Among the government initiatives shaping up as crucial to marketers, the ability to target online ads based on information acquired from consumers seems likely to come to the fore both in Congress and at agencies such as the Federal Communications Commission and the FTC. And what those bodies decide could have a tremendous impact on the effect marketers can achieve with their online campaigns—and the ROI they can wring from them.

It’s long been assumed that showing users ads that are tailored to them in some fashion—either by their demographic group or, even better, by their actual online behavior—can greatly increase the chances that they will respond to a message. And with budgetary pressures driving down spending on Web display ads, ad networks as big as those from Google, Yahoo and Microsoft are trying to compile information about what users do that will let them offer advertisers more targeted opportunities. They use cookies to build search queries and Web page visits into profiles that, while reportedly anonymous and thus information-protected, still let them know what kinds of ads users might respond most actively to.

“Targeted ads are orders of magnitude more effective and bring in more revenue,” Microsoft associate general counsel Mike Hintz told a Washington D.C. conference on “Computers, Freedom and Privacy” last week.

But what value do Web users place on seeing more relevant ads, and what are they willing to trade to get them? A recent survey by marketing agency Q Interactive suggests that, in the abstract at least, a large number of Web users would be amenable to offering some personal information if it meant never having to see those “shoot the duck” mortgage loan ads again.

The poll, of 1,800 visitors to Q Interactive’s CoolSavings.com lead-generation site, asked respondents if they would choose to “receive free online services and information in exchange for the use of my data to target relevant advertising to me.” And according to the results, more than half—52.5%–said they’d go for that deal.

That figure compared to 31.9% of all respondents who said they would choose to get ‘lower caliber or less functional services in exchange for untargeted advertising that does not use my data.” And another 15.8% of those questioned said they would opt to pay for access to online services and Web sites if it meant they would see no advertising at all.

According to Matt Wise, Q Interactive CEO, the big revelation from this survey is that support for targeted ads is so strong, particularly among two separate age groups, the 18-to-24s and the baby boomers aged 45 to 55. Among the boomers, 53.6% said they’d trade some information for more relevant ads, while 63.2% of the young adult group said the same thing.

To Wise, that’s one of the most surprising data points uncovered by the survey.

“If someone had asked me prior to doing this survey, I would have guessed that a minority of baby boomers—like 205 to 30%–would have been comfortable doing this,” he says. “We expected to see a huge negative reaction among that group and then for it [the value of ad targeting] to be rapidly more appreciated down the age ladder, as the technological savvy of the consumers increased.”

The closeness of the results on trading personal data for relevant ads between the boomer group and young adults suggests that those 45 to 55 are adapting more quickly than expected to the online environment. “They’re accepting the value exchange that’s entailed,” Wise says.

Personally, I’m not sure that the question’s phrasing makes that “value exchange” as clear as it could be. After all, asking someone if they’d be willing to give up data about themselves for “free online services” might be taken to mean that consumers would get a price break on whatever they’re fees they’re already paying on a site, or even for their broadband connection. I question how many of the respondents made the connection that the services or content would be “free” in that they’d be subsidized by those more targeted, more relevant ads.

At any rate, asked to name exactly what kind of personal data they would be willing to reveal to marketers to get more relevant ads and those free services, respondents overwhelmingly stuck to fairly generic attributes. The only data points that rose above the 50% mark in “shareability,” they said were ZIP code (77.8%), gender (72.3%) and age (64.9%). Only 42.5% were willing to exchange information about their marital status, and the falloff for other personal information such as weight, parental status and age of any children was dramatic.

Amazingly, 1% of respondents were willing to produce their Social Security number to get the online benefits. If you ever wondered how online phishers make a living….

Those who said they would be willing to trade information about their specific online activities in return for ad relevance or free services were in the minority. While some of these groups were small—about 12% willing to let advertisers know what terms they’ve searched on, for example, or what they’ve bought on the Web—some were perhaps still large enough to be significant. For instance, more than one in five respondents said they would have no problem trading a view of the Web sites they’d visited for ads that were more to their liking.

That’s not necessarily an impediment to ad targeting, says Wise. Q Interactive runs a display ad network of its own and affiliated sites and offers what it terms “predictive behavioral targeting,” which combines offline data and self-reported online data on geo-demographics, Web behavior and transactions to predict which ads a consumer is most likely to respond to.

“When we use our predictive algorithms, we find that the geo-demographic data is much more predictive than data about surfing behavior,’ Wise says. “Yet this survey shows that people are more concerned about tracking their surfing behavior than the traditional offline geo-demographic stuff.”

