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How personalized advertising works on the Internet

"Data is the new oil," said former EU Commissioner for Consumer Protection Meglena Kuneva in 2009. But what actually makes data so valuable? Personal data is mainly used for personalized advertising. In contrast to newspaper advertisements, users of the Internet are primarily shown products that have a high chance that the respective user will be seriously interested. How does it work? And what does that mean for consumers?

Get to know the user

In order to display advertising precisely and accurately, companies must first know the respective user as well as possible. It works by collecting a lot of data about him. For this purpose, user behavior is constantly analyzed, for example by a mail order company like Amazon evaluating the clicks of a user on its site and thus finding out what the respective customer likes.

The largest online data collectors also include companies such as Google and Facebook. These companies not only learn a lot about buying behavior, but can often create a detailed profile for the respective user. They get the information for this from the user themselves: via voluntary information in their own profile, for example about gender, place of residence and age, but also by evaluating what the user is looking for, what he likes and with whom he interacts via the respective platform.

An algorithm can use this data to create a terrifyingly accurate profile. Among other things, algorithms can deduce, for example, what phase of life the user is in: does he have children or does he work a lot? Could he be interested in a new car in the near future or are he planning a child? Does he buy sustainably manufactured products or does he rely on well-known brands? But also: What political opinion does he represent and what social issues are he interested in?

Make money with data

Collecting and evaluating data alone does not make money for companies like Facebook and Google. An example should illustrate how this works: A mail order company for minimalist designer furniture wants to advertise online. One possibility would be for him to do this directly via one of the platforms such as Facebook or Google. At Google, for example, he chooses an ad that appears to the user when he enters certain search terms, such as “modern” or “minimalist” - or when Google assumes, based on older search queries, that the ad might interest him.

Facebook also works like this: By using likes and clicks on other advertisements, the platform derives potential buying interests, advertising can be placed there in a very targeted manner. Users even reported seeing maternity wear adverts online before they even knew they were pregnant.

Facebook also uses its users' GPS data to find out which users may also meet in real life - i.e. are friends. The user then also receives advertisements for products that his best friend has bought or still wants to buy, because it is assumed that friends have the same interests. This could explain why users often see products they talked about with friends just hours before.

Cookies store information about the user

In the meantime, however, the data collected is also used outside of the platforms that collect it. This works via so-called cookies. Cookies are a kind of memory of Internet behavior: they store information about Internet users on their own computer and are required by online retailers, for example, to store items in their shopping cart or to bookmark them in their browser.

But there are also so-called tracking cookies that literally attach themselves to the user and not only monitor and analyze their entire surfing behavior, but also pass this data on. This happens, among other things, with so-called real-time bidding (in German: real-time auction), in which almost all websites that place advertisements participate. The system behind it is that advertisers find out in no time who is currently visiting a certain website and whether this user is relevant to their advertisements. You can obtain this information from the data stored in the cookies. If the user is of interest to you, you can place a bid for the ad space. This happens fully automatically and within the time in which the page is still being loaded for the user.

Why is that questionable

In June, the digital society association, together with several other organizations, submitted a complaint to the state data protection authorities against behavior-based online advertising. Complaints were also filed in ten other countries in Europe. One of the criticisms is that data is passed on on a large scale, for example in real-time bidding. Ultimately, the more advertisers bid on the ad space, the better for those who offer ads. The data that is passed on can also contain very personal information, such as about religious or ideological beliefs. In addition, it says from the digital society: "Once landed in this system, the person concerned has no control over who the data is passed on or perhaps sold to."

"Digital Society" managing director Elke Steven says she assumes that real-time bidding is illegal. In addition, personalized online advertising is always a kind of manipulation that can be extended from purchase decisions to opinions - for example by A user is only shown posts that the algorithm assumes that they correspond to his opinion. Steven also points out that in some cases search queries about one's own health are collected and incorporated into the individual profile.

It is also often criticized that companies like Google or Facebook already have a market power that gives other companies little chance. At the same time, Google, Facebook and Amazon have information about users that - if they are ever put together - enable a very clear picture of the person. According to Steven, the example of Whatsapp shows that this merger is by no means absurd. The instant messaging service was bought by Facebook in 2014.

Quick tips and tricks

If you want to know how detailed your own personality profile has been worked out on Facebook, you can request this data using the “Dataselfie” program (available free of charge on the Internet).

Since cookies are stored on your own computer, you can not only delete them, but also set which of them should be allowed in advance. This can be done in the settings of the respective internet browser (e.g. Firefox).

Some Internet browsers (such as Firefox) have a mode for (brief) private surfing that can be easily activated in the main menu. In this mode, neither history nor cookies are generated. In order to block cookies and history in the long term, there are so-called add-ons such as "Ghostery" - a kind of additional program for the Internet browser that can be installed quickly and free of charge.

If you don't want Google to analyze your own search queries, you can use alternative search engines. "DuckDuckGo" does not collect any personal information to prevent filter bubbles. Every user gets the same results.