The quality and variety of what's in those databases makes all the difference in the success of an advertising campaign. "The companies that are able to use their data to best identify and serve ads to site visitors in real time will win," one advertising executive who chose to remain anonymous told me.
Real-time ad targeting
Here is a radically simplified explanation of how an advertiser would place an advertisement on a website today: When someone visits a website, that site has an opportunity to deliver a targeted ad on behalf of one or more of its advertisers. To do this in real time, the website posts the availability of an advertising opportunity on an "exchange" -- a Web-based open market where advertisers can bid to deliver targeted ads.
But before the advertiser buys the opportunity to show its ad, it wants to know a lot more about the person who will view it. So it looks for a small bit of identifying code (an HTML cookie) that it has installed on the visitor's computer in the past. The advertiser then determines whether the cookie ID matches an audience profile in either its own database or that of one of its technology partners.
The profile databases within which the advertiser looks can contain information from hundreds of sources of offline and online data, and can be augmented with information bought from large data brokers such as Acxiom or Experian, or from specialty data brokers like 33Across and Media6Degrees, which sell profiles based on people's social networking data.
If the advertiser finds a match, it then determines how much to pay for the impression based on factors that may include demographics, time of day, or even how recently the visitor last saw one of its ads.
The advertiser might then work with another technology partner to adjust the content of the ad (anything from the messaging to the color of the product) to match the likely interests and tastes of the site visitor.
All of this happens in milliseconds.
Fingerprinting tech: Data aggregators' BFF
Using cookies to recognize people online and sync up data about them isn't ideal, however. A cookie associated with a particular IP address might contain the browsing histories of multiple people in the household who use that PC. And cookies may not last very long in the browser: Security software is often set to delete cookies once a week. People in the online advertising industry call such deletions "cookie erosion."
Naturally, companies are springing up with technologies that resolve these issues. New "fingerprinting" technologies rely on some highly sophisticated means to verify that the personal data collected at different sites at different times, and for different reasons, are all from the same consumer.
BlueCava, based in Irvine, California, has developed a "device ID" technology that identifies site visitors based on the unique combination of settings in their Web browser. The company then buys demographics, preference, and Web tracking data from site publishers all over the Web, and it matches and adds that data to the identified users' profiles in its database. It can then sell all that profile data to advertisers and marketers. BlueCava CEO David Norris says that his company's technology can identify devices with 99.7 percent accuracy, and that it has already identified roughly 10 percent of the 10 billion Internet-connected devices in the world.
Fingerprinting challenges anonymity online
Fingerprinting technologies like BlueCava's give some in the privacy community serious pause. "I think device ID is really unethical," says Kaliya Hamlin of the Personal Data Ecosystem Consortium. "It's one thing to put cookies in your browser, because you can throw them out; but a device ID is permanent, and it takes away your means of defining context in your digital life."