Lots of social media sites depend on online advertising for most of the revenue generated. Yet, there are many ways to go about integrating ads and targeting them towards specific web users.

Behavioral targeting, a method of compiling data about which sites people visit, what topics they search for and a number of other Web activities to better understand what types of ads might prompt them to make purchases, is relatively common and employed by various publishers and digital enterprises. This approach is now being called into question by consumer groups.

Targeting Behavioral Targeting

Several consumer groups, including Electronic Frontier Foundation and Consumer Federation of America have called on Congress to regulate the ways that website data is collected and compiled. The Federal Trade Commission had already issued a set of recommended principles for behavioral targeting, deciding to let companies and trade groups regulate themselves.

So why all the interest and why now? While privacy on the Internet has always been a concern since its inception, recently a few advertising initiatives implemented by Microsoft to expand its behavioral targeting services to cover websites, mobile phones and its Xbox game console and Google's "interest-based advertising" have raised eyebrows. 

Consumers vs Publishers vs Advertisers

But while consumers may feel targeted and even manipulated by the ads that show up when they log in to Facebook and watch videos on YouTube, such practices may prove to be very successful for publishers as they could make their lowest-priced ads more useful for advertisers and could lift revenues. Obviously this creates a power struggle between publishers and consumers.

Consumer groups and privacy advocates want disclosure and laws that would force sites and data collection firms to specify what the data will be used for at the time of collection and provide users an easy mechanism to block data gathering.

Of course, forcing websites to allow users to opt out of ad targeting would make it difficult for the publishers to collect data used to better customize sites and content to individual users. And advertisers would rather keep on self-regulating and avoid the whole issue of privacy altogether.

Waiting for the FTC

So what happens next? Nothing much until February 2010, when FTC officials will reveal their findings and announce whether or not they plan to issue legally-binding guidelines or not.

Until then, consumers will have to learn how to best protect their identities and information online and publishers will have use what they can to help them understand their users’ behaviors.