OFT publishes a new misguided report on behavioural advertising?

OFT publishes a new misguided report on behavioural advertising?

Behavioural advertising, or the targeting of advertising on the basis of an online users past viewing habits has been and continues to be used by many financial services companies, including those in the investment management arena. It is often used to target advertising at financial advisers or consumers who have elicited certain behaviour online. This could typically be visiting the finance pages of a news site such as the Times or Telegraph or visiting the IFA only section of the investment managers own website.

Behavioural targeting in this context is used to:

a) Specifically target advertising at the correct audience segment – delivering advertising to specifically only those people who have visited the finance pages of the Telegraph for instance, immediately excludes targeting site visitors only interested in say sports or motoring news. This filtering of the audience you are interested in is done on the basis that this group is likely to be more interested in financial services advertising given their interest in ‘money’ news.

b) By targeting advertising in this way you are somewhat reassured that your advertising is being more accurately targeted than by simply attempting to reach out to the entire audience visiting that website.

In theory, everyone benefits – site visitors are more likely to see advertising related to a particular interest that they may have, publishers are able to charge a premium for behaviourally targeted site inventory and advertisers campaigns perform better.

I was therefore interested in reading through the release today from the Office of Fair Trading (OFT) about “Online Targeting of Advertising and Prices“. The main stance the OFT appears to take revolves around online privacy and the potential of behavioural advertising being used to target different price levels  at different audience segments.

I confess that this somewhat perplexes me. I don’t understand how offering existing customers a discount over new customers could in anyway be to the end consumers disadvantage. This can simply be justified on the basis that it is more expensive to acquire new customers than to retain those you have.

But one of the concerns voice by the OFT is the potential for certain audience segments being charged more for a product or service. The example they suggest is that certain ‘affluent’ audience segments may be charged more for a product or service than under other situations. Again while in theory I can see how this might happen I don’t see any difference to this than that of a gardener or handyman ramping his quote to a wealthy couple on the basis of the house or neighbourhood that they live in or a chain of high street stores charging more for a product in one area than another.

The key difference here however that the OFT has completely failed to take notice of  the fact that in the online arena, price comparison websites are only a click away. My message to the OFT is therefore simple. Please focus on areas of legitimate concern – possibly those relating to bank charges and let the highly competitive online environment develop naturally. While abuse can occur in ‘any’ environment, as online consumers become increasingly price savvy it is unlikely that they will allow sites to take them for a ride. Those sites that attempt to do so are unlikely to flourish and grow.

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