SECTION I. DEFINITIONS AND CONTEXT

In 1994, the webpage Hotwired inaugurated the business of online advertising by selling an online banner space to the telecommunication company AT&T. The banner was charged based on the number of impressions it had. This model is referred to as “cost-per-mille,” and the costs are determined for each thousand views the advertisement has. The cost-per-mille model remained predominant until 1996, when Yahoo! launched the “cost-per-click” and was paid accordingly to the number of clicks the advertisement had.

In 1994, at the beginning of search engines’ activities, they also monetized their business with third-party advertisements. First, they followed the model of selling banner advertisements on a cost-per-mille basis. Second, they switched their banner ad model to the keywords search model. In this new fashion, as soon internet users typed keywords to fi nd information in the search engine, some of the fi rst responses displayed were sponsored by the websites themselves. Yahoo! adopted this system and Google still operates in this way.

In the past 25 years, the online advertising sector has evolved at the same pace as the internet. The pervasiveness of information about users has enabled the marketing sector to be even more data-driven than before. Profi ling and targeting techniques have reshaped the online advertising business, because advertisers can granularly include or exclude their audience and consumers.

MONITORING, PROFILING, AND DELIVERING

Online targeted advertising is defi ned as a practice of delivering an ad to a specifi c audience or individual. The practice encompasses four different steps: 1) the monitoring of internet users’ activities, 2) the collection users’ data, 3) the creation of their digital profi les, and 4) the delivery of the advertisement to the “right” consumer/individual.

MONITORING AND COLLECTION OF DATA

Targeted advertising reaches consumers based both on information spontaneously provided by them, such as in the cases of social networking, and on information tracked by cookies. Cookies are fi les designed to collect data about internet users’ activity online. They were originally developed to support e-commerce platforms identify items added in online shopping carts and personal login information. In the 2000s, companies started using tracking cookies for advertising purposes.