In their quest for more advertising revenue, Expedia and other travel websites have begun selling customer data on consumers' buying habits gathered through their Internet cookies, enabling advertisers to send highly targeted ads to online consumers when they visit popular websites.
The practice is known as behavioral advertising. As practiced by Expedia, it involves the actual sale of data to the advertisers.
A Miami hotel looking for business, for example, would not get access to names, addresses or credit card numbers, but it would be able to ascertain that someone using a particular computer had searched for, or booked, a first-class flight to Miami.
Depending on how the deals are structured, the advertisers can "own" the data, according to Omar Tawakoi, CEO of BlueKai, a data provider in the behavioral advertising arena that does fulfillment for Expedia.
Expedia, which calls its program PassportAds, is the first online travel agency to go public with such a behavioral data-selling/advertising initiative, though Tawakoi said other top travel websites, including a major travel search engine, are also selling this type of anonymous consumer data to travel and nontravel advertisers.
The model is built on the tracking cookies that many websites routinely attach to visitors’ browsers. On subsequent visits, the website reads the cookies to identify the consumers’ previous online activities. These cookies have become increasingly sophisticated, enabling advertisers to analyze thousands of data points related to consumer behavior.
For example, under the PassportAds program, Expedia might offer to sell a hotel advertiser thousands of cookies from people who booked travel to particular destinations. The hotel chain would buy this data from Expedia, which provides the relationships and networks in order for the hotel chain to display banner ads to these consumers when they visit the websites of Expedia’s publishing partners, which includes Amazon, MSN and Yahoo.
The ads would not necessarily appear when the computer user is engaged in something related to travel; they might crop up on, say, MSN or Yahoo Mail.
In theory, at least, behavioral advertising is more effective than contextual advertising, which sends ads to web pages based on the content of that page.
A consumer reading about cars, for example, will often find ads for cars in the margin. The display of such an ad would be triggered by the content of the page, not the consumer’s previous behavior.
For transactional websites such as online travel agencies, the practice provides a way to generate greater revenue from lookers who don’t buy, because even the cookies generated by their research at the site can have value to some advertisers.
Maziar Sattari, director of product and marketing for Expedia Media Solutions, said that airlines and hotels were well represented among sectors in the travel industry participating in the PassportAds program.
"They are salivating over this stuff," Sattari said. "We definitely are seeing much more interest in the airfare world."
Under the Expedia program, advertisers have the option to merely purchase the Expedia data through BlueKai and then make their own arrangements with advertising networks to deliver their ads. Expedia stated that the advertisers alternatively can work directly with Expedia, "which applies the data to deliver targeted ads across our publishing partners’ sites."
Privacy concerns
Behavioral advertising is a controversial practice, blasted by some privacy advocates but defended by the Interactive Travel Services Association (ITSA), which represents online travel companies and GDSs.
The Federal Trade Commission, which has been studying behavioral marketing issues for the past two years, last month released proposed principles to guide marketers’ self-regulatory activities.
The FTC’s proposed guidelines urged websites "to obtain affirmative, express consent" from consumers before collecting data for behavioral advertising and suggested that any notice about behavioral practices appear in a prominent place, rather than buried in difficult-to-fathom privacy policies.
A year ago, in comments about the FTC’s proposed guidelines, ITSA Executive Director Art Sackler noted that "in behavioral advertising generally, no personally identifiable information (PII) is collected or used in any way. When there is no PII involved, we fail to see the harm for individual consumers." He said the practice "offers genuine benefits to consumers without impinging their privacy."
But Mindy Bockstein, executive director of the New York State Consumer Protection Board, commented at the time that mere consumer disclosures were insufficient.
"Consumers need to be apprised of what behavioral targeting seeks to accomplish and the fact that, if they choose to consent to being targeted, profiles will be created with their tracked personal information," Bockstein commented to the FTC.
"Further, there must be specific disclosure on exactly who will have access to this information, how it will be stored and for how long, whether or not the consumer will have access to it, for example, to modify or correct any entry, and what security precautions will be in place to safeguard the data."
ASTA CEO William Maloney said that behavioral marketing is "another angle on an old story" but cautioned that privacy could be a concern.
In the case of PassportAds, Maloney said, "Expedia would gain, the hotel would gain and the travelers would gain through targeted marketing. As long as they have control and prior knowledge, then this would be a good thing for the travel industry."
Ensuring that behavioral marketing practices are covered in an online travel agency’s privacy policy would be important, he added.
Maloney likened behavioral marketing to a travel agent phoning an upscale hotel to ensure that a client gets upgraded to a better room and has a bottle of wine in the room upon arrival.
ASTA long has objected to GDSs and airlines exchanging booking data without travel agencies’ permission. He characterized the data as something akin to travel agents’ cash register records. The airlines, he noted, claim the data belong to them.
"We, of course, have objections to airlines profiting and selling information about travel agency sales," Maloney said.