Online Ad and Data Collection Watch

My group has launched a new project to keep the public better informed about the latest threats to our privacy. Click here to visit Online AdWatch. It will regularly highlight new developments in the interactive ad marketplace across the PC, mobile, and digital TV platforms. Send me your favorite examples of technologies, applications and market strategies that should be included.

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Why Didn’t LULAC’s Wilkes Disclose

Yesterday, LULAC’s Brent Wilkes wrote an op-ed in the San Jose Mercury News claiming that network neutrality safeguards “could inadvertently lead to a significant widening of the digital divide by slowing the penetration of advanced broadband technologies into Hispanic and other under-served minority communities.” Wilkes is the national executive director of the League of United Latin American Citizens.

Wilkes failed to disclose that LULAC has funding from both Comcast and AT&T, two of the biggest opponents of net neutrality. He should have told the editors about such a conflict of interest and had it prominently included in his op-ed. His position is bad public policy for those LULAC serves. Ironically, it is the very special interests Wilkes defends (Comcast, AT&T, etc.) that are opposed to meaningful policies that would deal with the digital divide. Network neutrality and universal broadband service for all go hand-in-hand. The LULAC board needs to examine its conflict of interest policy to make sure that whenever an official makes a statement, and there is funding from a related vested interest, it is publicly acknowledged.

See LULAC/Comcast release

See LULAC/AT&T Foundation release

From: 2007 LULAC National Legislative Awards Gala

Ford Motor Company

Comcast Corporation
General Motors Corporation
Univision Communications Inc.
Verizon Communications Inc.
Yum! Brands Inc.

American Airlines
Bell South
The Coca-Cola Company
Coors Brewing Company
Miller Brewing Company
PepsiCo, Inc.
The Procter & Gamble Company
Tyson Foods, Inc.

Burger King Corporation
Exxon Mobil
Home Box Office
Nielsen Media Research
Shell Oil Company
State Farm Insurance Companies

Rolls-Royce Corporation

Data Collection, Interactive Marketing and Digital Redlining: Beware of those that want to “Screen” you out

We believe the rapidly evolving set of online technologies designed to track, profile and target us online, via PC and mobile networks, requires meaningful consumer protection safeguards. One emerging issue is how marketers, advertisers and others may use online tracking technologies, such as behavioral targeting, to “screen” out consumers they consider “undesirable.” In another words, engage in a form of digital redlining. Marketers are now discussing how to use the knowledge they have about each of us to avoid what they consider to be unprofitable customers (such as those that use coupons or demand lower prices). “Audience screening,” as marketers are calling some of their newer interactive ad techniques, permit companies to simply bypass marketing to consumers who don’t fit in to their view of what may be profitable. The CEO of Best Buy termed such customers “devils” [sub. may be required] in a 2004 Wall Street Journal story. As the president of one marketing firm just explained in his article “Using BT to Dodge the Undesirable,” [I]f we know a lot about our least profitable (or even unprofitable) customers, how long before we use that information to develop profiles that help us skip over the deal-seekers and tire kickers? …Conceivably, an online electronics retailer could profile its customers in a number of different ways to identify the devils. Logfile, site analytics and customer purchase history data could easily provide information on which customers repeatedly redeem coupons and promotional codes featured in deal-seeker newsletters like GotApex? or We could also index profitability against purchase history for every customer in a retail database, or look to external resources to see where the devils might be coming from. A few relatively simple algorithms could easily limit exposure to unprofitable customers.”

Other technologies are also available to help companies screen us out. For example, the web marketing firm X 1’s “progressive optimization engine” [POE] enables companies to “make actionable decisions from massive amounts of complex interacting data…POE uses a wide variety of data (anonymous geo-demographic info, end-user behavior, client-provided customer data, third-party data, etc.) to profile end users and to track anonymously their online behavior and responsiveness.” As X 1’s CEO explained last summer, “If you combine the best attributes of behavioral targeting with a number of different technologies including progressive optimization and the more advanced audience profiling engines you can accomplish what we call audience screening. Audience screening allows the advertiser to identify the audience represented from an impression on a network or a portal and determine if that audience member is more or less likely to act in response to an advertisement than the general audience. If the audience member is regarded as highly desirable, then the ads are exposed. If the audience member is not deemed highly desirable, then they are not exposed to the ad and the next sequential audience member is evaluated for desirability and match to the potential customer base for the advertiser.”

