The TruEffect Blog

A newer, sexier version of P3P?

A start-up called Better Advertising kicks off its public campaign this week to become the reference standard technology for online advertising industry self-regulation.  The technology manifests itself as an icon (the “Power I”) located in the upper-right corner of a participating advertiser’s display ad.  When a consumer mouses over the icon, they're presented with the data being used to perform behavioral targeting in the delivery of the ad, and have the option to opt out of future targeting.  The company says they enable advertisers to be more accountable to consumers.  Basically, it’s a way to expose what data is being used by what advertisers to force some restraint through transparency.

Previous attempts to disclose the use of consumer data for targeting haven’t fared too well.  For example, the Platform for Privacy Preferences project was a noble attempt to force advertisers to state in unequivocal terms how they used consumer data.  Those terms were actually embedded in a “compact policy” facility built into web browsers since 2002.  The organization supporting P3P was not a commercial entity like Better Advertising, and it's been dormant for three years. 

Another attempt, the Network Advertising Initiative, has been more successful, but today's regulatory and legislative circles that work on privacy matters suggest it's insufficient. The NAI is the organization behind the cookie-based opt out, long established as the vehicle for consumers to exert preferences over how their data is used.  But unlike the NAI, Better Advertising will actually provide details about how data is used before providing the opt out choice.

Draft legislation from Congressman Rick Boucher (D-VA), has thrown down the gauntlet to the industry, and FTC Chairman Jon Leibowitz has been rattling his sword at the industry for a year now.  If we collectively fail to act, swift and significant restrictions will be placed on advertisers' ability to leverage consumer information to improve media performance and deliver the most relevant advertising available.  Will the "Power I" get the job done?  A lot of media heavyweights support the effort, so it has as good a chance as any.  Transparency will be key, and the belief within legislative and regulatory circles that consumers will be satisfied with the options available to them. 

– Scott Nelson

Dead internet ideas

Doug Weaver, founder and CEO of Upstream, and frequent speaker at iMedia Summit series gives a great, uncensored look at the truths we tell ourselves in the online ad biz in his presentation on “12 Dead Internet Ideas.” We talk a lot about consumer privacy and "relationship advertising" here at TruEffect, and how internet advertising hasn’t really changed much in 10 years. We should know – we were there in late 20th century, developing technology to serve the first ad. But Weaver, in Steve Jobs keynote fashion, puts it ever so much more eloquently than a PowerPoint ever could.

Weaver’s dead internet idea called "The Right to Target" calls into question the industry’s never ending quest to pull out all the stops on targeting technology, while lulling consumers into complacency around their privacy concerns by ensuring them that they are exchanging their data for really cool candy – like better and more relevant ads that keep the internet free. Weaver says "We think because we can, we assume that we may."

But by downplaying the relevance of context, we just provide more of the same –thousands of meaningless impressions that nobody is clicking on. To understand what will actually reach, and impact, the consumer has been the illusive grail of advertising since Madmen wrote the Brylcreem jingle.

But Weaver cautions that "the landscape we're destroying is the one we'll need to live in, and profit from, for years to come."  Even though it looks as if the "cookie opt-in" clause will not make it into the Boucher bill - for us to "celebrate dodging that bullet is like whistling past the graveyard."  He reminds us that if we think that consumers and government don't decide how it goes, one only has to take a look at how the "Do Not Call Legislation" put phone marketing out of business in 48 hours. 

But, it’s just a presentation, right?

– Layne Salter

Display still healthy - but old approach needs to die

We’ve all seen a trend of positive indicators for the health of online display advertising over the last several months.Kantar Media predicts it will grow 5.0% in 2010, a number which normally would underwhelm, except that it follows a year in which display grew 7.3% while the industry saw overall ad spend drop a whopping 12.3%. Meanwhile, Yahoo! paid $100 million for media newbie Associated Content to bolster its inventory of traffic-generating material, and Facebook surpassed perennial leader Yahoo! to become the top US publisher of display ads on the web. And finally, this morning brought the announcement that GSI Commerce is acquiring specialty retargeting network Fetchback.com.

Display is not only alive and well, but it’s growing.But if display is going to continue to gain share of wallet from other channels, it’s entirely too inefficient. For what they’re worth, click through rates continue to remain below 1.0%. And while view-through has given display a tad more credit for performance, it fails to remove the waste. Digital display advertising is not like print or broadcast – so it’s time to stop simply throwing it out there to see what sticks (clicks).

At TruEffect, we work very hard to identify why our clients’ display campaigns deliver results, or not. If we focused only on the typical dimensions of performance like creative design, audience demographics, page position, interactivity or even copy, we’d miss the biggest part of the story.

