[Infowarrior] - Advertisers Get a Trove of Clues in Smartphones

[Richard Forno]

March 11, 2009
Advertisers Get a Trove of Clues in Smartphones
By STEPHANIE CLIFFORD

http://www.nytimes.com/2009/03/11/business/media/11target.html?_r=1&hp=&pagewanted=print

The millions of people who use their cellphones daily to play games,  
download applications and browse the Web may not realize that they  
have an unseen companion: advertisers that can track their interests,  
their habits and even their location.

Smartphones, like the iPhone and BlackBerry Curve, are the latest and  
potentially most extensive way for advertisers to aim ads at certain  
consumers. Advertisers already tailor ads for small groups of  
consumers on the Web based on personal information. But cellphones  
have a much higher potential for personalized advertising, especially  
when they use applications like Yelp or Urbanspoon with GPS to  
identify a person’s location, right down to the street corner where  
they are standing.

Advertisers will pay high rates for the ability to show, for example,  
ads for a nearby restaurant to someone leaving a Broadway show,  
especially when coupled with information about the gender, age,  
finances and interests of the consumer.

Eswar Priyadarshan, the chief technology officer of Quattro Wireless,  
which places advertising for clients like Sony on mobile sites, says  
he typically has 20 pieces of information about a customer who has  
visited a site or played with an application in his network. “The  
basic idea is, you go through all these channels, and you get as much  
data as possible,” he said.

The capability for collecting information has alarmed privacy advocates.

“It’s potentially a portable, personal spy,” said Jeff Chester, the  
executive director of the Center for Digital Democracy, who will  
appear before Federal Trade Commission staff members this month to  
brief them on privacy and mobile marketing. He is particularly  
concerned about data breaches, advertisers’ access to sensitive health  
or financial information, and a lack of transparency about how  
advertisers are collecting data. “Users are going to be inclined to  
say, sure, what’s harmful about a click, not realizing that they’ve  
consented to give up their information.”

For now, advertisers are using a wide lens to survey people’s behavior  
on phones, aiming at people by city rather than by specific  
neighborhood or street.

And while they collect specifics about how someone behaves on the  
mobile Web — for instance, that someone bought a “Hot N Cold” ring  
tone after seeing an ad for it, then watched a Miley Cyrus video on  
TMZ.com — they use that information to categorize that person as a pop- 
culture fan, and then show a movie ad.

Advertisers are eager to use the information for much more specific  
targeting, however. An advertising system could know, for instance,  
that someone is 27 years old, male, a New England Patriots fan (which  
NFL.com can track), plays Blackjack, travels frequently between Boston  
and New York on weekdays (which applications using GPS can track) and  
uses a 3G iPhone. That would make him attractive to a host of  
advertisers, like the Delta Shuttle or a Las Vegas hotel, whose ads  
would appear while the consumer was browsing the Web on his phone.

“Everyone’s in an arms race to find out more and more about their  
users,” said Eric Bader, the managing partner of the mobile  
advertising firm Brand in Hand. Even application developers are  
handing over information about their customers to marketers. Dockers  
San Francisco, a brand of Levi Strauss, for instance, is beginning a  
campaign this week that will run on applications like iBasketball and  
iGolf. It will show a model wearing khakis, and the iPhone customer  
can shake the phone to see the model dance.

Dockers will start by tracking how long people shake the ad, and then  
“if it does make sense to do follow-up with these consumers, we’ll do  
that,” said Jonathan Haber, the United States director of Ignition  
Factory at OMD, the media agency directing the campaign. “We dig in,  
specifically, with these application developers and owners to get  
information about usage behavior.”

It’s not just behavior, but also data about income, or even whether  
you have children, that mobile advertisers consider. A company called  
Acuity Mobile, whose clients include the MGM Mirage and Harrah’s  
Entertainment, lets clients use consumer data, including, potentially,  
income, to determine what kind of offers clients should see.

“Someone who does not spend a lot of money with your brand might get a  
lower-value offer, like a free dessert in Vegas, versus a free buffet”  
for a high roller, said Alan R. Sultan, the president and founder of  
Acuity Mobile.

Applications that use GPS can offer even more specificity, including  
Loopt, Yelp, Urbanspoon, Where and almost any iPhone application that  
shows the pop-up box saying it “would like to use your current  
location.” Several firms are experimenting with a program called  
AisleCaster that can offer specials based on a person’s exact location  
in a supermarket aisle or mall.

Advertising systems can track not only the location of the phone, but  
also that person’s travel pattern: uptown New York to Nob Hill in San  
Francisco, for instance.

For now, systems like Quattro are using broad city-level categories  
while trying to sell to advertisers like Amtrak. “You don’t want to  
necessarily go down to location-level stuff like specific street  
corners, because it wanders over into really creeping out the user  
privacy-wise,” Mr. Priyadarshan said.

For now, there are not enough people using smartphones to make it  
worthwhile for advertisers to use highly specific criteria. But as  
more people switch to smartphones, that will happen more frequently.  
The smartphone market in North America increased 69 percent in 2008,  
according to the research firm Gartner. Google, Palm and BlackBerry  
are all introducing their own application stores. Despite the amount  
of data in the market, as long as advertisers don’t use personally  
identifiable information, there is no current regulation or law that  
governs how closely advertisers and application developers can track  
mobile phone users. Opting out of mobile targeted advertising is  
difficult, and that’s assuming consumers are even aware how closely  
they are being tracked.

“I didn’t know they were doing that, although I’m not surprised to  
hear it,” said Jordan Penn, 32, an affordable-housing developer in San  
Diego who has downloaded about 12 apps to his iPhone. “It doesn’t  
really concern me any more than all of the other tracking that goes on  
when you access the Internet.” Paul M. Schwartz, a law professor at  
the University of California, Berkeley, and an information privacy law  
expert, said tracking by advertisers was problematic. “People should  
be allowed to trade most kinds of information for value as long as the  
terms are fair,” he said. “They’re not fair now.”

Mike Wehrs, the chief executive of the Mobile Marketing Association,  
said the trade group was updating some of its self-regulatory  
principles, for example, suggesting that applications e-mail their  
privacy policies to subscribers rather than asking them to read a  
policy on the small mobile screen. “I agree there’s more that can be  
done,” he said. “One thing about mobile, it’s an amazingly fast-moving  
industry.”