FTC and Hill: Remember Doubleclick Acquiring Klipmart Last Year!

One of our messages to policymakers is that there has already been significant consolidation in the online targeted ad market. Once Google swallows Doubleclick, what little hope for any meaningful competition will disappear. So we think it’s useful to remind regulators about Doubleclick’s take-over—just last year–of online ad firm Klipmart. As clickz reported in June 2006:

DoubleClick has acquired video ad specialist Klipmart, and will combine the company’s technology and services with its own DART Motif rich media platform.

The deal, for which terms were not disclosed, brings DoubleClick a step closer to legitimacy as an end-to-end solution for rich media advertising, particularly since Klipmart ranks among the more sophisticated providers of video production services, an area where Motif is historically weak.

Meanwhile, Klipmart should benefit from DoubleClick’s democratic appeal to marketers, who for budgetary reasons may previously have shied away from the video vendor’s reputation for high-end deployments.

With the acquisition, DoubleClick now employs 100 in rich media. In its announcement, the company said it will soon launch an “Innovation Lab” focused on taking video to multiple digital platforms…

Klipmart is known for creating smooth user experiences for in-stream and in-page video ads, and for providing good customer service to agencies and advertisers. The company pioneered full-screen expansion of video ads, and publishes all video in multiple codecs to maximize the addressable audience.

“Klipmart has a superb reputation of creative video innovation and service,” said David Rosenblatt, CEO of DoubleClick, in a statement. “Combining these strengths with DoubleClick’s industry leadership, insight and global ad management platform will truly accelerate industry innovation in digital video and emerging advertising formats.”

Google Buys More Lobbyists and Influence

excerpt from Washington Post: “…Google went on a hiring spree and now has 12 lobbyists and lobbying-related professionals on staff here — more than double the size of the standard corporate lobbying office — and is continuing to add people. Its in-house talent includes such veteran government insiders as communications director Robert Boorstin, a speechwriter and foreign policy adviser in the Clinton White House, and Jamie Brown, a White House lobbyist under President Bush.

Google has also hired some heavyweight outside help to lobby, including the Podesta Group, led by Democrat Anthony T. Podesta, and the law firm King & Spalding, led by former Republican senators Daniel R. Coats (Ind.) and Connie Mack (Fla.). To help steer through regulatory approvals in its proposed acquisition of DoubleClick, an online advertising company, Google recently retained the law firm Brownstein Hyatt Farber Schreck.”

from: “Learning from Microsoft’s Error, Microsoft Builds a Lobbying Engine. Jeffrey H. Birnbaum. June 20, 2007

PS: And that’s before Johanna Shelton, former aide to Rep. John Dingell and FCC Commissioner Adelstein, starts working for Google on Monday!

Online Marketing & Advertising– “the core of creating online demand.”

Excerpt from: Editorial: The Internet Revolution

“…Beyond all this is a basic truth—online marketing and advertising have moved from the periphery to the core of creating brand demand. It is also now at the core of the research industry and at the core of how business gets done today.”

Joseph T. Plummer. Journal of Advertising Research. June 2007

From SEC S-1. June 12, 2007 (excerpt):
“The interactive nature of digital media on the Internet enables businesses to access a wealth of user information that was virtually unavailable through offline audience measurement and marketing intelligence techniques. Digital media provide businesses with the opportunity to measure detailed user activity, such as how users interact with Web page content; to assess how users respond to online marketing, such as which online ads users click on to pursue a transaction; and to analyze how audiences and user behavior compare across various Web sites. This type of detailed user data can be combined with demographic, attitudinal and transactional information to develop a deeper understanding of user behavior, attributes and preferences… Our products and solutions offer our customers deep insights into consumer behavior, including objective, detailed information regarding usage of their online properties and those of their competitors, coupled with information on consumer demographic characteristics, attitudes, lifestyles and offline behavior.

