Walt Disney chief Robert Iger said on Wednesday advertising will rapidly grow more sophisticated as media firms begin tracking consumer preferences and selling the data on to advertisers.

But Iger warned that privacy concerns may come to the fore with the growing ability of Web ads to monitor individual preferences and target surfers with custom ads.

Iger has warned that fundamental changes now underway in the broadcast and cable industries may permanently cut TV advertising sales and prices, leaving traditional media companies looking for ways to make up that revenue when the economy recovers.

The executive told the Fortune Brainstorm Tech conference that media companies can pump up online sales volumes by either selling consumer information or by marketing directly to consumers based on individual tastes.

If we know that you've gone online and looked at five different autos online, you are a great consumer for us to serve up a 30-second ad for a car, Iger said.

If we could sell your behavior to an advertiser -- I am actually pretty bullish about what technology is going to allow in terms of behavioral tracking. I think we are going to have information to sell to marketers.

Iger conceded that consumer groups have raised privacy concerns about such practices, but argued that such complaints generally came from older consumers.

Kids don't care, Iger said, adding that when he talked to his adult children about their online privacy concerns they can't figure out what I'm talking about.

Disney's experience as an early proponent of putting primetime TV shows and movies online, on Apple's iTunes and on its own broadband player gave it ample evidence that people are willing to pay for quality, choice content, Iger said.

There is a significant amount of headroom in being able to charge for something on the Internet, he added.

Disney estimates that people pay $5 per hour to see a movie in theater, 75 cents to read a book or magazine, 50 cents per hour for cable and 25 cents per hour for Internet content, he said.

SUBSCRIPTION PROMISING

Iger also predicted that media companies would use multiple methods to monetize content.

He reiterated Disney was developing a subscription service to sell premium content like TV shows and movies but did not indicate when such a service would be launched.

Subscription has the most promise because people will pay to subscribe to something that is really good. Our brand offers us some rich opportunities for subscription, he said.

Iger, the first chief of a major media company to sell content through iTunes and to make its prime time TV shows available online in an ad-supported player, joked that while Disney was at the vanguard of user-generated content, he missed the boat by not foreseeing the development of video sharing phenomenon YouTube.com.

I kick myself for having put (America's Funniest Home Videos ) on TV 20 years ago, and when I became interested in what the Internet could do I didn't come up with YouTube, he said. I could kick myself for that.

(Additional reporting by Laura Isensee and Alex Dobuzinskis; Editing by Valerie Lee)

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