for us to find what we need and want and for companies to find people who want what they're selling.
There is a lot of information on the web about cookies and tags and privacy concerns. If you'd like more information, I've included some links below. While you're researching, you might want to notice how well suited the ads are to your life.
This work is the opinion of the columnist and in no way reflects the opinion of ABC News.