The Wall Street Journal (WSJ) recently ran an article titled “The Web’s New Gold Mine: Your Secrets” about new types of tracking technologies that gather personal information about Internet users.  The companies behind these technologies then sell that data to other companies to be used for highly targeted advertisements.  The WSJ calls this “the fastest growing business on the Internet”.

Most people have heard of cookies, the small bits of text stored in a web browser that retain information like passwords and the contents of online shopping carts.  These new technologies, referred to as “pixels” or “beacons,” work in a similar way to cookies in that they track users’ behavior online.  But instead of just recording what websites they visit, beacons record what they do on those sites, like what they type in or where they move the mouse.  The beacons then build a highly specific profile of each user, and companies sell these profiles in bulk on exchanges similar to financial markets.

The companies that purchase this information use it to disseminate very specific, targeted advertisements.  Ad networks also engage in this practice, and collect fees from the targeted ads they place on websites.  In the profiles, users are not identified by name, but that fact does little to ease feelings that their privacy has been violated.  Internet users report that they find some of the ads “unnerving”.

This may have to do with the type of information that passes through these beacons.  Previously, many online advertisers felt that targeting consumers according to health or financial information was off-limits, but that is no longer the case.  And now, many tracking companies have expressed interest in moving into social media sites to mine the vast quantities of personal information that users share there.  With no legal limits on how consumer data can be used, it is unclear how far tracking companies and advertisers will go.

Internet users tend to associate questionable practices like this with disreputable websites, assuring themselves if they stay away from suspicious-looking sites, they will be safe.  This rule of thumb does not work with ad tracking.  The WSJ conducted a short experiment and found that the top 50 U.S. websites placed 3,180 tracking files on its computer, 2,224 of which came from tracking companies.  The biggest culprit was Dictionary.com, depositing 223 files from tracking companies.

There is clearly a significant ethical dilemma here.  Even though the files do not store information by users’ names, it is conceivable that they could obtain other forms of personally identifiable information.  Moreover, the ads that users see as result of the profiles the trackers develop can be harmful: the WSJ cites one example of a teenage girl – a minor – who gets bombarded with weight loss ads every time she goes online.

The companies that develop these technologies and sell the information they obtain do not see it as a violation, but rather as a service to consumers.  Targeted ads, they say, are what consumers want – they provide highly relevant information as opposed to annoying clutter.

Certain advertisers are struggling to come to terms with this conundrum as well.  According to another WSJ article, Google is having a particularly hard time.  Until now, the company has been hesitant to tap its enormous pool of user data, but competition may force it to reconsider what it means to live up to its unofficial “Don’t be evil” motto.

We would really like to know what our readers think about this issue.  There are points to be argued both in favor of and against ad tracking, and we welcome your input.  Leave us a comment and let us know what you think.