The TruEffect Blog

OMB unleashes new privacy guidelines for Government

Two weeks ago the Government Office of Management and Budget (OMB) issued two new memoranda, M 10-22 and M 10-23, regarding web measurement and the utilization for 3rd party technology for government websites. The new guidelines are part of the OMB’s “Open Government Directive” and seek to promote transparency, participation, and collaboration while protecting individual privacy.

Although the new memoranda reverse a number of previous mandates, what bears scrutiny is that while there appears to be some easing of restrictions around 3rd party technology use on government sites, most current 3rd party ad tracking serving and measurement technologies still cannot comply with the new requirements. For instance, new guidelines allow for retention of data for only as long as deemed necessary, but not to exceed 12 months. Most ad server cookies are set for a minimum of 24 months, while others range up to 10 years. And data is commonly retained for more than 18 months.

Last summer, the Future of Privacy Forum, in their reply comments to the Federal Government Websites cookie policy, recommended that “Only ‘first party’ domains should be used, rather than ‘third party’ domains, to avoid potential for unwanted correlation across unrelated Web sites.” Likewise the Center for Democracy and Technology recommended that Federal Government Agencies serve and measure advertising from their own first-party Web domain. We agree. That’s why “first-party” solutions, like our own TruConnect technology, are still the safest bets going forward in an industry whose privacy practices are increasingly being called into question.

– Martin Smith

Is the FTC getting superpowers?

I know, I know. At TruEffect we like to talk about online consumer privacy – a LOT. We’ve talked, sometimes ad nauseam, about the Federal Trade Commission’s Staff Report on Behavioral Advertising, and have closely followed the debate on the state of industry self-regulation.  While the FTC’s report is quite clear, the industry has largely disagreed with the positions posited by the FTC, and ignored their not-so-thinly veiled threats of government regulation – believing that the industry can certainly regulate itself long before a need arises for the government to do it for us. Well, it’s not that we take pride in saying, “I told you so,” but……

Yesterday Wendy Davis from MediaPost wrote about the online industry having their panties in a bunch around the new legislation before Congress that will make it much easier for the FTC to create rules and bring civil law suits. She writes “The current House version creates a new consumer protection commission while also beefing up the FTC's power in a few key ways. The bill removes administrative hurdles to the FTC's rulemaking ability, makes it easier for the agency to pursue civil litigation, and allows the FTC to target ad companies that aid and abet unfair practices.”

And if you want to know what the FTC considers unfair practices, you need only to read their aforementioned “Self-regulatory principles on behavioral advertising.”  I keep remembering FTC Chairman Jon Leibowitz’s comment, “A day of reckoning may be fast approaching.” If the IAB feels the need to lobby against this current legislation, does that mean self-regulation has failed? Will third-party data models like those used by behavioral targeting companies and third-party ad servers be at risk?

– Layne Salter

The Cookie Controversy

I went to Boston a few weeks ago week to present at the International Association of Privacy Professionals Academy (IAPP Academy). I was armed with data on how 500 advertisers leverage their cookie space across First-Party, Third-Party and Flash cookies.

The recent positioning papers on Behavioral Targeting from the FTC, "Self-Regulatory Principals for Online Behavioral Advertising," and IAB, "Self Regulatory Principals for Online Behavioral Advertising," started a firestorm of additional articles from Business Week, "Is Regulation Coming" to Clickz's, "A Strong Nudge from FTC may lead to Draconian Measures."

The issue here is that Behavioral Targeting has become a major part of the online advertising industry, and data is transferred from the Advertiser to a third-party Behavioral Targeting company for analysis and profiling. At that point in time, the data is anonymous but still becomes owned by the Behavioral Targeting Company where it can be resold as targets back to the originating company and other Advertisers.

There are two issues that are fueling the controversy:
1)    Data Transfer
2)    User Notification

The FTC is arguing that there is limited transparency and notice that the users are being tracked by the third-party. The data transfer is usually mentioned in a passive mode in the Advertisers’ privacy policy and it's up to the user to go to either the National Advertising Initiative (NAI) site or to the BT company site to opt-out of the tracking. The FTC would like to see a more active opt-in notification where the users have to take action to be included.

