Online advertisers scale back targeted ads amid privacy complaints, study finds

Online advertisements that target users' browsing histories may be more effective, but many companies are now scaling back those ad campaigns to avoid public backlash, according to a new study.

A report by the Ponemon Institute, released this week, finds that most companies agree online behavior-based advertisements are 50 percent more effective than standard, run-of-the-mill ad campaigns. However, these advertisers are are using these behavior-based ads 75 percent less than they would prefer, the study notes.

According to the Institute's founder, who recently spoke with The New York Times' Bits blog, "privacy fears are definitely having an economic impact."

Those fears seem to stem in part from the growing number of interest groups pushing lawmakers and federal officials to regulate targeted ads. Three in particular -- the U.S. PIRG, Center for Digital Democracy and the World Privacy Forum -- even urged the Federal Trade Commission in early April to probe whether Google, Yahoo and others are wrongly tracking or profiting from users' online behavior.

Lawmakers, too, have expressed those concerns. Rep. Rick Boucher (D-Va.) began airing complaints about behavioral advertising last year, stressing federal regulation would be necessary to assuage consumers' concerns while ensuring private corporations could advertise in a way they found lucrative.

"Despite clear benefits, privacy advocates and regulators pose serious challenges to online advertisers and marketers who wish to use [online behavioral advertising]," according to Ponemon's study.