The Cost of Free Services

by | Apr. 16, 2014

Google updated its terms of service informing users that their incoming and outgoing emails may be analyzed by software to deliver targeted ads. 

Google says, "Our automated systems analyze your content (including emails) to provide you personally relevant product features, such as customized search results, tailored advertising, and spam and malware detection. This analysis occurs as the content is sent, received, and when it is stored."

The initial reaction for most Gmail users, who are up-to-date on the latest ad targeting practices and read the terms of service notices, I imagine would be “Are you kidding me?” On further examination of Google’s service amendment, I, as a Parks Associates analyst researching all things advertising, share the following thoughts on this announcement:

Google will never use personally identifiable information (PII) when delivering targeted ads. Otherwise, they will have to contiually defend themselves against state and federal lawsuits despite the fact that that they have plenty of money to do so. 
Few consumers understand ad targeting practices. Parks Associates reports that in 2011, 5% of respondents reported seeing the AdChoices or Consumer Choice Page and 6% report being aware of the icons in 2013. More interesting, over 50% of consumers who clicked on either icon but did not opt-out indicate they want to receive personalized ads or are not concerned with the types of ads they receive.
Consumers have a choice. If consumers want to use a free service, they are beholden to the service agreements imposed on them. Otherwise, they need to pay to circumvent the personal intrusions that may be placed on them-such as companies monitoring their activities to deliver targeted ads. It's simple. If majorities of Google email users decide they don't want their email content scanned and used to send personalized ads then perhaps a new revenue opportunity is present for companies that offer email as a service extension (e.g., pay-TV service providers) or provide protected email services like Apple. 

Next: The Concept of TV Advertising is Forever Changed
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