Friday, January 7, 2005

Getting too personal?

The news that the Spy-Act bill (HR 29) is back on the docket for Congress in 2005, backed by Rep. Mary Bono, is sending a shiver down the spines of some online advertising companies. Many pundits have proclaimed 2005 the year of personalization for search engines and ad networks, but the Spy-Act could hamper the growth of companies, such as Tacoda and Revenue Science, that rely on tracking user behavior across web sites to infer profiles of interest. The big search engines also could find their efforts at fine-tuning relevancy of ads placed on their networks based on user behavior across the websites they visit curtailed.

So, are all the pundits that point to more personalization as a key development in online advertising in 2005 off-track? Not necessarily. However, it is more likely that publishers will be the key players in identifying the users who meet specific profiles, using variations of traditional controlled circulation methods. Large diversified publishers can offer a range of "personalized" segments to their advertisers across their networks of websites. Smaller publishers could establish networks with other related publishers. The key difference between the publisher networks and the ad technology companies mentioned above is that customers will voluntarily provide information about themselves to the publishing sites in exchange for high quality content, tools, and other services relevant to their interests. At Shore we've referred to it as the "vertical search solution to personalization" and describe it in more detail in the forthcoming 2005 outlook.
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