Database boasts it will track web behaviour of everyone in UK

A British advertising company claims to have built the world's largest database of individuals' internet behaviour, which it says will track "almost 100 per cent" of the UK population.

The announcement plunges WPP straight into the middle of the privacy debate surrounding online marketing. The company said it was pooling data from many of the world's major websites, networks of online advertisers and even sources following what people are buying in high street stores.

FTSE 100-listed WPP, founded and run by the British businessman Sir Martin Sorrell, is one of the most powerful well-connected advertising companies in the world, and its clients include some of the most famous global brands. Many, though not yet named, are providing WPP with data about visitors to their websites as part of the company's new database venture, called Xaxis.

"The internet is an advertising-supported medium, and much of the web is free because advertisers want to put messages in front of people," said Brian Lesser, chief executive of Xaxis. "We are supporting the broader internet economy by improving the targeting of ads, while also playing by the strictest privacy rules."

It has built individual profiles of 500 million internet users across the world, covering, it says, almost 100 per cent of the people online in the countries in which it operates, including the UK, US, Australia and eight others.

Privacy campaigners warned against the concentration of so much data about individuals, even though WPP insisted the information had been "anonymised".

"Knowing the pattern of websites you go to makes it very easy to identify you," said John Buckman, chairman of the Electronic Frontier Foundation (EFF). "The greatest problem with data gathering is not from the people gathering it, but where it goes afterwards. When the cat is out the bag, you can't put it back in. The safest protection for data is to never have it in the first place. The principle should be for the minimum amount of data to be captured wherever possible."

The EFF and other groups have become more concerned with the collection of people's web habits since the wave of hacker attacks on corporations, including Sony and Citibank in the past month. Privacy concerns are also dogging internet giants such as Google and Facebook, who store information on hundreds of millions of their users.

New market research and technology businesses have sprung up to marry old-fashioned data such as people's addresses and demographic information with their online buying habits. WPP will buy web-tracking services from these businesses, as well as collecting its own online-only data.

The company is promising advertisers "an unprecedented level of precision" and "zero waste", so that only people likely to be interested in their products will see adverts. But Mr Lesser added that WPP could be trusted not to try to unscramble the data and match it to individuals. "Who the person is is not really important to us," he said. "We will never get to the point that we know so much that we know who the person is."

The advertising industry is trying to hold off privacy legislation in Europe and the US, where the authorities are considering new laws either to ban secret tracking of web users or at least to ensure there are easy ways to opt out. The latest browsers have "do not track" modes, and the ad industry has its own voluntary code, including a blue icon for users to click to give them more control over data collected about them.

The companies that know who you are, where you live and what you like

Facebook

The latest skirmish involving privacy on the world's dominant social network is about its use of facial recognition software, which suggests your name to friends if they upload pictures which include you. Yes: Facebook knows what you look like, as well as where you live, who your friends are, and what you had for lunch yesterday – because you, or people you know, have freely shared the information.

Using this data, the site is already selling adverts targeted specifically at you, and is also making money selling access to you and your friends to other websites. Although it is possible for each user to adjust their personal privacy settings, many complain that this process is ludicrously complicated.

Google

The original Big Brother of the internet and gatekeeper for two-thirds of the world's search queries, Google keeps note of what you are tapping, and personalises some of its search results and the adjacent ads based on what it knows about you and your habits. If you are a Gmail customer or have signed up to other services, it knows even more and tailors its service still further.

When Google bought the large online advertising company DoubleClick, it hoped to link data from users' search results in order to tailor adverts on websites all over the internet – but regulatory scrutiny led it to decide against the plan.

Acxiom

The US firm has one of the largest databases used by the junk mail industry to target individual households. As the internet era dawned it saw the value in linking this "offline" information with online data, which it buys from e-commerce firms, anonymises and sells to online advertisers. It boasts that "unlike traditional consumer segmentation systems, [it's database] is built and applied at the consumer household level, not at a postcode or block group."