1. Write a report explaining how online-ad auctions work and the impact they have on Internet advertising.
2. Critics claim that Internet tracking infringes consumer privacy rights and that the industry is out of control. Should marketers have access to such information? Discuss the advantages and disadvantages of this activity for both marketers and consumers.
Have you ever wondered how ads for relevant brands and businesses pop up around Google search results or appear on just about every site you visit on the Internet? Advertisers pay to have these ads placed based on your keyword searches, your Web-surfing behavior, and even what you post on Facebook or write in Gmail messages. While concerns over privacy mount, the online tracking industry just keeps ramping up. Krux Digital reports that the average visit to a Web page generated 56 instances of data collection, representing a five-fold increase from the previous year. A 2010 investigation by the Wall Street Journal found that the 50 most popular U.S. Web sites installed more than 3,000 tracking files on the computer used in the study. The total was even higher-4,123 tracking files-for the top 50 sites that are popular with children and teens. Many sites installed more than 100 tracking tools each during the tests. Tracking tools include files placed on users' computers and on Web sites. Marketers use this information to target online advertisements. But this wouldn't be possible without online-ad auctions. When a user visits a Web page, that information is auctioned among computers to the highest bidder. Bids are based on the user's Internet browsing behavior. The bidder in such an auction is a technology broker acting on behalf of the advertiser. Real-time bidding makes up 18 percent of the online display ad market, and bids sell for less than $1 per thousand viewers. Web-tracking provides the user data to sell in the auction, and more than 300 companies are gathering this data. Data collectors often share information with each other, called "piggybacking," so they have more information about a Web site's user than the owner-the ad seller-of a Web site has.