We Know Where You Live

There are two general technologies at play here, and both have gotten a boost in the past couple of months, thanks to such diverse Web sites as The Wall Street Journal Online and Major League Baseball. First is the art of geolocation, or tracking down Internet users by their Zip codes and other location-specific data. Geolocation isn't something new--various Internet advertisers have been doing this for years--but the technological sophistication is increasing and the targeting process is improving. The problem in the past has been a lack of solid data about where particular IP addresses actually originate. Given that there are more than a billion such addresses, you need to collect a great deal of information and be able to sort through it quickly to figure this out. For those of you who don't know: every Internet user's computer is assigned a particular four-digit code whenever that person is connected to the Internet. The codes follow a particular pattern based on the nearest router that is used to connect the computer to the Internet. The IP addresses of some of these routers are fairly well known, while others can change quite often and are harder to pin down.

In the past, the simple mapping of an IP address to a particular user was crude--for example, early software counted everyone using AOL as being in Virginia, where the company used to have its headquarters. The problem is compounded by the millions of dial-up users who don't have the same IP address from one session to the next, and from the millions of DSL and cable-modem users who also switch IP addresses frequently.

But lately the technology has gotten better, and now a variety of companies use geolocation software to do various tasks. One example is the streaming content-delivery service Akamai, which maps IP addresses to its own database to determine the connection speed of a particular user, according to The New York Times. This enables Akamai to figure out what content at what bandwidth to serve up to a particular user. Another case in point is blacking out Web users from watching live baseball games in their home markets. While I question the wisdom of this--anyone who is desperate to watch a ball game over the Web should be given more, not less encouragement due to the lousy definition of the video stream--I understand why franchises have to be protected.

The second and complementary technology has to do with clickstream analysis--the ability of a site operator to figure out what a particular user is doing on their site and where they are going and what they are interested in. Again, the key here is being able to track users' particular IP addresses as they move about your Web site, and bundling together all those page views into a coherent picture of what each individual is doing. This requires a huge database and the ability to sort through it quickly, as well as being able to determine whether a session is still active. The problem is that Web servers don't think about sessions quite the same way that advertisers or content suppliers do. This is one of the reasons for setting up a cookie to keep track of this information, but cookies have their problems, too. (I won't get into that here; enough has been written about this over the years.)

The Wall Street Journal Online has an interesting twist on this. Each subscriber to the online edition is placed automatically in one of eight categories by associating various pages that he or she visits on the site with the topical focus of the category. The categories are car buffs, techies, investors, heath nuts, leisure, mutual funds, opinion leaders and travel. Advertisers can design their own categories based on custom criteria of the user's clickstream. I think this is the first time that any site has done any kind of partitioning in this fashion. In the past, many site operators have analyzed their page views and placed ads on the most popularly viewed pages. The Journal is breaking new ground here by setting up particular topical areas and selling these areas to advertisers. The topical areas have something to do with the site content, to be sure, but first and foremost they have to do with the interest of the site's visitors, not to mention the innovative aspect of the deal. It is probably a good way to make some money and charge advertisers a premium. I predict that others will soon adopt this way of looking at their sites, too.

The combination of clickstream and geolocation technologies says good things about Internet advertising. According to various sources, Internet ad spending is up in the last quarter, a welcome sign of life in our industry. And with these new technologies, or improvements to older ones, we will see more targeted advertising in the months to come.

So what could be bad about all of this? A few things come to mind. First, the databases could be used to track people down. Although the current technology is used in the aggregate, there is nothing to stop people from drilling down to individual IP addresses as the technology continues to improve. A number of people have begun to use the geolocating software to ferret out fraud or the potential for fraudulent transactions. And of course there are a number of evasive counter-measures that users can employ to hide their IP addresses if they are concerned. Second, Internet advertising could become more intrusive as site operators learn more about their visitors and more closely target their ad servers. And finally, the current support and implementation costs for these technologies are enormous and the monies spent on them might be better used elsewhere, such as in building more market share and brand awareness for your site.