Dive Brief:

• Oath, a unit of Verizon that owns Yahoo and AOL Mail, continues to offer a service to advertisers that analyzes more than 200 million email inboxes looking for user data about products that users might purchase, sources familiar with the matter told The Wall Street Journal. The practice of scanning emails for information to sell advertisers has been deemed off-limits by many in the U.S. tech industry.
• The company has used email scanning to improve ad targeting, and company officials have said that it only applies to commercial emails in users' inboxes and that they are able to opt out. Oath helps advertisers place messages on sites that it owns, including HuffPost and Yahoo Finance, using a variety of services. 
• Yahoo uses algorithms to search for commercial emails and uses a database of common emails to identify the messages. Algorithms associate certain emails with consumer preferences and place a tracking code, or cookie, on the user's computer so that advertisers can deliver ads to them. Oath identifies user groups who have made certain purchases based on receipts, travel itineraries and promotions in their email inboxes. 

Dive Insight:

Oath may be the only major U.S. email provider that continues to scan email inboxes for data to share with advertisers, according to the Journal's report. Google stopped scanning emails for ad targeting for its Gmail users last year, and Microsoft said it never used email data for advertising purposes, per the Journal. 

With privacy on the minds of consumers following several high-profile breaches in which user data has been mishandled, consumers and the media are paying closer attention to the data practices of digital platforms. If there is an enduring expectation of higher levels of protection when it comes to personal data and communications, Oath's practice has the potential to cause the company grief from unhappy customers and potentially regulators. In 2016, Yahoo paid $4 million to settle a federal class-action lawsuit that said email scanning was a violation of the wiretap laws. The company didn't admit wrongdoing but agreed to scan emails only after they arrived in an inbox rather than while they were in transit. 

While ad targeting helps marketers deliver the relevant, personalized messages that consumers are growing to expect, taking a more transparent approach can boost engagement. When consumers are told that product recommendations were based on previous shopping behaviors, click-through rates increased 11%, time spent on product pages jumped 34% and consumers spent 38% more on the recommended items, research from Maritz Motivation Solutions and the Harvard Business School found. 

The promise of identifying relevant user groups for advertisers is likely one way that Oath hopes to stay competitive as an advertising platform and email provider, a space that is increasingly dominated by Google, which has 1.4 billion email users. Among email users, 63% have an active Google account, 21% use Microsoft and 17% use Yahoo, according to comScore data cited by the Journal.