Online behavioral targeting (OBT), which allows advertisers to deliver relevant messages to consumers by basing those messages on an analysis of consumers' online behavior, has become a widespread, mainstream marketing practice. While this new targeting technique comes with distinct advantages for advertisers and consumers alike, it also raises privacy concerns and exposes marketers to a myriad of potential legal pitfalls. Still, the legal risks of OBT arising from private law have not been adequately discussed in the mainstream marketing literature. The purpose of this article is to expand upon this gap in the literature. Specifically, this article attempts to (1) to provide an overview of the state of the art of OBT, (2) to explain the relevant current and evolving laws and regulations with a particular emphasis on private law, (3) analyze the significance of these private laws for marketers, and finally (4) discuss some recommendations for online advertisers.
Evolving telecommunication technology and new opportunities for advertisersDramatic advances in communication technology over the last decade have ushered in new opportunities for advertisers. With the decline of print media and network television, the rules of the game of advertising are changing. As more and more consumers turn daily to modern telecommunication technology, advertisers are following. While traditional advertising revenues in the United States were shrinking, online advertising revenues increased by 15 percent to upward of $40 billion in 2013 (eMarketer 2013; Magna Global Advertising Forecasts 2013). With a growth rate of more than 140 percent, mobile advertising achieved revenues in the United States of $3 billion in the first half of 2013. The significant growth rate of mobile advertising reflects the profound shift in how consumers are viewing media as they access their mobile devices wherever they go (IAB 2013).Nike's spending on TV and print advertising in the United States serves as a fitting example. It has dropped by 40 percent in just the last three years, even as its total marketing budget has steadily climbed to more than $2.4 billion (Cendrowski 2012). The new media allow companies to connect with customers through a customized two-way communication-or in the words of Mark Parker, the CEO of Nike: "Connecting used to be 'Here's some product and here's some advertising. We hope you like it. ' Connecting today is a dialogue" (Cendrowski 2012, 2).The new media possess superior characteristics over the old. New media not only enable advertisers to communicate directly with their customers on a one-on-one basis, but also allow for the collection of almost unlimited amounts of personal, individualized data. Every online move a consumer makes, any search, any browsing, and any purchase can potentially be tracked down and analyzed by marketers.