Last week, TRA, a research firm devoted primarily to the cable set-top box, underscored our argument. According to President Bill Harvey, the gender and age of viewers has little correlation with the way they respond to ads. Yes, you may have a brand that is skewed heavily towards males with $100K+ incomes, but if the next affluent male you see in your campaign just bought your product, or a competitive product, that inventory is completely wasted. Some data we have assembled from recent campaigns tells the story better than words:

-A recent Telco client conducted an aggressive acquisition display campaign wherein 20% of the media was consumed by existing customers that could not make use of the offer and 42% was consumed by customers that were out-of-market and not eligible to buy.

-Despite frequency capping instructions provided to the publishers, a large direct response advertiser saw 42% of their display inventory consumed by 11.7% of their audience.

-And a large retail client saw 29% of all impressions consumed by users seeing a frequency of 30 ads or more!  (IOW – non-responders.)

These are just examples of why the industry feels that a 1% click-through rate and search-like CPCs are stretch goals. Display ads reach more consumers than any other online channel. If you can find out how to carve away even a small portion of the waste with a few simple techniques, it will easily become your most efficient channel.

– Scott Nelson

But, what do you really think social media is?

In an article today in iMedia Connection, with the provocative title (hey, it got me to click) “Why we need to kill social media”, Rob Key, CEO of Converseon, makes a well thought out argument that “the term 'social media’ itself is stunting the potential of the very force it is trying to describe and, hence, has outlived its usefulness.” Of course, Converseon is a “social media consultancy" so one can infer that the topic is near and dear to their hearts after years of trying to explain the so-called medium to clients.

But what entertained me were the comments. Apparently between the hours of 12:38 pm ET and 5:31 pm ET two warring factions managed to articulately (and somewhat diplomatically) duke it out. Shel Holtz, a consultant who develops social media strategies for companies, innocently started it all with his comment disagreeing with Rob’s point of view. Then Jeff Molander, professor of digital direct marketing at Loyola University’s school of business disagreed with Shel, siding with Rob and claiming that “all digital media is now social.”

Both camps made eloquent arguments. And, they are both right – depending upon the looking glass with which you happen to be currently viewing this complex topic. Is it really “media” from a marketing perspective, or a newly entrenched model so widespread it encompasses all modes of human communication? Like others in the online advertising biz, we at TruEffect have been watching as long held beliefs about consumer awareness are dispelled. Turns out, it's not a commodity to be understood and packaged within any one particular channel.  Those “eyeballs” do not live and function in a vacuum, and cannot be defined solely by their proclivity to type a keyword into Google, visit a particular website, Tweet about tomatoes, or leave lamps in their Overstock shopping cart.

Billions of words have been written on social media in the past few years. And, here I am – adding another 400 or so. But in the words of William Gibson, “The future is not Google-able.”

So, as of 5:31 pm ET, Jeff has had the last word.  I wonder if they left their computer screens and went out to “socialize.” All I know for sure, is that all three gentlemen in question, today, found an appropriate use of social media to further their individual causes. And now, I've done the same.

– Layne Salter

Ten years after

Instead of writing the typical January “how did I do with my predictions” post, I’ve waited until we’re back in the here and now.  Looking ahead, within the context of the progress we’ve made in the first decade of this medium, what we can expect?

February, 2000: Breathing a sigh of relief that we survived the Y2K conversion; a small group of men held a planning summit in Kuala Lumpur for a largely unknown consortium called al-Qaeda; Internet titan AOL had just entered into an agreement to “merge” with Time Warner and redefine the media landscape.  Internet advertising never heard of Google or Facebook, expandables and page peels were percolating in a lab, and the CPM was still king.

February, 2010: Breathing a sigh of relief that we’ve largely avoided a Swine Flu epidemic; airline travel is more time consuming than ever; and Time Warner just completed its spin-off of AOL after a painful marriage. 

A LOT has changed. But unfortunately, not enough.  We’re spending more than ever on interactive media, but the efficiency simply hasn’t scaled with that growth.  And when you look at the technology used today vs. ten years ago, very little has changed.  Sure, we’ve figured out some new economic models to buy and sell consumers’ attention, but the methods of delivery, measurement and targeting are basically the same as they were in 1997. 

Today, when we meet with clients and prospects, the triad of impression-click-conversion still rules decision-making.  Interactive advertisers have very few options other than massaging the same data with techniques such as path-to-conversion and weighted attribution.  The problem isn’t the math, it’s the data.

Ad serving, and soon thereafter bid-optimization, were both successful technologies because of the ability to consolidate both data and workflow.  Consolidating the data was thought to be the only way to effectively deliver meaningful performance.  But as the industry has matured, that couldn’t be further from the truth. 

A consumer’s perception of your brand and the interaction they’ve had with it (and I'm not just talking about purchases or customers – rather, any interaction) drives response more than any other variable.  This is further demonstrated when performing conversion attribution.  A recent study by a leading industry analyst recognized TruEffect™ in a wave study, as providing sophisticated attribution modeling worthy of recognition.  The difference is the data.  Not aggregated or consolidated data.  Discrete data owned and controlled by the advertiser. Data that describes the relationship an individual consumer has with their brand.

