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Retargeting Ads Follow Surfers to Other Sites

By MIGUEL HELFT and TANZINA VEGA

The shoes that Julie Matlin recently saw on Zappos.com were kind of cute, or so she thought. But Ms. Matlin wasn’t ready to buy and left the site.

Then the shoes started to follow her everywhere she went online. An ad for those very shoes showed up on the blog TechCrunch. It popped up again on several other blogs and on Twitpic. It was as if Zappos had unleashed a persistent salesman who wouldn’t take no for an answer.

“For days or weeks, every site I went to seemed to be showing me ads for those shoes,” said Ms. Matlin, a mother of two from Montreal. “It is a pretty clever marketing tool. But it’s a little creepy, especially if you don’t know what’s going on.”

People have grown accustomed to being tracked online and shown ads for categories of products they have shown interest in, be it tennis or bank loans.

Increasingly, however, the ads tailored to them are for specific products that they have perused online. While the technique, which the ad industry calls personalized retargeting or remarketing, is not new, it is becoming more pervasive as companies like Google and Microsoft have entered the field. And retargeting has reached a level of precision that is leaving consumers with the palpable feeling that they are being watched as they roam the virtual aisles of online stores.

More retailers like Art.com, B&H Photo, Diapers.com, eBags.com and the Discovery Channel store use these kinds of ads. Nordstrom says it is considering using them, and retargeting is becoming increasingly common with marketers in the travel, real estate and financial services industries. The ads often appear on popular sites like YouTube, Facebook, MySpace or Realtor.com.

In the digital advertising business, this form of highly personalized marketing is being hailed as the latest breakthrough because it tries to show consumers the right ad at the right time. “The overwhelming response has been positive,” said Aaron Magness, senior director for brand marketing and business development at Zappos, a unit of Amazon.com. The parent company declined to say whether it also uses the ads.

Others, though, find it disturbing. When a recent Advertising Age column noted the phenomenon, several readers chimed in to voice their displeasure.

Bad as it was to be stalked by shoes, Ms. Matlin said that she felt even worse when she was hounded recently by ads for a dieting service she had used online. “They are still following me around, and it makes me feel fat,” she said.

With more consumers queasy about intrusions into their privacy, the technique is raising anew the threat of industry regulation. “Retargeting has helped turn on a light bulb for consumers,” said Jeff Chester, a privacy advocate and executive director of the Washington-based Center for Digital Democracy. “It illustrates that there is a commercial surveillance system in place online that is sweeping in scope and raises privacy and civil liberties issues, too.”

Retargeting, however, relies on a form of online tracking that has been around for years and is not particularly intrusive. Retargeting programs typically use small text files called cookies that are exchanged when a Web browser visits a site. Cookies are used by virtually all commercial Web sites for various purposes, including advertising, keeping users signed in and customizing content.

In remarketing, when a person visits an e-commerce site and looks at say, an Etienne Aigner Athena satchel on eBags.com, a cookie is placed into that person’s browser, linking it with the handbag. When that person, or someone using the same computer, visits another site, the advertising system creates an ad for that very purse.

Mr. Magness, of Zappos, said that consumers may be unnerved because they may feel that they are being tracked from site to site as they browse the Web. To reassure consumers, Zappos, which is using the ads to peddle items like shoes, handbags and women’s underwear, displays a message inside the banner ads that reads, “Why am I seeing these ads?” When users click on it, they are taken to the Web site of Criteo, the advertising technology company behind the Zappos ads, where the ads are explained.

While users are given the choice to opt out, few do once they understand how the ads are selected for them, said Jean-Baptiste Rudelle, the chief executive of Criteo.

But some advertising and media experts said that explaining the technology behind the ads might not allay the fears of many consumers who worry about being tracked or who simply fear that someone they share a computer with will see what items they have browsed.

“When you begin to give people a sense of how this is happening, they really don’t like it,” said Joseph Turow, a professor at the Annenberg School for Communication at the University of Pennsylvania, who has conducted consumer surveys about online advertising. Professor Turow, who studies digital media and recently testified at a Senate committee hearing on digital advertising, said he had a visceral negative reaction to the ads, even though he understands the technologies behind them.

“It seemed so bold,” Professor Turow said. “I was not pleased, frankly.”

While start-ups like Criteo and TellApart are among the most active remarketers, the technique has also been embraced by online advertising giants.

Google began testing this technique in 2009, calling it remarketing to connote the idea of customized messages like special offers or discounts being sent to users. In March, the company made the service available to all advertisers on its AdWords network.

For Google, remarketing is a more specific form of behavioral targeting, the practice under which a person who has visited NBA.com, for instance, may be tagged as a basketball fan and later will be shown ads for related merchandise.

Behavioral targeting has been hotly debated in Washington, and lawmakers are considering various proposals to regulate it. During the recent Senate hearing, Senator Claire McCaskill, Democrat of Missouri, said she found the technique troubling. “I understand that advertising supports the Internet, but I am a little spooked out,” Ms. McCaskill said of behavioral targeting. “This is creepy.”

When Advertising Age, the advertising industry publication, tackled the subject of remarketing recently, the writer Michael Learmonth described being stalked by a pair of pants he had considered buying on Zappos.

“As tracking gets more and more crass and obvious, consumers will rightfully become more concerned about it,” he wrote. “If the industry is truly worried about a federally mandated ‘do not track’ list akin to ‘do not call’ for the Internet, they’re not really showing it.”

Some advertising executives agree that highly personalized remarketing not only goes too far but also is unnecessary.

“I don’t think that exposing all this detailed information you have about the customer is necessary,” said Alan Pearlstein, chief executive of Cross Pixel Media, a digital marketing agency. Mr. Pearlstein says he supports retargeting, but with more subtle ads that, for instance, could offer consumers a discount coupon if they return to an online store. “What is the benefit of freaking customers out?”

