Category: European Commission

Microsoft’s Digital Ad Goal: Anticipate…Consumer Behavior Faster than the Speed of Thought

Both Google and Microsoft are in a race to push the boundaries of digital advertising so they can better serve brands and marketers. Microsoft is now again in the spotlight because of its attempt to acquire Yahoo! In November 2006, my group CDD and the USPIRG filed a complaint at the FTC focused on threats to privacy and consumer welfare from digital advertising. We had a special focus on Microsoft and its adCenter work, and have kept an eye on the company every since (along with our watch on Google). Today, Microsoft’s adCenter Lab issued a press release summarizing some of its latest work to expand the capabilities of interactive advertising. Here is an excerpt to ponder:

“We believe the technical advances and intelligence we are creating at adCenter Labs can change the game of online advertising,” said Tarek Najm, technical fellow at Microsoft. “Solutions to today’s challenges must be capable of handling and understanding the complexity of vast amounts of data. To address that challenge, we are developing advertising algorithms that can anticipate and understand consumer behavior faster than the speed of thought, so that we can help advertisers create more efficient and relevant user experiences.”

Ad Age on some of the methods used with online advertising (inc. for Google & Microsoft)

from Abbey Klaassen’s 2.4.08 article on Microsoft’s proposed Yahoo! takeover, entitled “They’ll still be Chasing Google.” [excerpt]: “The merger could also provide advertisers with a broader suite of online ad offerings and allow them to better integrate their search ads with display, video and even in-game units. In theory, at least, the combination of those formats allows marketers to influence consumers’ opinions about a product or brand, create demand for that brand and fulfill or track that demand through a transaction such as a search. It also allows them to measure and attribute the value of the different types of ads consumers encounter on the path to a purchase — for example whether John Doe has seen a display ad, and is then prompted to search for the product advertised.”

The Microsoft/Yahoo! Threats to Privacy Issues Exemplied by Ad Industry Reaction to Deal

Once again, we thank the ad industry for writing our blog (and regulatory!) copy: “”I think what we lose in being able to negotiate with both of them we’ll gain with new opportunities. The biggest opportunity would be to leverage Yahoo’s behavioral targeting across Microsoft’s relationships with Facebook, XBox and Massive, which has the ability to dynamically insert ads in console games.”–Andrea Kerr Redniss, SVP, Optimedia US.”

from: Madison Avenue: We Love MSFT-YHOO. Silicon Valley Insider. Feb. 1, 2008.

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Privacy Threats from a Microsoft-Yahoo! Combine

Just to get the regulatory review ball rolling. Some of the areas we want Congress and the European Commission to investigate (should a deal be consummated).

With a few links to help lead the way!
Microsoft’s AdCenter data collection system.
Microsoft’s online ad laboratory agenda.
Microsoft’s data collection in-game acquisition, Massive.
Microsoft’s 2007 online ad exchange acquisition, AdECN.

Yahoo!s acquisition of online ad exchange, Right Media.
Yahoo!s acquisition of behavioral marketing network, Blue Lithium.
Yahoo!s new online ad system, including Smart Ads.

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The Net’s “Long-Tail”–a Leash Controlled by Two Giants & FTC Bungles Merger Review

Just a few added thoughts on the proposed Microsoft-Yahoo! deal. We think there needs to be real soul-searching by Congress and the FTC on how it addressed the Google/DoubleClick deal and the related spate of new media mergers in 2007. We told both Hill leaders and the FTC that they needed to explore the larger dimensions of this deal–including its impact on the diversity of online publishing (that’s because whomever controls the “monetization” engine of the online ad biz becomes the critical controller). When Microsoft, Yahoo!, Time Warner and the others went on a post GoogleClick shopping spree, we said the FTC should reject these mergers until they had examined the entire online ad market. But the commission failed to do so, in our opinion.

So now as a proposed Yahoo! takeover by Microsoft is considered, one serious concern is that a merger brings with it newly acquired assets that further add to concerns over consolidation and data privacy. The FTC approved without safeguards the $6 billion takeover of aQuantive by Microsoft. The FTC approved without safeguards the takeover by Yahoo! of behavioral targeting ad network Blue Lithium. The FTC approved without safeguards Yahoo!s acquisition of online ad exchange (and data collection system) known as Right Media. There have been other purchases as well by the two companies.

Congress will need to investigate the implications to both competition and consumer privacy: neither the FTC nor DoJ can be trusted to address these concerns. There are also human right issues, given Microsoft’s own work in China. We will be following this deal closely, including examining the implications of a Yahoo!-Microsoft digital combine.

Behavioral Advertising: Targeting “Users Further Down the Purchasing Funnel”

When you can get the online ad industry to write your copy, it makes the work at the FTC and the European Commission so much easier! Here’s an excerpt from a revealing imediaconnection article entitled “Targeting Tips for a Converged Media World.” [Jan. 30, 2008]
“In days past, audience segmentation was based solely on demographic and contextual targeting information, which allowed advertisers to promote their products or services to a group of potential consumers based on their gender, age and other fairly unsophisticated, generic characteristics. In the online world, consumers now essentially determine their own segmentation based on individualized habits, determined through behavioral targeting…. Behavioral targeting…is also an additional way for marketers to target users further down the purchasing funnel and helps marketers better predict how users will act… Marketers will be able to track individuals or user clusters across their favorite TV shows, travel habits through their car’s GPS or obtain their video game proficiency through in-game advertising… As users age and change their personal preferences, behavioral targeting can change with users’ habits and compensate accordingly…With marketers able to include interactive components into traditional media outlets while infusing behavioral knowledge and targeting, advertisers must create messages that can be delivered across all platforms. For example, we could see mobile ads that use interactive elements if marketers know the behavioral cluster exhibits a preference for interactive media.”