It’s this new approach to leveraging consolidated platforms with discrete data sources that will push interactive campaigns to new levels of performance.  Technology won’t be the foil, nor will new forms of content.  Treat each consumer appropriately based on what they’ve told you about themselves and their interest in your products or services.  And do so on an enterprise scale and in real time.  That’s what we can expect to be talking about ten years from now.

– Scott Nelson

Autonomy. Mastery. Purpose.

I just finished watching Daniel Pink’s (@danielpink) lecture on what really motivates people. It’s a packed 18 minutes of YouTube glory, but I want to chat about a few points that really stuck with me.  

•Incentives only work well with mechanical tasks – That’s right, commissions and bonuses mean nothing to people working on abstract tasks and solving problems.  Wow, talk about punching a hole into just about every salesman’s balloon.  When you first think about it, it might seem completely obtuse, flying in the face of our beautiful free-market capitalism.

But after listening to Dan a little longer, it starts to make sense. Adding a little to his lecture, my take is pretty simple.  It’s not just about the money; people need to believe when they spend 8 hours a day, five days a week for decades working on something, that they are working towards a greater cause.  It’s gotta mean something, not just to the worker but to the World. 

• “Management didn’t emanate from nature.  Management is not a tree, it’s a TV… someone invented it, and it doesn’t mean it’s going to work forever.”  This one is sure to make disgruntled employees around the world thrust their fist in the air in defiance of their overlord managers.  But don’t get too carried away because the implications of not being managed may not be evident at first take.

It’s pretty simple – you’re going to have to think for yourself.

Yup, that’s right. No management means you have to figure out the problem, not wait for someone to tell you what to do.  If we’re all honest for a minute, we’ve really gotten comfy with other people making decisions that we are cleared to not care about and f-up. Yikes, a zinger there, but… deep in your soul search, and find it true you will.

•Fedex days – You have 24 hours to work on anything you want.  Only catch, you have to deliver something at the end of those 24 hours and present it to the company.  Maybe a new code, develop a flash game or maybe “get your creative on” a process that sucks right now, it’s totally up to you.  He claims 50% of Google’s innovations come from days like this, where their super geeks are able to let their mind run wild and not be confined by the cage of the everyday.

Next post will be about how this can be applied to a marketing company – agency, technology, advertiser or random guy tweeting allllll the time (uuuhhh… I didn’t mean me!?!?).  Stay tuned, feels like this framework fits well into our industry.  In the meantime, feel free to send across any ideas you may have.

– Brian Murphy

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

Ad Exchanges – Never mind the quality, feel the width

What a great week! Adobe pitches $1.8bn for Omniture, validating the continued convergence of creativity and measurement, and Google launches its new ad exchange, legitimizing this new channel of media buying. Gotta love bright, shiny new things.

Reaction seems to have been fairly mute, given responses to articles such as Robert Hof’s Business Week piece. Or maybe we all just knew it was coming, so we left the streamers and poppers in their box. Given Google’s proximity to Apple, they should learn to create a little surprise, shock, and awe – nothing rocks like a Jobs keynote, followed by a Mossberg ‘here’s why it’s too cool’. . .

But for most, the ad exchange is evolutionary, not revolutionary.  We’ve had new types of buying platforms emerge, from Adbrite’s approach, to Right Media’s model that allows greater flexibility. The hope that Google’s entry will enfranchise the long tail, make this easier ,and thereby create competition appears to be a solid rationale. Just as there was Search before Google, so there was Display before them too.

However the fundamentals are a little different to make Display work with same ease as changing the user interface, or the economics of buying by click. Search works well because there are relatively few moving parts to the puzzle, and we are dealing with a fairly self-selecting bunch. In the funnel of customer purchasing, we are down somewhere between knowing I have a need or interest, and about to take action. If I search “Flights to Cancun” I am either interested in flying to Cancun or a plane-spotter (where’s my anorak?).

Display demands we deal with more numerous levers than simply creating engaging words that snag pre-qualified users. To do Display well, we need to understand oddities such as reach, frequency, message optimization, etc.  We’re also dealing with users in different states within our funnel, where awareness and interest are as important as action and need. However, the table stakes for awareness and interest are a lot higher, and the distance from awareness to action a lot longer. This is one where time is money, and how long or patient the long-tail is, remains to be seen.

Google’s advantage is it knows how to simplify this type of management so it’s not onerous for the user to manage and operationalize. Whether an exchange is the right vehicle for it remains to be seen. It certainly won’t be a boring few months with Microsoft and other players emerging with their competitive solutions.

– Martin Smith

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