Cookies, Targeted Advertising and CTR
Original Article: http://www.npr.org/templates/story/story.php?storyId=130349989
Anyone who regularly uses the Internet is familiar with the countless ads it contains-and many of them are so irrelevant to us that we tune them out. But in recent years, tracking devices called ‘cookies’ have let to a revolution in the online advertising business.
As described in the article, a cookie is essentially a tracking device that analyzes your browsing history, and can be used to develop a profile for you. Your interests, past purchases, and even certain psychological traits are analyzed in order to determine which sorts of products you might be interested in. This allows those selling advertisement space (Google, Amazon, etc) to bombard you with eerily specific advertisements, customized for you and your interests.
These targeted advertisements are much more likely to interest users than generic advertisements, because they’re based off of things the advertisers know the user likes. This leads to higher click through rates, which in turn makes the advertisements themselves much more valuable for advertisers.
The process benefits everyone: users get more relevant ads, advertisement sellers have more valuable spaces to sell, and advertisers get more traffic. The only downsides are that targeted ads can be unsettling for the user, and cookies themselves can raise user privacy concerns. But overall, the use of cookies offers enormous upside.