Currently, many companies track where users go on the Web—often through cookies—in order to display customized ads. That's why if you look at a pair of shoes on one site, ads for those shoes may follow you around the Web.
But online marketers are increasingly seeking to track users offline, as well, by collecting data about people's offline habits—such as recent purchases, where you live, how many kids you have, and what kind of car you drive.
Here's how it works, according to some revealing marketing literature we came across from digital marketing firm LiveRamp:
- A retailer—let's call it The Pricey Store—collects the e-mail addresses of its high-spending customers. (Ever wonder why stores keep bugging you for your email at the checkout counter these days?)
- The Pricey Store brings the list to LiveRamp, which locates the customers online when the customers use their email address to log into a website that has a relationship with LiveRamp. (The identity of these websites is a closely guarded secret.) The website that has a relationship with LiveRamp then allows LiveRamp to "tag" the customers' computer with a tracker.
- When those high-spending customers arrive at PriceyStore.com, they see a version of the site customized to "show more expensive offerings to them." (Yes, the marketing documents really say that.)
Tracking people using their real names—often called "onboarding"—is a hot trend in Silicon Valley. In 2012, ProPublica documented how political campaigns usedonboarding to bombard voters with ads based on their party affiliation and donor history. Since then, Twitter and Facebook have both started offering onboarding servicesallowing advertisers to find their customers online.
"The marriage of online and offline is the ad targeting of the last 10 years on steroids," said Scott Howe, chief executive of broker firm Acxiom at a conference earlier this year.
Last month, Acxiom—one of the country's largest data brokers, which claims to have 3,000 data points on nearly every U.S. consumer—agreed to pay $310 million topurchase onboarding specialist LiveRamp. Acxiom and LiveRamp declined to comment for this article, citing the need to remain quiet until the acquisition is complete.
Companies that match users online and offline identities generally emphasize that the data is still anonymous because users' actual names aren't included in the cookie.
But critics worry about the implications of allowing data brokers to profile every person who is connected to the Internet. In May, the Federal Trade Commission issued a reportthat found that data brokers collected information on sensitive categories such as whether an individual is pregnant, has a "diabetes interest," is interested in a "Bible Lifestyle" or is "likely to seek a [credit-card] chargeback."
Previously, data brokers primarily sold this data to marketers who sent direct mail—aka "junk mail"—to your home. Now, they have found a new market: online marketing that can be targeted as precisely as junk mail.
"Will these classifications mean that some consumers will only be shown advertisements for subprime loans while others will see ads for credit cards?" Federal Trade Commission Chairwoman Edith Ramirez said at a press conference. "Will some be routinely shunted to inferior customer service?"
The FTC has called for Congress to pass legislation requiring data brokers to allow consumers to access their information and to opt out of targeted marketing. Currently, many data brokers don't offer people either one.
The Direct Marketing Association, which represents the data broker industry, doesn't offer a specific opt-out for onboarding. It does offer a global opt-out from all of its members' direct mail databases, but it only requires members to remove people's data for three years after they opt-out.
Some companies offer their own opt-outs. Twitter allows users to opt out of onboarding by unchecking the "promoted content" button in their account settings. LiveRamp offers a so-called " permanent opt-out" for users who do not want to be targeted via their e-mail address.
Facebook does not offer a specific opt-out for onboarding. Instead, it suggests users opt out of the data brokers themselves. A Facebook spokesman says that users who don't like specific targeted ads can avoid seeing them again by clicking an 'x' on the top right corner of the ad and following the links to the advertisers' opt-out page.