Month: November 2007

EC Second Phase Investigation of Google & DoubleClick: Good for Consumers, Competition and Privacy

Today’s announcement by the Directorate for Competition (DG Comp) underscores that the EC recognizes the serious consequences of the proposed Google takeover of DoubleClick. Competitors, consumer groups, and privacy advocates have provided sufficient information to the commission to warrant this relatively rare phase two inquiry. Google is quickly becoming the key digital gatekeeper for the online publishing and advertising marketplace. At stake here is more than just the skyrocketing Google share price, the convenience of our online searches, or even the current state of online advertising competition. The online marketing system is at the core of the dramatic changes transforming global communications–from broadband PC, to mobile, eventually even to television. If we are to have a more democratic and diverse digital marketplace of ideas and commerce, there must be meaningful competition and consumer protection in the online ad sector. This means Google should be prohibited from buying DoubleClick. Or, that at least meaningful safeguards are imposed that limit Google’s ability to leverage DoubleClick’s vast treasure trove of consumer data and its business relationships with many of the world’s largest companies.

Consumers need to be assured that they won’t be unfairly treated in terms of pricing and choice when buying online; advertisers will need protections to ensure that online marketing remains both affordable and competitive, especially when using Google. Privacy must be considered as well, with appropriate safeguards enacted

IAB creates new post: "SVP, Thought Leadership and Marketing."

As the IAB ramps up its political operation to defend the interactive marketing industry from consumer-friendly privacy safeguards, it has created a new senior position. The SVP for Thought Leadership and Marketing is… “to help drive the growth of interactive advertising through enhanced communications with marketers, agencies, and others about the power of interactive media to reach and influence consumers.” In another words, a seasoned PR hand. David Doty is now in that position; he came from Booz Allen Hamilton where he was Director of Corporate Branding and Creative Services.”

But what IAB requires is “thought leadership” that recognizes that interactive marketing can’t run a-muck. Consumer protections are required, as well as a socially responsible approach to digital advertising in a global environment.

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Facebook’s chief revenue officer’s pitch to advertisers: We’ve created “the most sophisticated and accurate targeting system available on the web today.”

What companies such as Facebook and MySpace say to their marketing clients and prospects is one thing. To users and members (and regulators), especially about protecting privacy, it’s another story. That’s one reason why we hope everyone will review this video from Facebook’s chief revenue officer Owen Van Natta presentation at a U.K. marketing conference held November 7, 2007. Van Natta explained that the new Facebook marketing system was designed to help marketers reach “people that influence people…the next generation of advertising is going to tap into trusted referrals in a way that has never has been done before.” Using the language of marketers, Van Natta pointed to the 25 million individuals daily on Facebook: “that’s a lot of reach and frequency.” “We’re going to spread your message virally,” he told the Internet Advertising Bureau UK crowd. You can “fan” your brand, he assured them. Facebook would enable them to tap into the “power of the influencer.”

Van Natta also discussed the test they had done of the new Beacon and related Facebook marketing system. Calling Facebook’s advertising approach a form of `social distribution,’ he said that “this is going to create some of the most effective advertising that marketers have ever seen…Facebook social ads are like trusted referrals from your friends.” It’s “the most sophisticated and accurate targeting system available on the web today.” The chief revenue officer also trumpeted the “targeting and insights” capabilities of the new approach: “nothing like this has ever been available before…incredibly power insights…actionable information.”

Van Natta also discussed the benefits for advertisers from the Beacon system, including how the use of the marketed products by Facebook members was tied in to their “mini-feed.” He discussed the new service called “Pulse,” which informs advertisers how many people are talking about their brand on Facebook. That’s “incredibly valuable,” Van Natta noted. He said they knew exactly who was getting the ad, and that advertisers would receive “actionable social data.”

We hope all Facebook users and regulators–here and in the EU especially–will watch this video. Facebook users have no idea they are now part of a viral marketing scheme, where information that is being sent to them is shaped by the kinds of arrangements made with advertisers. The idea that the information shared with marketers is “non-personally identifiable,” as he claims, is absurd. They know your interests, where you live, your circle of friends, etc. There is an important place for commerce in communications. But there need to be rules to ensure that what goes on is fair. And privacy must be protected.