The Industry response has been for increased self regulation which would enable the users to easily get to their data so they can make an informed decision as to whether they stay in a program or chose to opt-out. These options are good for users as long as there is education to help them understand how they are being tracked, and how to take action to prevent this tracking if they feel compelled to do so.

The next big firestorm surrounds something that has been flying under the radar, but used at an accelerating rate, is Flash Cookies. They are not cookies, rather Local Shared Objects which closely resemble a traditional cookie in function. The problem arises because the Flash Cookie is not controlled by the browser, it’s controlled by the flash player and is significantly more difficult to view and delete. Two articles came out the day before my presentation. One from the Behavioral Targeting Insider,  "Moving Flash Cookies into Direct Response BT" and the Daily Online Examiner "Hidden Cookies Privacy Landmines". The articles are from completely different ends of the spectrum. One encourages their use because they bypass browser security features, and the second alerts privacy professionals to the fact that they bypass browser security features.

The overriding factor is that users build relationships on the web by going to their favorite sites for products and information. When the user builds that relationship, who owns the data? Does the site (Advertiser/Publisher) or a third-party, engaged by the site to help drive deeper relationships, own the data?

An article written by Ben Edelman, "Towards a Bill of Rights for Online Advertisers," highlights the heart of the issue. Advertisers are the ones spending the money to fund the web, and deserve the rights to know where their ads are shown and use their data as they see fit.

It seems logical that the Advertisers should have the right to control and use their own data. I wouldn’t be surprised to find that Advertisers push for Advertiser cookies as an option for the future. There would be no controversy as to who owns the cookie and the data and where you need to go to opt-out.

– Greg Neal

Data mining in the media economy

It seems things always come in threes. This also holds true in Privacy News. Over the past holiday week, the US saw a series of pieces related to the on-going privacy/targeting debate in the media.  Stories percolated into Business Week and The New York Times related to the regulation/self-regulation discussion of behavioral targeting, while in the UK it was announced that British Telecom was terminating its controversial trials of the Phorm targeting service. What’s different this week? Just maybe the industry trade bodies are finally taking seriously the threat of external regulation? With that there is an escalated need to aggressively pursue a self-regulatory path.

A cross-section of industry groups have now produced 7 guiding principles for behavioral targeting and taken a passable stab at defining it:
“The collection of data online from a particular computer or device regarding Web viewing behaviors over time and across non-affiliate Web sites for the purpose of using such data to predict user preferences or interests to deliver advertising to that computer or device based on the preferences or interests inferred from such Web viewing behaviors. The Principles do not apply to a Web site’s collection of viewing behavior solely for its own uses” ¹

The specificity of the definition is very interesting in that it draws some very specific data practices into question. These relate to specialist companies that aggregate data across sites such as NextAction, Acerno, and data aggregators such as Blue Kai. However it may exclude companies such as Media6Degrees, that makes inferences based on your association to users you are connected to via social media. While such companies are very familiar to interactive advertisers, they are practically anonymous to the consumer and are, as such, clearly in the target area of regulators because they hold an ambiguous and undefined role.  Do we want to go this route and call out companies?

How does this apply and does it also challenge re-targeting and other practices related to data collection?  Re-targeting shares data from advertiser sites with media networks to allow the re-solicitation of visitors to an advertiser site.  You may have experienced this when you visit a site and then almost immediately start to receive ads from that company. A recent article by Wendy Davis in Mediapost shed light on this practice when she reviewed AT&T’s data sharing activities. Greg Neal , VP of Product Strategy at my company, TruEffect, observed in his analysis of the top 500 advertisers that, on average, data is shared through cookies 7-20 times, depending upon the industry.  