Wise believes it would be helpful for regulators to make finer distinctions between the kinds of data about themselves consumers want to protect and the data they don’t object to sharing.

“The risk is that people will irrationally try to block [collection of] PII, or personally identifiable information, which according to the consumers we surveyed is not the bigger concern,” he says. “Rather, they become concerned about being tracked in some way they haven’t been in the past. After all, most people don’t get creeped out by the fact that they got a credit card solicitation in the mail because the mailer used geo-demographic data.”

Right now most users agree that the ads they see are either irrelevant to their lives, interests and needs (31.1%, including those who found them irrelevant or “somewhat irrelevant”) or neutral (30.4%). That’s a total of 60.5% of those polled who said they found no specific connection between the Web ads they see and their interests. But 38.5% reported that they found Web ads to be either “somewhat” or “very” relevant.

Surprisingly, asked whether receiving more relevant display ads would improve their online experience, only a tad more than one quarter of respondents (27.8%) said yes. That’s a bit smaller than the contingent who said better targeting would not improve their Internet experience (30.9%) and much smaller than the group who were unsure what impact more tailored ads would have (41.3%). Obviously proponents of targeted ads have some room to make converts among consumers; but just as obviously they’re going to have to work to do so.

Marketers going after the 25-34 customer have a clearer choice, since that group had the highest proportion of respondents (40.4%) saying that yes, more relevant ads would make their Web surfing better. Among boomers that proportion in favor of targeting ads dropped to 30.8%; among the 18-24 crowd, 30.1% agreed that relevance would be good for their Internet experience.

Meanwhile, asked what draws their attention to an online ad, total respondents named the immediate need for a product or service as the most compelling factor (44.4%), followed by a specific offer or promotion such as free shipping (25.5%), an ad from “a brand or store I like” (20.6%, and the inherent appeal of the image or message in the ad itself (9.5%). The biggest surprise in the age breakouts: 18-24s are much more susceptible to brand appeal than the other groups, with 36.6% citing it as a factor in the draw of an online ad.

And advertisers may have something to gain and little to lose by trying to target their online ads, whether or not users think it will make the Web a more congenial place. By a slim majority (52.6%), most respondents said ads targeted to their specific interests would make them think more favorably of the marketers behind them. Only 6% said they would view advertisers less favorably for targeting their ads.

Among the government initiatives shaping up as crucial to marketers, the ability to target online ads based on information acquired from consumers seems likely to come to the fore both in Congress and at agencies such as the Federal Communications Commission and the FTC. And what those bodies decide could have a tremendous impact on the effect marketers can achieve with their online campaigns—and the ROI they can wring from them.

It’s long been assumed that showing users ads that are tailored to them in some fashion—either by their demographic group or, even better, by their actual online behavior—can greatly increase the chances that they will respond to a message. And with budgetary pressures driving down spending on Web display ads, ad networks as big as those from Google, Yahoo and Microsoft are trying to compile information about what users do that will let them offer advertisers more targeted opportunities. They use cookies to build search queries and Web page visits into profiles that, while reportedly anonymous and thus information-protected, still let them know what kinds of ads users might respond most actively to.

“Targeted ads are orders of magnitude more effective and bring in more revenue,” Microsoft associate general counsel Mike Hintz told a Washington D.C. conference on “Computers, Freedom and Privacy” last week.

But what value do Web users place on seeing more relevant ads, and what are they willing to trade to get them? A recent survey by marketing agency Q Interactive suggests that, in the abstract at least, a large number of Web users would be amenable to offering some personal information if it meant never having to see those “shoot the duck” mortgage loan ads again.

The poll, of 1,800 visitors to Q Interactive’s CoolSavings.com lead-generation site, asked respondents if they would choose to “receive free online services and information in exchange for the use of my data to target relevant advertising to me.” And according to the results, more than half—52.5%–said they’d go for that deal.

That figure compared to 31.9% of all respondents who said they would choose to get ‘lower caliber or less functional services in exchange for untargeted advertising that does not use my data.” And another 15.8% of those questioned said they would opt to pay for access to online services and Web sites if it meant they would see no advertising at all.

According to Matt Wise, Q Interactive CEO, the big revelation from this survey is that support for targeted ads is so strong, particularly among two separate age groups, the 18-to-24s and the baby boomers aged 45 to 55. Among the boomers, 53.6% said they’d trade some information for more relevant ads, while 63.2% of the young adult group said the same thing.

To Wise, that’s one of the most surprising data points uncovered by the survey.

