Quick Query: What, Exactly, Is An IP Address?

Ecommerce merchants can now track where their visitors live. Digital Element is a firm that provides this geo-tracking service and it allows merchants to change their home page and other landing pages based, for example, on whether a visitor lives in Alaska or Florida.

The technology behind this service is IP addresses. Every computer on the Internet has an IP address and in this follow-up interview, we ask Digital Element co-founder and executive vice president, Rob Friedman, what, exactly, is an IP address?

PeC: Rob, our first interview, about Digital Elements’ geo-tracking service, was interesting. It created other questions that we have for you related to IP addresses, the technology behind your geo-tracking service. What is an IP address?

Rob Friedman: “That’s a good question because I don’t think a lot of folks understand. They hear the term, but they don’t really understand what an IP address is. An IP address is one of the key building blocks, the core of the Internet. It’s basically a number identifier for every device that’s connected on the Internet. In strict terms, it identifies the piece of equipment that a person uses in order to gain access to the Internet. So, every piece of equipment that is attached to the Internet has an IP address and it’s really critical to how the Internet works.”

PeC: Who assigns IP addresses?

Friedman: “IP addresses are assigned in two different ways. There are registries that assign blocks of IP addresses to Internet service providers and then those ISPs take that block of IP addresses and assign a specific IP address to different pieces of equipment they own, so that when you log into an ISP, say it’s a dial-up POP or a cable ISP, you’re assigned an IP address that the ISP owns, that the ISP got from one of the registries.”

PeC: Got it. How can you tell where a user lives based on his or her IP address?

Friedman: “Now, that’s the magic. As I mentioned before, IP addresses don’t have a geographic component like phone numbers do. And there’s no yellow pages or white pages like there are with phone numbers. There are over four billion IP addresses. So, we had to come up with a purely technical solution to figuring out where IP addresses were. Using our technology, we can figure out where routers are on the Internet, what the speed is between those routers, where end pieces of equipment are on the Internet, and really do a lot of Internet plumbing analysis. From that, we figure out where IP addresses seem to be coming from. It’s really a very educated guess.

“The new thing that we’ve added is NetAcuity Edge, which actually takes some user-supplied information . . . to really drill down even further to where an IP address is located, down to, basically, a zip code level.”

PeC: If I have a laptop and I go out of state, does my IP address change if I access the Internet from, say, a hotel, versus from my office?

Friedman: “It does in most cases. The IP address that you’re using is generally different if you log in from a hotel because IP addresses are assigned where you enter the Internet. So, if it’s from the hotel system, you would get a different IP address than from your office.”

PeC: It seems like there are potential confidentiality issues with tracking IP addresses. Is that true?

Friedman: “Well, I understand your concern, but using IP addresses, we generally can get down to a zip code level, not where somebody lives. We don’t know it’s you. It’s kind of like a dumbed-down version of caller ID. Luckily, with IP addresses being dynamic and really not representing a user per se, the [confidentiality] concern with IP addresses is very, very minimal.”

PeC: If Digital Element has 10 customers that sell 10 separate products, do you track if a single IP address has gone to, say, 8 of those 10 customers? Do you draw inferences from what that user’s interests are based on that activity?

Friedman: “We don’t do that and we actually don’t have the technical means to do that because what happens is when a customer gets set up with our database, they download some software onto a box at their place. So, that customer knows what IP addresses are coming to its site, but it doesn’t get fed back to us. So, we don’t have access to what IP addresses that they’re seeing or what pages that IP address has surfed.”

PeC: Our readers are mainly ecommerce merchants. Anything else on your mind for them today regarding IP addresses?

Friedman: “One thing jumped out at me when you mentioned you wanted to have a follow-up on IP addresses. Specifically, I think a lot of people don’t really understand how powerful IP addresses can be to their businesses. It’s really an untapped resource.

“In the real world, if you’re opening up a store, location is one of the most important things that you look at. You look at where you’re going to open it, how you’re going to stock the shelves, what kind of clerks you’re going to have there, how you’re going to price things, and that all varies based on the location.

“You wouldn’t open up a store in New York without looking at the location to determine how you’re going to stock your shelves and what type of products you’re going to put there. You wouldn’t open up a store in Japan and price everything in dollars and have all your signs written in English, yet online merchants do that. Merchants open up one-size fits all [ecommerce] stores. It’s kind of like business commonsense to me.”