Cable’s 70/70 Rule & the Public Interest: Programming diversity is what should matter

Our friends and colleagues have worked for years to ensure that the monopolistic-run cable television industry be required to operate in a more competitive and–dare I say–democratic manner. So Bravo! to Media Access Project, Consumers Union, Consumer Federation of America, and everyone else. But the focus of any FCC rules changes should be on how to ensure real programmatic diversity, including shows and channels owned and managed by women and people of color. If all we get is an a la carte system where one can merely pick and choose from the narrow content choices now offered us, then we will not be making real progress. How one should measure success of any cable TV regulatory change should be on what we see on the screen. That’s more important, in my opinion, than a focus on lowering cable rates (or offering new options for cable consumers to block programs and channels they find undesirable).

So as advocates and others consider policy changes, here’s what I suggest we consider. What rules are required so that there are new, unaffiliated, international, national, and local news channels available on cable systems? How can we foster independent programs and channels owned and operated by African-Americans, Hispanics/Latinos, and other groups? What needs to be done to ensure that five to seven years from now, there’s channels reflecting the rich cultural and artistic experience of the country? And, finally, what rules can be enacted that will aid these new media outlets to become sustainable, cross-platform (online, mobile, TV) services? That will require they have access to the full-functionality of cable–and not be placed in some digital backwater.

Huffington Post and its Prius Ads: Paid by the Photo

Arianna Huffington was on a keynote plenary panel this week at the “adTech” interactive marketing conference in New York. In a discussion of video advertising online, Ms. Huffington, according to this post of the event, “gave the example of a program where she and readers at the Huffington Post shared photos of themselves and their Prius’. Huffington Post “got paid” for the program and Toyota gained substantial exposure from a community of brand enthusiasts.”

As more companies pay for a variety of “viral” and other marketing promotions, it will be important for full disclosure and transparency. We hope the Huf Post will lead the way in this regard.

We hope that users of Facebook (as well as MySpace) express opposition to the new aggressive data collection and targeted marketing system. Facebook is supposed to be an community where you can express who you are, and friends freely communicate. But it’s being transformed into a zone where advertisers with the biggest budgets can harvest your data, take advantage of your network of friends, and deliver targeted marketing and branding commercials. Facebook’s new approach combines behavioral targeting with viral marketing. That system threatens everyone’s privacy. Facebook is thumbing its nose at its users as well. This forced data collection and `target to your profile and friend’s’ scheme is, claims Facebook’s “chief privacy officer” Chris Kelly, actually good for you. “We saw a real opportunity here to democratize advertising,” he said [via Online Media Daily. Sign-up required]. “People will not be able to opt out of these social ads or turn them off, at least for now, unless they stop revealing information about themselves on Facebook.” That’s according to Techcrunch, which blogged live from Facebook’s advertising event.

Is this a democratic form of expression, or a Kremlin like digital gulag?

Facebook’s users are viewed as merely grist for a big data mining mill designed to sell targeted ads. Here’s how Zuckerberg described the new approach to advertisers (also from the same Techcrunch story): “Let’s talk about targeting. With Facebook you will be able to select exactly the audience you want to reach, and we will only show your ads to them. We know exactly what gender someone is, what activities they are interested in. their location, country, city or town, interests, gender,” work history, political views…Advertisers can build their own Facebook pages and design them any way they like: “We have photos, videos, discussion boards, any Flash content you want to bring to your page, plus any application a third party developer has made.”

Zdnet reported that Facebook Ads will enable “businesses to connect with users and target advertising to the exact audiences they want…Facebook will provide metrics to its marketers that include activity, fan demographics and ad performance so businesses can adjust targeting and content.”

This is a real violation of trust. No one is saying Facebook can’t make money. But it needs to be be done in a way that respects the privacy and values of its members. The time to express displeasure is now.

