Online advertising

Many website operators produce income by selling advertising on their websites (online advertising). Advertisers will pay a premium for ads that are more likely to reach their target demographic.

In other media, such as broadcasting, advertisers engage in targeting by purchasing advertising time during programs that those who buy their products are most likely to watch. The Internet presented new challenges and opportunities for advertisers to reach their target audiences.

Technology has been developed that allows advertisers to target advertising to individual web users. This is seen as an advantage for advertisers, because, rather than aiming their ads at groups of people who visit a particular site, their ads are aimed at the individual user. This maximizes the odds that the user who sees the ad will be interested in the product or service it touts.

Targeting advertising to individuals involves gathering information about that individual’s web surfing habits. The collection of this information has raised concerns among some over the privacy of web activity, particularly if the data collected are personally identifiable. Some have alleged that online advertisers are violating privacy laws by collecting these data.

In online advertising’s simplest form, a commercial website rents out "space" on its site to another website which places a hot link banner advertisement in that space. The banner ad, when clicked, sends the user directly to the advertiser’s website. In this scenario, no matter who visits a particular website, that user will see the same advertisement, regardless of whether he/she may be interested in that product or service. However, many advertisers will pay a premium for the increased likelihood that users viewing their advertisement would be interested in the product or service offered. As a result, technology has developed to more accurately target online ads to the desired audience.

Online advertising providers, such as DoubleClick and NebuAd, have developed the ability to target ads to individual Internet users who would be most interested in seeing those ads. These techniques are known generally as “behaviorally targeted advertising.” Behaviorally targeted advertising delivers ads that are geared toward specific Internet users by tracking certain, though not necessarily all, web activity of each user and inferring each user’s interests based on that activity. Most online advertising providers monitor individual Internet users by placing a “persistent cookie” on that user’s computer. “Cookies” are small text files that can store information. “Persistent cookies” reside on a hard drive indefinitely, unlike most “cookies” which expire when a browser window is closed. Generally, online advertisers give the “cookies” they place on user computers a unique alphanumeric code that identifies that user to the advertising company purportedly without revealing any personally identifiable information. “Cookies” may be placed on an individual’s computer when an individual visits a website affiliated with the online advertisement supplier; however, the exact moment of “cookie” placement may be different when the relevant advertising partnership is between a user’s Internet Service Provider (ISP) and an online advertising provider.