Our digital marketing intelligence platform is comprised of proprietary databases and a computational infrastructure that measures, analyzes and reports on digital activity. The foundation of our platform is data collected from our comScore panel of more than two million Internet users worldwide who have granted us explicit permission to confidentially measure their Internet usage patterns, online and certain offline buying behavior and other activities. By applying advanced statistical methodologies to our panel data, we project consumers’ online behavior for the total online population and a wide variety of user categories…

Unlike offline media such as television and radio, which generally only allow for the passive measurement of relative audience size, digital media enable businesses to actively understand the link between digital content, advertising and user behavior.”

PS:  The S-1 also notes that “[O]ur database infrastructure currently captures approximately 182 million Web pages and 4.5 billion URL records each week from our global Internet panel, resulting in over 28 terabytes of data collected by our platform each month.”

Google Loves Our Data! Let Us Count the Ways…

As admirers go, Google is definitely of the secret variety. From its highly guarded formula for generating search results, to the shroud of mystery that surrounds its plans “to organize the world’s information and make it universally accessible and useful,” to a complex privacy policy that is spread over 20 separate pages on the Web, the search giant invariably raises more questions than it answers. “Don’t be evil,” reads the company’s motto, but apparently it’s OK to be evasive. “It’s somewhat of a paradox,” financial analyst Jordan Rohan told the Los Angeles Times last year. “Google’s whole purpose is to make information easier to access—unless, of course, you want to know information about Google.” As the Times added, “Google’s unwillingness to disclose little more than the legally required basics of how it does what it does—and where it’s headed—has left advertisers puzzled, partners confused, competitors nervous and investors frustrated.”

Make no mistake, however, this secret admirer really does care about us. Why else would Google give us so much—lightning-fast search results, interactive maps, email service (with plenty of storage space to archive our communications), online calendars, word processing programs, spreadsheet applications, and more—all free of charge?

The answer, of course, is that Google actually gets plenty in return, in the form of massive amounts of data that it compiles on consumer interests, tastes, and behavior. For all of its variations on the search engine theme—from Google News to Google Video to Google Product Search—the company remains above all else an advertising engine, one whose $500 stock price and $700 billion revenues are testaments of its success.

So how does Google love us? Let us count the ways, with a sampling of the kinds of user data to which Google currently has access:
1. The keywords and phrases we use in the searches we perform.
2. The time and date of these searches.
3. Our Internet IP address and browser configuration.
4. The websites we visit as a result of these searches.
5. The amount of time we spend on those sites before returning to Google.
6. Our patterns of navigation as we travel away from and back to Google.
7. The addresses and directions we enter in Google Maps.
8. The messages we send and receive via Gmail or Google Talk.
9. The schedules we create on Google Calendar.
10. The documents we create and edit in Google Docs.
11. The figures we enter in Google Spreadsheets.
12. The sources we subscribe to in Google Reader.
13. The accounts we create and the information we post to Google’s far-flung Web properties, including Blogger, Orkut, and YouTube.
14. The activities we carry out using a variety of Google-branded “helper” applications, including Google Desktop, Google Toolbar, Google Checkout, Google Web History, and Picasa.

“Google has been aggressive about collecting information about its users’ activities online,” observed Adam Cohen in the New York Times. “It stores their search data, possibly forever…. Its e-mail system, Gmail, scans the content of e-mail messages so relevant ads can be posted. Google’s written privacy policy reserves the right to pool what it learns about users from their searches with what it learns from their e-mail messages, though Google says it won’t do so. It also warns that users’ personal information may be processed on computers located in other countries.”

The lynchpin in Google’s vast data-dragnet is the small text file placed on the user’s hard drive, known as a “cookie,” stamped with a unique user ID and passing information back and forth between one’s PC and a particular website. “Google was the first search engine to use a cookie that expires in 2038,” explains Google-Watch.org. “…This cookie places a unique ID number on your hard disk. Anytime you land on a Google page, you get a Google cookie if you don’t already have one. If you have one, they read and record your unique ID number.”

