What is online behavioural advertising?

Stuart Colman, managing director – European operations, AudienceScience

Advertising supports much of the content, services and applications available to users on the internet for little or no cost. Many small and emerging companies depend on online advertising to facilitate their market entry and build competitive and successful businesses. Effective online advertising helps to maintain the low barriers to entry that have played a crucial role in the robust competition and innovation that fuel this medium.

Advertising on the internet is increasingly targeted and one of the ways this can be done is based upon user interests or behaviour. This is achieved when user interests are collected from web browsing activity over a period of time.

How does behavioural advertising work?

Behavioural advertising or interest-based advertising is intended to make display advertising that is more relevant to users’ likely interests. More relevant advertising is beneficial for both users and advertisers: users discover more of what interests them and advertisers find a better way to communicate with users.

Providers of behavioural advertising (eg an advertising network – see image below) create audience segments (view audience segment image in handbook download) based on web sites visited over a period of time with a particular browser. These audience segments are then used to provide relevant advertising to users within that segment. For example, a user may visit golf sites often and thus be categorised in the ‘golf enthusiasts’ segment. Some businesses now offer this in real time without the need to create a specific audience segment.

There are three main business models for behavioural advertising varying in the scope of what information is used and how it is collected:

One

A web publisher may collect and use information on an internet user’s browsing activities from its own website(s) to provide behavioural advertising. This is often known as ‘first party’ behavioural or interest-based advertising. A web publisher may use an agent (eg a technology company) to collect the information to deliver the advertising. This model would not normally include user declared interests within a profile on a social networking site.


A web publisher collects and uses browsing activity in its own website.

Two

A web publisher may partner with an advertising network which collects and uses information when an internet user visits one of a number of websites participating in that particular network or information about searches that user has made. This is often known as ‘third party’ behavioural or interest-based advertising.


An advertising network collects and uses browsing activity from web publishers
partnering with the advertising network.

Three

A newer business model is when providers make use of internet traffic data passing through Internet Service Providers (ISPs). See image below.


A technology company collects and uses information from IP traffic at an ISP level.

All providers have to comply with the law and, in most cases, the information used for providing you with these adverts is not personal, in that it does not identify the internet user.

Data about your web browsing activity is collected and analysed anonymously. If this analysis infers a particular interest, a cookie – a small file used by most websites to store useful bits of information to make your use of the internet better – is placed in your computer and this cookie (not your browsing data) determines what advertising you receive. See image below. Where personally identifiable information (like registration data) is used, an internet user will have been told about it in the website’s privacy policy when he or she registered for a particular service.


How a cookie determines the interest segment.

How is behavioural advertising different to other types of display advertising?

Behavioural advertising is different to other types of display advertising. For example, contextual advertising is where advertisements are served within a chosen ‘context’ by the selection of a website focused on a particular topic. An example is when a user is shown an advertisement for tennis rackets solely because he/she is visiting a tennis-related website. Behavioural advertising is also different to demographic advertising where advertisements are served based upon specific information provided by the user (eg gender, age, location). An example is when a teacher living in London who has registered on a jobs website is shown advertisements for teaching opportunities in London whilst on that site but not necessarily in the teaching section.

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