“If someone had asked me prior to doing this survey, I would have guessed that a minority of baby boomers—like 205 to 30%–would have been comfortable doing this,” he says. “We expected to see a huge negative reaction among that group and then for it [the value of ad targeting] to be rapidly more appreciated down the age ladder, as the technological savvy of the consumers increased.”

The closeness of the results on trading personal data for relevant ads between the boomer group and young adults suggests that those 45 to 55 are adapting more quickly than expected to the online environment. “They’re accepting the value exchange that’s entailed,” Wise says.

Personally, I’m not sure that the question’s phrasing makes that “value exchange” as clear as it could be. After all, asking someone if they’d be willing to give up data about themselves for “free online services” might be taken to mean that consumers would get a price break on whatever they’re fees they’re already paying on a site, or even for their broadband connection. I question how many of the respondents made the connection that the services or content would be “free” in that they’d be subsidized by those more targeted, more relevant ads.

At any rate, asked to name exactly what kind of personal data they would be willing to reveal to marketers to get more relevant ads and those free services, respondents overwhelmingly stuck to fairly generic attributes. The only data points that rose above the 50% mark in “shareability,” they said were ZIP code (77.8%), gender (72.3%) and age (64.9%). Only 42.5% were willing to exchange information about their marital status, and the falloff for other personal information such as weight, parental status and age of any children was dramatic.

Amazingly, 1% of respondents were willing to produce their Social Security number to get the online benefits. If you ever wondered how online phishers make a living….

Those who said they would be willing to trade information about their specific online activities in return for ad relevance or free services were in the minority. While some of these groups were small—about 12% willing to let advertisers know what terms they’ve searched on, for example, or what they’ve bought on the Web—some were perhaps still large enough to be significant. For instance, more than one in five respondents said they would have no problem trading a view of the Web sites they’d visited for ads that were more to their liking.

That’s not necessarily an impediment to ad targeting, says Wise. Q Interactive runs a display ad network of its own and affiliated sites and offers what it terms “predictive behavioral targeting,” which combines offline data and self-reported online data on geo-demographics, Web behavior and transactions to predict which ads a consumer is most likely to respond to.

“When we use our predictive algorithms, we find that the geo-demographic data is much more predictive than data about surfing behavior,’ Wise says. “Yet this survey shows that people are more concerned about tracking their surfing behavior than the traditional offline geo-demographic stuff.”

Wise believes it would be helpful for regulators to make finer distinctions between the kinds of data about themselves consumers want to protect and the data they don’t object to sharing.

“The risk is that people will irrationally try to block [collection of] PII, or personally identifiable information, which according to the consumers we surveyed is not the bigger concern,” he says. “Rather, they become concerned about being tracked in some way they haven’t been in the past. After all, most people don’t get creeped out by the fact that they got a credit card solicitation in the mail because the mailer used geo-demographic data.”

Right now most users agree that the ads they see are either irrelevant to their lives, interests and needs (31.1%, including those who found them irrelevant or “somewhat irrelevant”) or neutral (30.4%). That’s a total of 60.5% of those polled who said they found no specific connection between the Web ads they see and their interests. But 38.5% reported that they found Web ads to be either “somewhat” or “very” relevant.

Surprisingly, asked whether receiving more relevant display ads would improve their online experience, only a tad more than one quarter of respondents (27.8%) said yes. That’s a bit smaller than the contingent who said better targeting would not improve their Internet experience (30.9%) and much smaller than the group who were unsure what impact more tailored ads would have (41.3%). Obviously proponents of targeted ads have some room to make converts among consumers; but just as obviously they’re going to have to work to do so.

Marketers going after the 25-34 customer have a clearer choice, since that group had the highest proportion of respondents (40.4%) saying that yes, more relevant ads would make their Web surfing better. Among boomers that proportion in favor of targeting ads dropped to 30.8%; among the 18-24 crowd, 30.1% agreed that relevance would be good for their Internet experience.

Meanwhile, asked what draws their attention to an online ad, total respondents named the immediate need for a product or service as the most compelling factor (44.4%), followed by a specific offer or promotion such as free shipping (25.5%), an ad from “a brand or store I like” (20.6%, and the inherent appeal of the image or message in the ad itself (9.5%). The biggest surprise in the age breakouts: 18-24s are much more susceptible to brand appeal than the other groups, with 36.6% citing it as a factor in the draw of an online ad.

And advertisers may have something to gain and little to lose by trying to target their online ads, whether or not users think it will make the Web a more congenial place. By a slim majority (52.6%), most respondents said ads targeted to their specific interests would make them think more favorably of the marketers behind them. Only 6% said they would view advertisers less favorably for targeting their ads.