As if Google (with its billions of searches and millions of users it serves every month) doesn’t already know enough about us, its proposed $3.1 billion acquisition of DoubleClick will bring online consumer surveillance to an entirely new level. DoubleClick might not be the household name that Google is, but in its field—online advertising—it is perhaps even more dominant, reaching an estimated 80 to 85 percent of all Web surfers with some 720 billion ads a year. Its consumer analysis, profiling, and behavioral targeting technologies, carried out on a vast network of affiliated websites, are extraordinarily thorough. “Without a doubt, DoubleClick’s historical data is very valuable,” says Jupiter Research analyst Emily Riley. “Every time you’re online, every page visit, and every ad you see comes with the possibility that a cookie is placed on your machine. DoubleClick has all the data.”

And soon Google will have access to all of that data as well. DoubleClick’s DART system, for example, will provide Google with a complete set of applications—and data access—to allow it to extend its more linear search advertising business into the third-party and rich-media advertising market. Another of DoubleClick’s key technologies, called Motif, is used to track user interaction with video content. As the search and online video markets converge, the ability to identify and assess user response to interactive media environments will be central to online advertising. Google’s interest in such technology was no doubt fueled by its $1.65 billion acquisition of YouTube in 2006. Google is now in the process of “data-tagging” all of the videos on YouTube in order to make the site a much more effective platform for advertisers.

A combined Google and DoubleClick, clearly, will be a potent force in the online universe. As the New York State Consumer Protection Board recently declared, the Google/DoubleClick “merger presents significant privacy implications. The combination of DoubleClick’s Internet surfing history generated through consumers’ pattern of clicking on specific advertisements, coupled with Google’s database of consumers’ past Internet searches, will result in the creation of ‘super-profiles,’ which will make up the world’s single largest electronic repository of personally and non-personally identifiable information.”

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Examples of Your Online Behaviors Tracked

excerpt: “What is an online behavior?

Every single action that a user takes on the site determines user’s behavior. Following are some of the different elements that determine the behaviors of users online

1. Every page view
2. Number of minutes on a page
3. Path taken
4. Links/Ads clicked
5. Scrolling on the page
6. Referring Sites
7. Each second in the visit
8. Each visit
9. Total Visits
10. Total Page views
11. each Product viewed
12. Each cart abandoned
13. Each step of the funnel completed/abandoned
and the list goes on……”

“Calculating Behaviors on your site.” November 19, 2006

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Bancroft Family & Dow Jones Staff Beware:

Does the Bancroft family really want the Journal to be part of the show-biz style media business? That’s what will happen to the fine editorial staff at WSJ and the news service once the Bancrofts’ take Mr. Murdoch’s $5 B (okay, if they take GE/NBC’s and Microsoft’s money almost the same thing will happen. But at least Fox News won’t be the editorial model). Here’s a chilling excerpt about Mr. Murdoch and News Corp.’s digital data-mining and targeting operation over at MySpace and Fox Interactive (via Forbes):

“Soon MySpace’s ad salesmen will use software that sifts through its members’ profile pages and sorts them based on the often piercingly personal information they pin up on their pages. Then they’ll compile ‘buckets’ of its members and offer them up to advertisers. Looking for married men who live in the U.S. and own dogs? Single women with college degrees who drive pickup trucks? For a fee, MySpace will deliver you directly to their cyber doorstep.”

imediaconnection says “[C]onsider what this means. If Murdoch’s vision for the digital ad world of tomorrow can be reconciled with his power plays of today, he can revolutionize the way marketers approach me when I sit down to watch the next Super Bowl… think how much Anheuser-Busch might pay Murdoch to know that I prefer an import like Tiger beer (another of their fine brews). Now, imagine a media buy where Murdoch can serve up everything the beer-maker wants to know about me and the rest of the people on MySpace while we all tune in to watch the big game. I’ll get the Tiger ad, my neighbor will get the Bud ad, Anheuser-Busch will get a huge ROI, and Murdoch will make money every step of the way. “

Murdoch’s News Corp. will eventually have the Fox Interactive model shape its entire editorial landscape. Such a system will see the Journal’s vaunted news operation reduced to being considered sticky content for online marketers. Surely, the Bancroft family can broker a deal that truly preserves editorial integrity for this key news resource.