So, you ask: what’s the harm? I just won’t see an ad and can go about my business online. But we all know it’s more complicated than that. As we are classified and as our profiles are shared online, too many people will know about us. They will know as well what others think they know about us—such as if we are considered a “devil.” Some of us may be allowed to see valuable editorial content—even important news—because we are considered a valuable demographic target. Whole classes of people could be placed on an undesirable list—think of those Americans struggling to just make it economically and can’t readily afford the e-commerce lifestyle. Decisions about online targeting and segmentation practices can’t be permitted to be solely in the hands of marketers and the ad lobby. There is a role for public policy—now. We hope State Attorney’s General, Congress, consumer advocates and the FTC will take notice.

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Yahoo!’s Deal with the Newspaper Industry: Papers should come clean about the data they will now collect/share and our privacy

We are troubled, as are many, about the crisis occurring within the U.S. daily newspaper industry. The lay-offs, cut backs, and other problems besetting such distinguished papers as the Los Angeles Times, San Jose Mercury News, Philadelphia Inquirer, and too many others, requires the attention of policy makers and civic leaders. We believe a principal cause for the current problem are publishers and newspaper holding companies whose first interest is squeezing out maximum revenue returns—for themselves and shareholders. Newspapers can make a reasonable profit and support serious journalism. But when they are seen as just another vehicle designed to generate lots of cash, the defenders of the First Amendment have been replaced by white-collar criminals. It’s time for new federal laws that would enable newspapers to be operated without regard to maximizing shareholder return.

We also know we are in a key transition period for all media. That’s why we should publicly examine all the major deals shaping our future information landscape—to determine how well they will serve the public interest [Yes. We think that’s more important than just making money from the deals]. So, when William Dean Stapleton, CEO of MediaNewsGroup, says in a joint statement that the new partnership with Yahoo! and 176 newspapers is “transformational”–it requires a closer look. Some of the biggest names in the news business—Belo, Cox, Hearst, Scripps and MediaNews—have now hitched their digital wagons to Yahoo! Papers such as the San Francisco Chronicle, San Jose Mercury News, and Dallas Morning News are now a part of what is called the “most comprehensive advertising network in the online industry.” A major facet of the deal, notes the release, is for the papers to “[U]se Yahoo!’s search monetization functionality on newspapers Web sites, such as Web search, downloads of the Yahoo! toolbar and sponsored search.”

We recognize that newspapers must boldly work to secure new digital revenues. But in doing so, they must be responsible. That includes explaining carefully to every reader and user the kind of personal and other data Yahoo! is now able to collect and financially harvest. Readers/users need to know how Yahoo! and its newspaper partners will “target” them. When Yahoo! acquired rich media ad firm AdInterax last month, they noted that “Rich media technology enables marketers to create more compelling and interactive advertising units online using sight, sound and motion to deliver a message to target consumers. Yahoo! plans to further integrate rich media capabilities into its current leading offerings by developing a self-service model for marketers based on the AdInterax platform. This new rich media solution will enable advertisers and agencies to create and run rich media campaigns coupled with other Yahoo! capabilities including behavioral targeting, geo-targeting, demo-targeting, and dayparting.” The release also noted that “the AdInterax tracking and reporting module tracks traditional metrics including impressions, clicks, and reach and frequency, in addition to other key branding and direct marketing data.”

Newspapers should be protecting the privacy of the public—from both the excesses of government as well as commercial interests. Journalistic-related companies should make deals with online marketers such as Google and Yahoo! which place the privacy interests of readers/users first. We suggest that the editors from the papers now working with Yahoo! commission stories that will explain the deal in terms of what data is being collected and how it will be used. Then, the papers should run editorials calling on Congress to pass meaningful privacy safeguards on electronic data gathering. But—if they did that—wouldn’t it now threaten the very deal they just made? We will be tracking this story.