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American Antitrust Institute warns FTC about Google and Doubleclick merger

The AAI sent a report entitled “Google Acquisition of Doubleclick: Antitrust Implications” to the FTC today (November 6, 2007). They noted that “[P]ublicly available information suggests that Google’s acquisition of DoubleClick, which is presently being considered by the Federal Trade Commission and European Commission, raises serious competitive issues under several different antitrust theories. In this white paper, we present some background and brief analysis of the principal competitive considerations under U.S. antitrust law.”

Here’s are some key excerpts (our italics):


“The integration of search, contextual, and display advertising, even if it offers efficiency benefits, may have exclusionary effects if advertisers using rival search engines or advertiser tools cannot replicate the benefits of such integration. For example, post-merger, advertisers using DART for Advertisers or other DART advertiser tools may be unable to get the same quality of access to data and reporting on their search or other campaigns with non-Google search engines or ad networks as they can with Google search or AdSense. Moreover, advertisers that use non-DART advertiser tools may be unable to get the same quality of access to data and reporting on their Google search or AdSense campaigns that is available to advertisers using DART’s advertiser tools. In these cases, Google’s dominant position in search (and contextual) advertising will be further entrenched, and DoubleClick’s leading position in advertiser tools will be cemented. As a result, the lessening of competition in the search market and advertiser tools market may outweigh whatever efficiency benefit may result from integration…Based on the information presented here, AAI believes there is a good argument that Google and DoubleClick are horizontal competitors in two relevant markets. The first is the market for distributing online advertising space of third party (non-search) web sites, where Google’s AdSense is the market leader. The second is the market for publisher ad serving tools, where DoubleClick’s DART for Publishers is the dominant product. While the competition between Google and DoubleClick in these markets may be more potential than actual, the two companies are perhaps uniquely positioned to capture significant market share in each other’s markets. If the evidence confirms that these markets are concentrated and that entry is otherwise difficult, as appears to be the case, then the merger presents a relatively straightforward case for challenge under the horizontal and non-horizontal merger guidelines. We see little in the way of merger specific efficiencies that would offset the loss of competition…If foreclosure were the only issue, it might be resolved by placing conditions on the merger, even though there are costs involved in enforcing a regulatory decree. But unless the horizontal concerns are rebutted, AAI believes that the prudent course is for the FTC to block the merger.”

Social Network Spying Machines

As we await the announcement form both MySpace and Facebook about their respective expanded profiling and and ad targeting plans, here’s a quote to ponder via this Reuters story (our emphasis): “MySpace said more than 50 advertisers have joined its HyperTargeting program, which mines the information on the social network’s member pages to determine their main interests and what kind of commercial messages they would respond to.

“It’s looking at what they say, what they do and what they say they do,” said Adam Bain, executive vice president of product and technology at Fox Interactive Media, the parent of MySpace within Rupert Murdoch’s News Corp.”

Read this, via Adweek. 11/5/07: “Analysts and agency executives say the moves to uncover what a News Corp. executive once called the “digital gold” of user-interest data and social connections could herald the evolution of behavioral targeting as the greatest advance in Internet advertising since Google perfected keyword-targeted search ads seven years ago.

“It changes everything,” said Michael Barrett, chief revenue officer at Fox Interactive Media, the News Corp. unit that includes MySpace. “Every form of targeting has been trying to get to what that individual is thinking about, passionate about and interested in. It defines the next generation of targeting.”

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Memo to the online ad industry: come clean with FTC and public. Show some social responsibility

One of the most shocking aspects of the FTC’s two-day “town hall” on online marketing was the failure of the industry to be candid. They didn’t want to provide the FTC–and more importantly, the public–with information about how the business models they’ve developed are designed to tap into our personal data and use them at will without our real consent (and meaningful legal protection for consumers). There is real absence of social responsibility coming from the major companies and trade groups. What we heard from the IAB and DMA repeatedly during the event, in response to calls to protect consumers’ privacy rights, was that the “free Internet” would die without advertising. Such scare tactics reflect a narrow and self-serving mentality about the role of the Internet. `It’s our toy, brought to you by the following sponsors,’ is what they claim. But, our political and social culture as a democracy transcends such a simplistic analysis. A variety of public, nonprofit and commercial roles are needed to help ensure that the Internet and other digital media create a vibrant democratic culture of participation, equity, public health and–yes–economic growth. Such an intellectual failure and self-serving perspective underscores why this is an important public interest issue.