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$1 Billion to Be Spent on Behavioral Targeting in ’08; $3.8 B by ‘11: eMarketer

Driving the big online data deals (Google/Doubleclick; Microsoft/aQuantive) is the power of behavioral targeting (BT) to profile, track, and target consumers online. More major advertisers are embracing BT, adding such data collection strategies to their arsenal of demographic, psychographic, technical, contextual, and search targeting weapons. Here’s how a new (and recommended) eMarketer report defines BT (all quotes with our italics):
“…behavioral targeting segments the audience based on observed and measured information. Whether behavioral targeting is done on a single site, a large portal or across an ad network, the behavior that publishers, advertisers and providers typically identify includes what pages or sites a user visits, what content is viewed and what subjects are searched for. These data are combined with the time, length and frequency of visits.
Behavioral information can also be merged with visitor data—such as age, gender and ZIP code—derived from site registration or Web publisher surveys to assign individuals to target groups even more accurately.”

eMarketer’s report cites Tacoda’s Dave Morgan who says “what behavioral targeting means at a deeper level is serving ads to individuals based on their previous browsing or purchasing history.” Morgan also is quoted saying (in light of a potential GoogleClick): “Here’s why Google has to play it safe [with behavioral targeting], because they’re not transparent about what data they keep and what they do with it—and they expect people to rely on how they keep their best interests in mind.”

One of our concerns about Google and Doubleclick is the integration of search and BT. So, eMarketer’s analysis is useful for the FTC and other policymakers: “The Holy Grail for online ad targeting is a combination of the behavioral technique on top of other methods, especially search… the combination will be popular: 55% of search engine advertisers would pay a premium of 11% or more for behavioral projections to help target paid search advertising…”

The report suggests that such a melding of BT and search is in its “testing” stage. We believe it is likely further along that that, with Microsoft’s adLab and other efforts working full time to expand data collection and targeting for online advertisers. Coming soon, is BT tied to the deliver of video programming online. As we explained to the FTC and others, you have to understand online advertising—and all the mergers—in the context of an online ad system combining search and rich media (video) marketing.

eMarketer also reports that behaviorally targeting is “shifting away from single sites and onto advertising networks” (citing Advertising.com’s 2007 Online Publisher Survey). That’s another reason why the FTC must act soon. No time like the review of GoogleClick (once an agency is selected for Microsft/aQuantive, we will send a similar message about that deal. Btw, we think Yahoo! and WPP’s deals need to be examined as well).

Souce: Behavioral Targeting: Advertising Gets Personal. eMarketer. June 2007


Another Ad Industry Exec on Google & Doubleclick

excerpt: “DoubleClick, which has access to user behavior across huge portions of the Internet, could allow Google to create a still more precise picture of its users — and deliver still more targeted, and more expensive (but also more effective) advertising.

If the assumptions here are correct, then we’re looking at an attempt on Google’s part to create highly precise profiles of millions of people — and that’s a privacy dilemma.”

from: “Getting Comfortable with Less Privacy.” Mark Simon. Search Insider. June 4, 2007

[the author goes on to suggest that such data collection and targeted advertising will ultimately benefit users via a “better free Internet,” so the privacy trade-off is worth such profiling and collection]

Privacy Int’l: Google Rep May Have Engaged in “Smear” Campaign

Privacy International, the respected global NGO working on a broad range of privacy issues, sent a letter to Google CEO Eric Schmidt on June 10, 2007. A Google representative allegedly contacted at least two journalists suggesting that Privacy International had a conflict of interest in how it determined its new rankings on consumer privacy (Google came out at the bottom of the list). This incident, if true, underscores our assessment of Google at the moment. It’s zealous desire to dramatically expand its online advertising business (which generates all of its profits) is contributing to a corporate culture that is blind to issues related to privacy. There’s a balance here, I suggest, where individuals are guaranteed their rights and digital commerce can simultaneously grow. But Google must become a leader in this area. If it is dragged digitally kicking and screaming down the privacy path, it will lose support in the marketplace. The time for real corporate leadership is now. Egos and ambition are no excuse for not engaging in serious corporate and civic responsibility.