“AT&T is by no means unique" said Neal. "In fact they are better than many and have a very clearly articulated privacy statement related to these practices.  We typically see data being shared with between 3 and 10 companies.” What is more concerning for Neal is companies that do not understand how their sharing of data impacts their business and the brands they support.

“When reviewing client data practices it is not unusual to see data they have shared for specific re-targeting to be driving advertisements for competitive advertisers. I think advertisers often over-estimate the control they have of their data. When they share that data with another party, there is little control or regulation over the specific purposes and re-purposes for which the data may be used. It’s also extremely difficult to monitor or track. When the data is gone, it’s gone!”

This is a view shared by Match.com’s Jim McDonald who said, “We have rationalized the range of networks with whom we work based on compliance to our data standards. We have also begun investigating other methodologies such as managing all media within our domain. Users have a relationship with Match not any third party company they’ve never heard of.” Research supports this view with 61% of users expecting their interactions to be private, but nearly the same number also want advertising to be relevant.

Chris Ahrens of agency Draft/FCB reiterated this sentiment saying, “Draft/FCB has taken a pragmatic approach to the BT area and deployed different technologies when most appropriate.  We were the first to use ad serving without cookies as well as supporting the use of the advertiser option when appropriate”.

Given advertisers have options, is the industry’s response really getting ahead of the issue or simply acknowledging a changed reality?  Behavioral Targeting comprises less than 9.5% of all display media sales² although they do comprise a much larger part of media selection and retargeting.

Nielsen’s Marc Ryan believes that many consumers have already created their own opt-outs. “For quite some time we have been noticing an increasing trend in users managing their data more aggressively, this includes deleting or simply not accepting cookies. Typically we see more than 50% of media being managed in this way by better tools and options in the browser and use of security software.”

Webtrends, a leading web analytics company, saw similar trends.  “We believe about 28%-33% of users now manage how their data is used in media.  Consumers are ok with sharing data with companies they know (and trust).  They are often a little more savvy than the industry gives them credit for or wants to admit as it impacts measurement accuracy and performance.  In site-side analytics we saw this a number of years ago and made adjustments by working in the domain of the advertiser. We see the same trend in media and believe companies such as TruEffect offers solid alternatives to current practices.”

– Martin Smith
¹ Self Regulatory Principles for Online Behavioral Advertising
² eMarketer, June 2008

Would you want this job?

While "Terminator Salvation," sans "Governator" plays in theaters nationwide, President Obama declares that cyberspace is actually a real place, and gives it its own security force. To protect us from hackers, international terrorists, and even SkyNet Research, Obama announced today the creation of a new government post - Cybersecurity Coordinator. Sure, this is not a job most of us would want, but his speech announcing the post certainly underscores the importance of this virtual space we've created and adopted in droves over the past two decades.

He reminds us that the internet is not just about our growing personal communication and entertainment uses, saying "... make no mistake:  This world -- cyberspace -- is a world that we depend on every single day.  It's our hardware and our software, our desktops and laptops and cell phones and Blackberries that have become woven into every aspect of our lives. It's the broadband networks beneath us and the wireless signals around us, the local networks in our schools and hospitals and businesses, and the massive grids that power our nation.  It's the classified military and intelligence networks that keep us safe, and the World Wide Web that has made us more interconnected than at any time in human history. So cyberspace is real.  And so are the risks that come with it."

As geeks around the country rejoice at the administration's plans are to keep this virtual world "open and free," we wonder if the continued emphasis on technology and security will fuel even more government attention to consumer privacy concerns around online advertising and behavioral targeting?  Time will tell.

– Layne Salter

Newspaper impressions

Jim Nichols takes a different angle on recent newspapers' demise in his iMediaConnection article.  He points out the fact that while the internet has played a major role in killing paper news by giving consumers free news and content, it's still largely in the infancy stage of figuring out its own business model.  But he also reminds us that many papers are doing a fantastic job creating and offering digital content.

