Behavioural targeting allows advertisers to personalize ads for consumers based on their online behavior and browsing history. While this provides benefits for companies in targeting high-value customers, it also raises privacy concerns among many users who feel their online activities are excessively tracked. There is no consensus on whether behavioral targeting is ethical, but companies could improve perceptions by increasing transparency around their data collection and use and giving users more control over their personal information.

1. Behavioural
Targeting:
Innovative
Marketing or
Privacy Invasion?
Allyson Phillips

2. What is
Behavioural
Targeting?
A type of targeted
advertising, it is“[a]
practice which includes
techniques used by
advertisers to capture
users’ online behavior
patterns that benefit them
to segment users based on
their behavior”

3. Although behavioural targeting can provide firms with a
competitive advantage, there may be significant drawbacks
in the privacy concerns held by consumers

4. Traditional mass advertising was used
because firms lacked information about
consumer habits and had no way to only
reach prospective consumers
Behavioural targeting allows businesses to
differentiate their advertising between
various groups of consumers since there
are so many specialized media outlets
through which to communicate

5. The key behind behavioural targeting is that the
advertisers can show ads only to users within a
demographic of high value

6. How Does it Work?
Websites create advertisements
based on your purchasing,
search history, and browsing
habits
Social networking websites may
place ads on the side of the
page based on what your
friends are doing (for example,
which pages they “like” on
Facebook)

7. By targeting customers who value the firm’s
product or service, the firm can maximize
not only its sales, but also the margin it
makes on each sale, since customers can be
charged prices closer to their maximum
willingness-to-pay

8. “The business that’s made the effort to anticipate my question –
and been generous enough with its expertise to try and answer it
– will have the best chance of being found in search, and may
well predispose me towards a sale too”
- Catherine Toole, “Brands as Publishers: Inside the Content Marketing Trend”

9. The Push for Digital Advertising
“Simultaneous to the “pull” of
information by the consumer [via
visiting retailer sites] is the digital
“push” by marketers, who spent
more than $43 billion on digital
advertising in 2013”
- Gian M. Fulgoni, “Omni-Channel Retail Insights and the Consumer’s Path to
Purchase”

10. Good News for Firms
“If a firm can tell its own loyal customers apart from those of its
competitor, it can set lower prices so as to target aggressively
the rival’s customer base. As the other firm will act likewise,
competition will increase”
- Paul Belleflamme, “What to think of targeted advertising?”

11. There are incentives for firms to share customer data that can
be used for price discrimination, and studies show it can be a
“profitable strategy for competing firms”
- Paul Belleflamme, “What to Think of Targeted Advertising?”

12. As targeted advertising becomes more
widely used, many consumers worry that
everything they do online is being tracked
The Growing Concern…

13. A Canadian Study on Behavioural Ads
Of 1500 Canadians polled in
2014, 73% said they feel they
have less protection over their
information than they did 10
years ago
58% of those surveyed reported
having turned off location
tracking on mobile devices
because of privacy concerns, up
from 38% in 2012

14. A Canadian Study on Behavioural Ads
“81% of participants said they would do
business with a company specifically
because of its reputation for privacy”

15. Facebook “Social Context” Advertising Scandal
“[Facebook] allowed advertisers to post
updates on users’ feeds to notify their
friends of their commercial activity
at participating retailers”
- Sidneyeve Matrix, Module 02 Lecture 01 “Advertising Strategies,”
FILM 240, 2017.

16. Some people had
their surprise
engagement plans
revealed by
Facebook
notifications sent to
their friends that
they had recently
made a large
purchase at a
jewelry store

17. Similarly, Facebook’s use of “sponsored
stories” meant that if a user “liked” a page
on Facebook, his or her friends were told
about it in the form of an advertisement
Many users felt this was
an encroachment on their
privacy, and the result was
a $20M class action
lawsuit in 2014.

18. What is the Best Approach?
Behavioural targeting can be a very effective way
for businesses to advertise to specific groups of
people and ensure profit maximization
However, an important part of marketing for
businesses is called Marketing Ethics, or
promoting “honesty, fairness, and responsibility in
advertising,” and it is often a complicated topic

19. Is Behavioural Targeting “Ethical”?
There is no agreed-upon answer, but there may be some
solutions to make it more welcomed by consumers

20. For many users, the solution may be as simple
as having access to more information on how
their data is used and collected
By being more transparent about their privacy
policies, firms can allow consumers to understand
what is being done with the data collected, allowing
them to be more comfortable in using their services
56% of Canadians surveyed said that they did
not feel they had sufficient knowledge to
properly protect their privacy

21. Sources
Belleflamme, Paul. "What To Think Of Targeted Advertising? | Ipdigit". Ipdigit.eu. N.p., 2013. Web. 17
Feb. 2017.
Ben Elhadj-Ben Brahim, Nada, Rim Lahmandi-Ayed, and Didier Laussel. "Is Targeted Advertising Always
Beneficial?". International Journal of Industrial Organization 29.6 (2011): 678-689. Web.
Chauhan, Sonam and Shubhangini Rathore. "Ethics In Behavioural Targeting:". International Journal of
Online Marketing 4.2 (2014): 45-61. Web.
"Ethical Marketing | What Is Ethical Marketing?". Marketing-schools.org. Web. 19 Feb. 2017.
Fishman, Andrea. "Privacy Vs. Security: What's Behind Ad-Targeting Concern?". Cmo.com. N.p., 2012.
Web. 15 Feb. 2017.
Fulgoni, Gian M. "“Omni-Channel” Retail Insights And The Consumer's Path-To-Purchase". Journal of
Advertising Research 54.4 (2014): 377-380. Web.
Hendricks, Drew. "Facebook To Drop Sponsored Stories: What Does This Mean For
Advertisers?". Forbes.com. N.p., 2014. Web. 16 Feb. 2017.
Matrix, Sydneyeve. “Module 02: Promotional Media | Lecture 01 Part 01: Advertising Strategies,” FILM
240, Queen’s University, February 2017.
Phoenix Strategic Perspectives Inc.,. 2014 Survey Of Canadians On Privacy. Ottawa: N.p., 2014. Web.
15 Feb. 2017.
All photos have Creative Commons License CC0, sourced from Google and Pexels.com