Privacy fears mount as advertising targeting sophistication grows

In the quest for better targeted advertising, marketers are using high-tech tools that can pinpoint a person's location, demographics and habits, raising the hackles of privacy activists.

Online or in the shopping mall, these efforts are becoming more prevalent.

Google, Yahoo and its advertising partners can track a user's browsing habits in an effort to deliver more relevant marketing messages.

Offline, new digital signs with hidden cameras can use facial recognition software to tailor messages similar to the scenario in the science fiction film Minority Report.

Some analysts say the new technology is positive, enabling firms to get the most for their advertising dollars.

"We're marketers. We present consumers with information that they can use to make informed buying decisions related to our brands," says Rob Graham, vice-president at the consulting firm Laredo Group.

But a 2009 study by the University of California and the University of Pennsylvania showed that Americans are opposed to targeted advertising on the web.

"Contrary to what many marketers claim, most adult Americans (66 per cent) do not want marketers to tailor advertisements to their interests," the study concluded.

"Moreover, when Americans are informed of three common ways that marketers gather data about people in order to tailor adverts, even higher percentages... say they would not want such advertising."

Chris Hoofnagle, director of the Berkeley Centre for Law and Technology's information privacy programmes, said many web users are aware their habits are tracked by firms such as Google or Amazon, but are unsettled by third-party advertisers and marketers tracking across websites without any permission.

"Individuals don't want to be tracked it might not cause you harm, it might just be creepy," he said.

The practices underscore concerns over online privacy at a time when social network giant Facebook is embroiled in its own controversy over sharing data with third-party websites.

New technology is also testing the limits of acceptable practices and privacy offline. In some shopping malls, a new generation of digital signs not only can change messages frequently but can measure customer traffic and determine who is walking by through facial recognition software.

"We're not quite there yet but we are at a point where we can adjust the adverts according to who is in front of that screen," said Keith Kelsen, chairman and chief executive of Media Tile, a digital signage firm.

Kelsen said the signage industry has a set of guidelines to protect privacy, and dismissed most of the fears as overblown.

"There is really no reason for concern because we're not tracking individuals, we're tracking information that is collected on whether they are male or female, or quantities of people, how long do they look at the screen," he said.

But some privacy activists say the industry has not done enough to protect against abuses.