I think he's hit on something. It's true that news content has the ability to generate a highly sought after audience. Couple that with the fact that online offers superior technology in ad targeting. Unlike newspaper readers having to wade through pages of huge furniture and auto ads that may have no bearing on their interests, digital content can provide its readers with targeted, even custom ads. Online targeting promises a lot, but will it deliver enough to boost display advertising?

I second Jim's call to advertisers to go out and buy some impressions on a digital newspaper. Who knows? You might save a journalist's job, and keep the world safe from glib and depthless television news.

– Layne Salter

Rocky Mountain News - Rest in Peace

Today I was saddened to hear the long-awaited announcement that tomorrow one of our local newspapers will be ceasing operations.  The Rocky Mountain News is two months from its 150th anniversary and has won a Pulitzer Prize for journalism four times – an accomplishment shared by very few newspapers in the world.  And other awards stack up behind the Pulitzers. 

Now it would be easy to ask why I, an internet media guy, wouldn’t see this as another validation that online is the future.  And, isn’t this failure just another example of an industry that has not remained competitive and deserves to go extinct?  Well, it’s just not that simple.  The internet, and internet media, has been an explosive success because it has enabled the sharing of information across society with an efficacy and speed that boggles the mind.  We can learn a great deal about almost anything in seconds, which has redefined business, education, government, global trade, culture, health care, and even how we interact as human beings.  But, the internet does not create the content. 

People are the authors of everything we share online.  Teachers share their lessons.  Analysts share their expertise.  Scientists share their research.  Musicians share their songs.  And journalists share their news stories, photos and commentaries.  The internet has not offered any substitute for this wealth of knowledge, yet it seems to have put into jeopardy the business models that feed some of these authors, journalists in particular.  At its most lofty, journalism is chartered with reflecting every side of an issue as truthfully as possible. Thomas Carlyle’s “Fourth Estate” has been a cornerstone of a free and open society, and has been particularly important in American history. 

So what difference does this make to those of us in digital media?  Each and every one of us in the business can attribute our revenue and our paycheck to the media budgets of the advertisers that pay to get their message in front of consumers.  Consumers want content.  Compelling content.  Entertaining content.  Useful content.  It’s the content that draws traffic that drives ad revenue.  And one of the earliest and most successful sources of content on the web is news.  Journalism.  Obviously, we’ve evolved from headlines on CompuServe to tweets and blogs from “citizen journalists”, but we collectively depend heavily on the news, weather, entertainment and sports reporting from professionals.  Professionals who have failed to morph their business model in a sustainable way, but continue to blindly feed the model that is their Brutus.  Walter Isaacson provides an excellent analysis and a provocative proposal in his recent Time Magazine article.

We have heard in the last few days that television seems to be surviving quite nicely, thank you very much.  And that’s true – kudos to the ability of that industry to remain relevant.  But newspapers are the most entrenched source for local issues and the most connected with their communities.  Newspapers at every level provide an enormous amount of quality content that drives a lot of revenue to our industry.  If we fail to recognize the need to nourish and grow quality content, then we’ll find ourselves struggling for relevance as well.  How successful would an internet be if comprised solely of advertising??

I grew up on a Midwestern river which fueled the growth of towns large and small and supports fish and wildlife as well as agriculture and recreation.  As commerce up and down that river grew, the Army Corps of Engineers decided to make the channel deeper and straighter in an attempt to facilitate large shipping barges.  This well-intended move to efficiency and effectiveness turned the meandering river into a fast-flowing “ditch” that has become too treacherous for many swimmers and boaters, and eliminated some of the shallower pools and eddies that were home to all kinds of creatures.  The need of the people living along the river to exploit this natural resource for commercial gain has eaten away at the real value it brings.  What a self-defeating tragedy it would be if the internet ad industry followed suit and drove quality content providers such as professional journalists out of business. 