The U.S. requires the development of a legal framework which protects our privacy in an era where all our actions are fodder for corporate and governmental collection and use. We need to ensure that online marketing treats consumers fairly. There are special groups–and concerns–where business as they want it should not happen. The new CDD/PIRG amended complaint filed Thursday is just one of a number of things we will do to advance the public interest in the digital marketing and data collection era.

Let me also point to a very important article by the noted Peter Matthiessen in the current issue of The New York Review of Books. “Alaska: Big Oil and the Whales” is a chilling essay on what the demand for oil is doing to the native people, wildlife, and the land. So much destruction as we wantonly plunder for more oil and gas (including the use “of powerful [seismic] airguns” that “shoot sound waves through the sea floor (causing disruption to the “animal habitats and whale migrations”). Matthiessen also writes that: “Like most coastal Inupiat communities, Point Hope… is faced with the melting of the permafrost under the tundra and the erosion of the coasts; because of Arctic warming, the sea ice is forming too late in the year to suppress the waves that batter the shores in the fierce autumn storms. Shishmaref and Kivalina villages in the Point Hope region have been fatally undercut by storm erosion and must soon be abandoned; their inhabitants are likely to become the first “climate refugees” from global warming in the United States, and others may soon follow… The Eskimo people surely sense that the ground of their ancient culture is eroding on every side and even from beneath them.”

I am not against advertising. But we need to make all the marketing processes underlying interactive advertising visible, transparent, and accountable. I asked one panel during the FTC Town Hall focused on “disclosure” why they couldn’t tell consumers what they told their clients: how their interactive marketing techniques are designed to change user behavior (including encouraging people to spend more money). Not one person answered.

It’s time to go beyond our narrow self-interests, and work together to help make (or try to save) a world worthy for our children and our successors.

UK trade magazine reports on Google’s “sheer dominance.”

key excerpts from New Media Age, 11/1/07. “NMA Report – Competition.” Greg Brooks. Sub. required:
“One of the biggest problems facing search engines is Google’s sheer dominance of the sector. How have the latest moves from Yahoo! and Microsoft affected this?

Google’s domination of the UK paid-search market has gone unbroken since AdWords burst onto the scene in 2000. Advertisers would like nothing better than to see some healthy competition for their search budgets. But six months since Yahoo! introduced Panama, and over a year since Microsoft launched AdCenter in the UK, Google’s grip is tighter than ever…
“Google’s lead in terms of volume continues to grow, as the latest statistics from Hitwise show (see graph). Agencies say it’s the only must-have for clients…

The emergence of Panama is a strong indication that a competitive market is driving improvements to relevancy and forecasting. But it remains to be seen if anyone can challenge Google’s position,” says Michael Stroud, head of online marketing at Lloyds TSB…

Daniel Kerzner, regional director for north-west Europe at Starwood Hotels, adds, “Google remains a solid, reliable volume driver for us. Its dominance is a potential threat to business, however, if it continues to exploit its lone position in the marketplace”…

…the figures don’t make a pretty picture for Google’s rivals. Hitwise data for September 2007 shows that Google handled 85.2% of all searches in the month, with Yahoo! on 4.91% combined, Microsoft own-brand search commanding 3.95% of search, and Ask.com down to 3.55%…

“AdCenter has tried to leapfrog Google with more targeting features to drive efficiency, but has left basics like attracting more customers behind,” says Paul Bongers, head of paid search at BT, which uses Zed to plan and buy its search campaigns. “You can have the greatest search engine in the world, but if the customers aren’t there it won’t matter…
So far the new features haven’t enabled Yahoo! and MSN to gain on Google, which has actually increased its dominance of UK searches