From the New York Times...

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Technology Aside, Most People Still Decline to Be Located

By CLAIRE CAIN MILLER and JENNA WORTHAM

Internet companies have appropriated the real estate business’s mantra — it’s all about location, location, location.

But while a home on the beach will always be an easy sell, it may be more difficult to persuade people to start using location-based Web services.

Big companies and start-ups alike — including Google, Foursquare, Gowalla, Shopkick and most recently Facebook — offer services that let people report their physical location online, so they can connect with friends or receive coupons.

Venture capitalists have poured $115 million into location start-ups since last year, according to the National Venture Capital Association, and companies like Starbucks and Gap have offered special deals to users of such services who visited their stores.

But for all the attention and money these apps and Web sites are getting, adoption has so far been largely confined to pockets of young, technically adept urbanites. Just 4 percent of Americans have tried location-based services, and 1 percent use them weekly, according to Forrester Research. Eighty percent of those who have tried them are men, and 70 percent are between 19 and 35.

“Ever since mobile phones and location technology got started, there have been conversations about the potential for doing something really incredible with this for marketers,” said Melissa Parrish, an interactive marketing analyst at Forrester. “But clearly the question is whether it has reached the mainstream, and it looks like the answer is no.”

Foursquare, for example, which lets people “check in” to public places on their phones and let their friends know where they are, has close to three million users, most of them in cities. Loopt, a similar service, has four million users, about a quarter of whom actively use it. Compare that with Twitter, which has 145 million registered users.

This month, Facebook introduced Places, which adds some Foursquare-like features to its social network. If Places catches on with Facebook’s 500 million users, many think it could bring location-sharing to the masses.

“Clearly location is not yet mainstream — it’s still a younger-demographic phenomenon — but if anyone can change it, Facebook will,” said Sam Altman, chief executive of Loopt.

For now, many people say sharing their physical location crosses a line, even if they freely share other information on the Web.

Stephanie Angelucci, who is 30 and lives in North Beach, Md., updates her MySpace page with photos of her babies, news about her health and testaments to her love of sailing. But she won’t use location apps.

“I don’t like broadcasting where we are or when my husband’s gone, just for safety reasons,” she said. And privacy concerns aside, she doesn’t see the need: “We go to playtime, the park and the grocery store. My life isn’t exciting enough to broadcast where I am and what I do.”

Some users of Foursquare like the spontaneous social gatherings it can inspire, or the way it keeps friends informed of one’s nightlife exploits. But people who are not frequent bar-hoppers need other reasons to check in. The companies that make location-based services are working to add incentives that they hope will reel in a bigger audience.

Sharing location becomes a simple cost-benefit analysis for most people, said Matt Galligan, chief executive of SimpleGeo, which sells location technology to companies building apps. “There has to be an incentive for giving away very specific information, like coupons or points.”

Shopkick, which became available this month, offers coupons to people when they walk into stores like Best Buy and Macy’s. The application allows users to share their location just with the store and not with other people, and is making inroads with a broader demographic.

Elizabeth Aley, 38, a volunteer in Nixa, Mo., says she is “kind of addicted” to Shopkick. She uses it when she goes to Wal-Mart, Target and the Price Cutter grocery store, to rack up points for entering the stores and to get coupons that she has exchanged for Tide laundry detergent and a Swiffer.

Ms. Aley has chosen to use the app to also reveal her location to her Facebook friends and Twitter followers. The rewards make using the app worthwhile, she said, and the privacy trade-off “really never crossed my mind.”

Gowalla bills itself as a travel game that lets users stamp digital passports at places they visit, find virtual objects in real-world places in a kind of scavenger hunt, or follow trip itineraries in new cities.

“Connecting with friends is nice, but I don’t know that it alone will be enough of a driver” to make a location service widely popular, said Josh Williams, a Gowalla founder.

Foursquare hit upon the idea of allowing people to become “mayor” of places they visit most frequently, touching off competitions among users. Now it is teaming up with big companies and small stores so people see special offers when they check in, whether they are in Brooklyn or Milwaukee.

The company has signed promotional deals like a recent one with the History Channel, which sends users historical facts when they check in at a landmark.

“It’s a misconception that the service is just for city kids,” said Dennis Crowley, a Foursquare founder. “Cities have the densest use, of course, but it happens in the Midwest and all over the world.”

Still, wariness about broadcasting one’s location extends to city dwellers, too. Marsha Collier lives in Los Angeles and writes “For Dummies” books on technology. She uses Whrrl and Foursquare as a way to share information about her life with her online fans and followers — but instead of checking in when she arrives at a place, she checks in as she leaves, to avoid alerting people that she is away from home.

“If I’m going to go work out at the gym, I’ll check in on my way out,” she said. “That way, you’re going to be home soon, so your house won’t be unattended for a long time.”

Others let only a small circle of people see where they are. Ellen Lovelidge, 27, a fishery specialist and D.J. in Washington, carefully chooses who can see her Foursquare updates. She does not plan to use Facebook’s new service, since her Facebook updates go out to a large network of friends, colleagues and family.

“I like Foursquare because I can actually pick who sees where I actually am, compared to Facebook, where I have 1,200 friends,” she said. “I don’t want 1,200 people knowing where I am.” Facebook does let users pick a smaller subgroup of friends who can see location updates, but Ms. Lovelidge said it would be too much trouble to set that up.

Location services are catching on more quickly with young people, who have grown up posting personal information online.

“The magic age is people born after 1981,” said Mr. Altman of Loopt. “That’s the cut-off for us where we see a big change in privacy settings and user acceptance.”