Google announced a new privacy feature for both users and website owners using Google Analytics.
In addition, website owners can take an additional step to help anonymize IP address information sent to Google. Google can remove the last octet of the IP address if you implement this feature with your Google Analytics install. Google does warn that implementing this will "slightly reduce the accuracy of geographic reporting."
For marketers, this will have some type of impact. As we reported at Search Engine Land, Google does not expect many users to opt in to this feature. Google told us:
We're not sure [what to expect]. But it may be helpful to compare it to similar tools that provide users with more power and control over data. For example, with the Ads Preferences Manager, we've seen that of the tens of thousands of who people visit the site every week (out of the millions and millions of users), only 1 person our of every 15 opts out, 4 edit their categories, and 10 do nothing. Greater choice and transparency is good for users and we believe that what’s ultimately good for users will be good for advertisers and Analytics customers.
Forum discussion at Google Blogoscoped Forums.