The Coming Behavioral Targeting Storm (or Why Google Didn't Buy Tacoda)

We were curious about why AOL ended up with Tacoda, a New York company that is one of the leaders in behavioral targeting.  Part of it, no doubt, was AOL: the company made a strong commitment and was initially the highest bidder.  Part of it, we suspected, was privacy concerns.  And some recent comments Google, at least, has made about behavioral targeting appear to bear this out.

The concept and practices of "behavioral targeting" have not yet made their way into the mainstream, and when they do, there is likely to be an outcry.  There is something about behavioral targeting--building a profile of what sites you've been to in order to serve more relevant ads to you on a customer's site--that doesn't feel quite right, even when the tracking is anonymous.  Tacoda's network is currently "opt-out."  It seems conceivable that, someday, it will have to be "opt-in."

Google has already been hung up in its attempts to purchase DoubleClick, despite DoubleClick's not really being in the data business anymore (Abacus, the database of catalogue buyers, is gone).  So imagine what might happen with a Google-Tacoda purchase--especially when most people will just be learning what Tacoda does (with the objections shouted by those who would love to see Google fail). 

So it is not surprising that Google would shy away from behavioral targeting, as Susan Wojnicki told Reuters the company is planning to do.  It seems plausible, in fact, that other major publishers will make a similar decision, especially once the practice has been subjected to full public scrutiny.  For the leader in the space, already dogged by privacy and monopoly concerns, entering the minefield by buying behavioral leader Tacoda probably just wasn't worth it.  For AOL, a laggard struggling to play catch-up and seeking an edge, it was.  (More on Google's plans for limited behavioral targeting, video advertising, et al from CNET).