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Targeting potential customers is a simple operation to perform on a desktop. An organization can add bits of code to its website called cookies, which can then allow advertisers to track visitors to a cookie-enabled site when they surf other sites. Visit a website for your university's varsity team, for instance, and you might see ads for team paraphernalia. Because these ads appear only to people who have visited a particular website, those visitors are up to three times more likely to click on it than to click on a banner ad, notes AdRoll, a San Francisco-based digital advertising company.

But cookies have limitations. They work only when a visitor uses the same device. When a visitor accesses a website from their desktop at work, the cookie can't track them when they surf the Web at the gym on their smart phone. Today, it is not unusual for users to switch devices many times within just one hour, leaving marketers in the dark. Enter Tapad (www.tapad.com), a rapidly growing digital advertising start-up, with offices around the world, including in Toronto. It claims that it can track and target the same consumer across multiple devicesdesktop computers, laptops, smart phones, and tabletsusing software algorithms.

Tapad does its best to find commonalities among all the devices, apps, and Web-browsing software that one visitor might use. It analyzes 150 billion data pointsfrom cookies, smart-phone IDs, Wi-Fi connections, website registrations, browsing history, and other sources that it will not reveal.

For instance, if a tablet and a laptop connect to the same Wi-Fi network, it is an indication that one person might be using both devices. In a similar fashion, browsing patterns are also importantsay, two devices with a history of visiting the same sports websites, which increases the likelihood that one person is using both devices. Based on these probabilities, Tapad sends ads to potential customers across the devices the software thinks they share. Thus, the same customer might see one ad on a work computer, another ad on their smart phone on the bus ride home, and a third ad on a tablet on the couch.

Significantly, Tapad encountered a major problem right from the start. The advertising industry still tends to be fragmented into divisions that focus on mobile, desktop, and television advertising. Tapad had to sell its product to all three groups.

In August 2011, Tapad secured its first client, a U.S. wireless network. The start-up ran ads for a month that increased the network's click-through rates by three times. That higher rate enabled the network to fine-tune its marketing budget, because it knew which transactions came from which devices, at which times.

Tapad sends out 2 billion ads each month for clients such as Audi, American Airlines, and TurboTax. Tapad states that it is working with 200 of the Fortune 500 companies (the largest companies in the world). However, the success of Tapad and competitors such as Drawbridge (https://drawbridge.com) is running the risk of irritating regulators and privacy advocates. Lawmakers may force advertisers to adopt "Do Not Track" technology, which requires websites to allow browsers an easy opt-out. Tapad states that the data it collects do not identify any users by name. Furthermore, the company includes opt-out buttons in all of its ads. Tapad employs a privacy lawyer to ensure that the company is functioning within the law while it continues to expand rapidly.

Question:Is Tapad's business model ethical? Why or why not?