- Scott Nelson

FTC Staff fires privacy shot across the bow

While I would like to think “everyone” cares as much about online advertising, behavioral targeting and consumer privacy as I do, my gut says most advertising folks didn’t gallop over to the Federal Trade Commission website to download and pour over the Staff Report on behavioral advertising last Thursday.  Based on that assumption, we’re going to devote a bit of effort to getting the word out because the implications of this report are far greater than may be apparent at first glance.  With this report, and, perhaps more importantly, the two concurring letters from Commissioners Pamela Jones Harbour and Jon Leibowitz, the FTC has fired their warning shot to each of us whose business exists because of online advertising.  The call-to-action starts with the first two words in the title – “self-regulatory”. 

Full disclosure – we’ve built our company on the belief that advertisers own their relationship with consumers, and the information defining that relationship should belong to them, not to some third-party technology company or ad network.  For that reason, I was pretty excited when the FTC explicitly validated our approach to data and behavioral targeting.  Their endorsement of the ‘first-party’ model as “more likely to be consistent with consumer expectations, and less likely to lead to consumer harm, than practices involving the sharing of data with third parties or across multiple websites,” profoundly confirms our position.  But as this warm glow of self-satisfaction waned, and we read further into the report, another message became clear – ignore this report at your own peril.   

To offer some perspective, since the 1990s, the FTC has kept a careful eye on the online advertising space, but has refrained from directly regulating.  They’ve consciously allowed all of us to go about our business and figure out models that bring value to consumers, and revenue to our top line.  The FTC Town Hall early this decade was the impetus for the formation of the Network Advertising Initiative and is as close to imposing regulation that they’ve come.  Now that we’ve developed more sophisticated methods of collecting data and targeting online ads, and a track record that includes the rise of über-data hound Google and the AOL search debacle in 2006, the FTC no longer feels they can stay on the sidelines.  Commissioner Harbour goes so far as to layout a timeline “directing staff to complete, by Summer 2010, a report that evaluates the efficacy of self-regulation in the realm of behavioral advertising.”  To stoke the fires even further, Commissioner Leibowitz warns all of us to keep our promises regarding the use of consumers’ information.  “If they fail to do so – whether first party or third party, online or offline – we will go after them.”  

I’ve been calling for advertisers to actively engage in this process since before I gave a presentation to the FTC’s Town Hall on eHavioral Advertising in November, 2007.  But companies whose business models are dependent upon the development of third-party profiling databases and targeting solutions are likely to not heed the FTC’s call sufficiently to prevent the drafting of regulation or even legislation.  The folks controlling the media budgets must insert themselves by helping to define acceptable practice.  Already, advertisers are struggling to allocate more of their (dwindling) media budgets to online, failing even to keep up with consumer adoption.  (Only 8% of media dollars are flowing online, even though we consume 28% of media from the internet - Forrester Research, January 2008.)  If regulation or legislation is forced down our throats, further impairing a brand’s ability to make the most of every media dollar, we will only see that gap widen.

Next week I’ll be participating in a workshop hosted by the Future of Privacy Forum in Washington D.C.  This will be a great opportunity to learn from some of the leaders in our industry.  Perhaps one of the most encouraging aspects of the event is the fact that some of the largest advertisers in the world are planning to participate.  Perhaps they’re taking “self-regulatory” more seriously this time around.

– Scott Nelson

Display advertising grows - despite rumors to the contrary

Making sense out of today's industry news has become a Jekyll and Hyde experience. One minute we're up, the next we're down. Headlines often speak of doom, when the content is actually good news. For instance, a recent eMarketer article titled "Economy Deals Online Ad Spending a Hit" sounds dismal when, in fact, it predicts the growth of online ad spend in 2009 and beyond. Sure the growth percentages have slowed, but who'd expect double digits in the current economic climate? Display advertising is predicted to grow by 6.6% in 2009, and online as a whole growing 8.9%. Compared to the predicted decline by 4% to 7.8% in US TV ad spending, online display looks downright rosy, so let's not drive nails into her coffin just yet.

