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Advertisers Use Smart Phones As Open Window On User Information

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By STEPHANIE CLIFFORD

The New York Times

Published: March 14, 2009

The millions of people who use their cell phones daily to play games, download applications and browse the Web may not realize that they have an unseen companion: advertisers that can track their interests, their habits and even their location.

Smart phones such as the iPhone and BlackBerry Curve are the latest and potentially most extensive way for advertisers to aim ads at consumers. Advertisers already tailor ads for small groups of Web consumers based on personal information. But cell phones have a much higher potential for personalized advertising, especially when they use applications such as Yelp or Urbanspoon with GPS to identify a person's location.

Advertisers will pay high rates for the ability to show, for example, ads for a nearby restaurant to someone leaving a Broadway show, especially when coupled with information about the gender, age, finances and interests of the consumer.

Eswar Priyadarshan, the chief technology officer of Quattro Wireless, which places advertising for clients such as Sony on mobile sites, says he typically has 20 pieces of information about a customer who has visited a site or played with an application in his network. "The basic idea is, you go through all these channels, and you get as much data as possible," he said.

The capability for collecting information has alarmed privacy advocates.

"It's potentially a portable, personal spy," said Jeff Chester, executive director of the Center for Digital Democracy, who will appear before Federal Trade Commission staff members this month to brief them on privacy and mobile marketing. He is particularly concerned about data breaches, advertisers' access to sensitive health or financial information, and a lack of transparency about how advertisers are collecting data. "Users are going to be inclined to say, 'Sure, what's harmful about a click,' not realizing that they've consented to give up their information."

For now, advertisers are using a wide lens to survey people's behavior on phones, aiming at people by city rather than neighborhood or street.

As they collect specifics about how someone behaves on the mobile Web - for instance, that someone bought a "Hot N Cold" ring tone after seeing an ad for it, then watched a Miley Cyrus video on TMZ.com - they use that information to categorize that person as a pop culture fan and then show a movie ad.

Advertisers are eager to use the information for much more specific targeting. An advertising system could know, for instance, that someone is 27 years old, male, a New England Patriots fan (which NFL.com can track), plays blackjack, travels frequently between Boston and New York on weekdays (which applications using GPS can track) and uses a 3G iPhone. That would make him attractive to a host of advertisers, including the Delta Shuttle or a Las Vegas hotel, whose ads would appear while the consumer is browsing the Web on his phone.

"Everyone's in an arms race to find out more and more about their users," said Eric Bader, the managing partner of the mobile advertising firm Brand in Hand.

For now, there are not enough people using smart phones to make it worthwhile for advertisers to use highly specific criteria. But as more people switch to smart phones, that will happen more frequently. The smart phone market in North America increased 69 percent in 2008, according to the research firm Gartner. Google, Palm and BlackBerry all are introducing their own application stores.

Despite the amount of data in the market, as long as advertisers don't use personally identifiable information, there is no regulation or law that governs how closely advertisers and application developers can track mobile phone users. Opting out of mobile targeted advertising is difficult, and that's assuming consumers are even aware how closely they are being tracked.

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