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Online behavior monitoring sees marked increase in 2012

Browsing history and online behavior monitoring by the web's 50 most-visited websites has exploded.
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An example of targeted ads when inputting "new motherboard prices" into a Google search. (Screengrab/Screengrab)

Data tracking and online behavior monitoring has sharply increased on 50 of the most-visited sites on the web in the last two years, according to a report by Krux Digital, an online data analysis firm based in San Francisco.

An increase in behavioral monitoring is coupled with the rise of online advertising auctions, a technique for selling advertising that nearly instantly increases the profitability of the website.

When a user visits a website, the visit is auctioned off automatically to the highest ad bidder based on the number of pages visited, the length of time spent on each page, and the user’s browsing history. For example, if the user has been searching for “new motherboard prices,” they may receive ads for computer parts sales while visiting a website that monitors their online behavior. 

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“Market players are all jockeying for position, building vast cross-web data stores either to resell that consumer data or to power their own media businesses. With the low cost of cloud storage and easy access to publisher web pages, there are no real barriers to entry. Scores of entrepreneurs and venture capitalists have rushed to get a piece of the data pie, mounting what are, in essence, zero-COGS businesses premised on ‘gray market’ data collection and reuse,” read the report. 

The Wall Street Journal reported on Sunday that the report documented an average of 56 instances of data collection on the 50-most visited sites on the web measured by comScore, up from 10 instances from Krux’s initials study last November. 

While Krux did not mention which websites were monitored specifically, they include Google, Microsoft, Facebook, Amazon, Apple, Yelp and Netflix.

The report also observed an increase in third-party companies collecting online user data. The number of data collection companies jumped to more than 300 in 2012, an increase from 167 in 2011. 

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The Wall Street Journal also reported that Forrester Research, an analysis firm, “estimates that real-time bidding will constitute 18 percent of the online display-ad market this year, up from 13 percent last year.”

"It's gone from virtually zero in 2009 to about a fifth of the entire market right now," said analyst Michael Green to the Wall Street Journal. "We've moved from a traditional advertising model of buying 1,000 impressions. Now you evaluate and buy a single impression."

Collection companies are also competing with each other in building the largest stores of user information to resell to other companies or increase the profitability of their own businesses. 

“Market players are all jockeying for position, building vast cross-web data stores either to resell that consumer data or to power their own media businesses. With the low cost of cloud storage and easy access to publisher web pages, there are no real barriers to entry,” read the report.

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http://www.globalpost.com/dispatches/globalpost-blogs/the-grid/online-behavior-monitoring-sees-marked-increase-2012