PS: We also want to see the same privacy-related disclosure from the 50 papers now involved with Google, via a deal announced earlier this month. They include the New York Times and Washington Post.

Digital Robber Barons Say Humbug to the Public Interest: Jerry Yang of Yahoo! and Bill Gates

On Wednesday, Mr. Yang dismissed the need for public policy in the U.S. to address the digital divide. As reported by Communications Daily, Yang told the Tech Net Innovation Summit that `the market will address the digital divide via creation of very inexpensive PCs and cellphones for poor people.’ [Tech Chiefs Slam Visa Rules, Communications Regulation Framework: Digital Divide `Myth.’ Com Daily, 11/16/06. Subscription required]. Yet just six years ago, Yang remarked, “Access to computers and the Internet are becoming increasingly unbalanced, with information haves pulling away from the have-nots.” If Mr. Yang’s solution to ensuring equitable broadband access in the U.S. is cheaper hardware, it doesn’t reflect well on his understanding of the relationship between democratic participation and broadband communications in the digital era. It’s time that the U.S. developed new policies designed to ensure that all low-income Americans have free access to digital communications. We shouldn’t just have one set of folks with full access to broadband over PCs, mobile devices, and Internet Protocol TV’s. Universal service policy in the U.S. should mean that everyone who wants to is online. If not, there will be millions of Americans who won’t be able to participate in the civic life of the country. Mr. Yang did suggest that in a few other countries “ a more proactive set of rules may be necessary” to address such concerns. Perhaps Mr. Yang and Yahoo! aren’t interested in low-income Americans because they don’t have the income to be suitable revenue targets for the company’s well-honed interactive advertising machine.

Bill Gates also makes an appearance this week for another inclusion in the public interest digital policy hall of shame. Gates, speaking at the same summit as Yang, told Charlie Rose that much of U.S. telecommunications regulation “actually holds us back.” He specifically pointed a finger at the 1996 Telecommunications Act rules requiring monopoly providers to open their networks to competitors. As for the U.S. lag in broadband penetration, it was reported that Gates noted that as `the Internet continues to absorb TV and landline voice, broadband penetration will improve.’ [Gates Touches on Broadband Policy, EU Antitrust, IP in China. Com Daily, 11/17/06]. That a boy, Bill. Look the other way with your foundation hat on addressing the health needs of the developing world. Meanwhile, it’s steely-eyed business monopoly hardball when it comes to public interest telecom policy in the EU and U.S.

Finally, the same issue of Communications Daily (sorry to be a one-source Jeffrey today!) tells us that incoming House Commerce Committee chair John Dingell has “hired 2 of his former staffers who were working in the private sector.” Gregg Rothschild will be chief counsel; Dennis Fitzgibbons the chief of staff. These two folks have been working as a Verizon VP of federal government relations and as a director of public policy for DaimlerChrysler, respectively. While we appreciate that the duo wished to return to public service, their current occupation as corporate lobbyists doesn’t bode that well for the public interest.

Online Ad Biz–State of Denial

We’ve been away from this column working on a variety of projects related to educating the public about the dangers lurking in the digital advertising system. Online data collection, profiling and one to one targeted interactive marketing across all platforms–mobile, digital TV and PC–is (sadly) the defining characteristic of our broadband era. Increasingly, such marketing schemes will use purposefully immersive interactive media content designed to engage all of us to embrace a variety of marketer-desired behaviors (the online ad industry touts its ability to use this technology to “convert” us. But it’s about buying and branding–not anything ethical or spiritual). CDD and US PIRG filed a complaint at the FTC last week urging the agency to launch an investigation and issue needed consumer safeguards. Our privacy and more is at risk. (Our complaint, which is a good overview of what’s going on, was also intended to provide the otherwise reluctant regulators at the FTC a little reality counter-programming at their Tech-ade event). The interactive ad system that has emerged for digital marketing in the U.S. is indefensible, no matter how its supporters rationalize it. In addition to working with the FTC, we expect that the new Congress will take the issue up next year. Meanwhile, we urge our readers to look at the complaint–and then come back to this column for updates.

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