Most articles on the death of display seem to focus on one of three culprits -

1. Lack of solid measurement standards
2. Outdated buying and pricing methods (CPM)
3. Irrelevant and bland ads

Many use the term display media synonymously with branding campaigns. Yet banner ads are utilized in every imaginable online scenario except search – CPM, CPC, or CPA. And with the exception of keyword data in Search, most online measurement is dictated by the same three metrics – impressions, clicks, and conversions. Metrics that are admittedly ten years old. What if we come up with some new criteria?

1. Engagement Advertising – This is a way of targeting and measuring media based upon the relationship between the consumer and the brand. What if an advertiser had insight into who was actually seeing their ad, and whether that person was a prospect or existing customer. Online technology is capable of this granularity, and many companies are working to harness it in various ways. Networks use targeting that's based predominantly on aggregated data derived from within their own technologies. The only problem is, you only get it when you buy on their Network. TruEffect's DirectServe™ technology allows advertisers to use the information they already have to find their customers anywhere they buy media on the web.

2. Media evaluation and purchasing based upon the buyer's needs – The traditional way media has been sold hasn't provided advertisers a lot of choice or negotiating power. But what if an advertisers could tell what percentage of eyeballs within a specific media buy were already customers? Could he negotiate a better rate for his acquisition campaign? Or what if that same advertiser could gauge the effectiveness of multiple buys by seeing how much customer overlap there was between them? The possibilities are limitless when an impressions is served based upon an actual relationship, or lack of, between an advertiser and an individual consumer.

3. Relevant messaging – Banner ads are accused of being bland and irrelevant. A recent AdAge article says the current burn out rate for a TV ad is down to only eight showings. If we extrapolate this to the web, my guess is it would be even less. It's safe to say today's consumers, inundated with sensory input, are somewhat desensitized to banner ads. Is it bland creative, or simply an irrelevant message? Search advertising shows us it's the relevance that counts, because nothing's more bland than a three line text ad. If we can hone in on one to one targeting, the technology already exists to micro-target on the fly with custom messages, without the expense of creating hundreds of actual ad variations.

Hard times require innovation and persistence, and yes, advertisers are going to demand better ROI and measurement solutions. At least we can rest assured that technological advances, and smart marketers are already leading the way. And it doesn't appear that display is going away any time soon.

– Layne Salter

How the Internet is saving democracy

This is NOT your father's Presidential campaign. Not even close. If the internet has anything to say about it, the days of bumper sticker mentality and less than factual (OK,mud-slinging) political TV commercials may be over. And it’s not just the fact that presidential hopefuls are spending more advertising dollars online. Yes, McCain and Obama might be neck and neck in the fight for Search supremacy, with McCain reportedly pulling ahead in paid Search by driving 22% of traffic from this source, compared to Obama’s 14%, even though Obama’s spending $5.5 Million on the effort. (How’d you like to be optimizing THOSE search campaigns?)

The real story lies in the power of the sheer number of people engaged in the online political story, coupled with the voluminous and instantaneous mass of information being disseminated via blogs, videos and online news. According to a Business Week article, which cites a Pew Research Center study, 27% of Americans go online at least once a week to do something related to the campaign. This represents approximately half of the number of people who turned out to vote in 2004. Andrew Rasiej, founder of Personal Democracy Forum, a nonpartisan group that tracks political influence and technology, said, "This is the unseen force that didn’t exist. My 81-year-old dad e-mailing Barack Obama's speeches or Jon Stewart's videos to his 50 friends—he's part of this force that's turning citizens into pamphleteers, whether they know it or not." 

The Pew study found that 40% of Americans have gone online to get political news, up from 16% in 2000. 35% of Americans have watched political videos, compared with 13% in 2004. And the real differentiator is that they’re actively doing their own fact-checking – searching out the direct sources of information, rather than simply swallowing pundits' take on events. About 39% have gone online to watch debates and speeches, and read position papers.

So while CNN estimates that $3 billion will be spent on political TV ads in the 2008 election (almost double the amount spent in 2004), I'd say the odds favor a growing number of informed, intelligent voters. Perhaps even a majority of the public coming out to vote? Sounds like democracy to me. Thanks Internet.

– Layne Salter