Google’s Privacy PR: Here’s What They Sent to Reporters. But real safeguards are required, especially in the GoogleClick era

Yesterday a reporter sent me the following email sent from the Google PR shop. Instead of calling for responsible policy safeguards to protect consumers, Google is distributing booklets, videos and other self-help materials (in other words, let the user beware). It’s not surprising that Google is on a PR effort to quell the growing calls for real privacy protection. But they are not living up to their own ideals if they fail to really be more candid about the conflicts they have with a business model entirely based on data collection and targeted marketing.

Here’s the email:

“From: “Adam Kovacevich”
To: undisclosed-recipients:;
Sent: Monday, January 28, 2008 12:23:11 PM (GMT-0500) Auto-Detected
Subject: Happy Data Privacy Day

Okay, okay, so you can be forgiven if you didn’t realize today was Data Privacy Day here in dear old North America. At Google we’ve been doing a lot lately to educate our users about our privacy policies (particularly the launch of our Google Privacy YouTube channel ), but we figured today was a good day to unleash a few more education efforts. To wit:

• A brand spankin’ new video on the YouTube channel explaining how cookies work: http://youtube.com/user/googleprivacy
• A new booklet ( http://64.233.179.110/blog_resources/google_privacy_booklet.pdf ) that gives our users an in-depth look at our privacy practices and approach. This should be a particular good resource for you journos too.
• We’ve co-sponsored the creation of educational materials ( https://www.privacyassociation.org/images/stories/pdfs/DPD08_TeenPrivacyOnline_slides.pdf ) on teen online privacy for parents and educators.
• Our senior privacy counsel Jane Horvath is today joining legal scholars, privacy professionals, and government officials from Europe and the U.S. at an international data privacy conference being held at Duke University in Durham, North Carolina.

For more on all of this, check out our blog post:

http://googleblog.blogspot.com/2008/01/celebrating-data-privacy.html

or background from the Search Engine Land blog:

http://searchengineland.com/080128-095148.php

Adam

—
Adam Kovacevich | Sr. Manager, Global Communications and Public Affairs | Google
1101 New York Ave NW | Second Floor | Washington, DC 20005 “

EC’s Questionnaire 1 on Google/DoubleClick merger

Following press reports of a new questionnaire sent by the European Commission Competition Directorate, we thought we should place here what we believe was the initial survey sent. Eventually, Congress and others will need to investigate how well the FTC conducted its own review of the deal. Frankly, several parties–including commissioners–spoke of their concern that the agency’s loss in Whole Foods and other cases made it more difficult to confront the Google takeover of DoubleClick case. This is an ongoing story. But for now, here’s the questionnaire:

Case COMP/M.4731 – Google/DoubleClick

Questionnaire to Customers 1
Deadline for Reply: 18/10/2007

Google Inc. (“Google”) notified to the European Commission its intention to acquire control of DoubleClick Inc. (“DoubleClick”) by way of purchase of shares. The two parties to the merger Google and DoubleClick are hereinafter collectively referred to as “the parties”. Both are active in the online advertising industry.
Pursuant to the Merger Regulation , the Commission is required to assess the operation’s possible effects on competition within the common market. To this end, the Commission needs to gather relevant information from the parties to the operation as well as from other market operators, such as competitors and customers.
Therefore, your replies to the following questions as well as any other opinion on the effects of the operation you might consider relevant, are of key importance to the investigation. We should also be grateful for any additional remarks you may wish to make relating to the proposed concentration. If you consider that a particular question is not relevant, please indicate this and explain why. Please reply to this questionnaire on behalf of all companies belonging to your group.
When you reply to this questionnaire, please provide TWO versions of your reply: (i) a CONFIDENTIAL version; and (ii) a NON CONFIDENTIAL version which excludes business secrets or other confidential information.

In accordance with the Merger Regulation and in the light of the deadlines which the Commission must respect following the notification of the case, the Commission wishes to have your reply by 18/10/2007.
If you have questions of administrative nature or wish to receive this questionnaire in electronic format, please contact Ms Györgyi Nyiregyhazi (Tel.: +32 2 29 85327, e-mail: gyorgyi.nyiregyhazi@ec.europa.eu) clearly indicating the reference: M.4731 Googkle/DoubleClick – Questionnaire to Publishers.

If you have any further questions on the substance of this request, please contact Mr Bertrand Jéhanno (Tel.: +32 2 29 91048, e-mail: bertrand.jehanno@ec.europa.eu), Mr Carl-Christian Buhr (Tel: +32 2 29 86 033, e-mail: carl-christian.buhr@ec.europa.eu), Mr Flavien Christ (Tel: +32 2 29 90931, e-mail: flavien.christ@ec.europa.eu,), Mr. Peter Eberl (Tel: +32 2 29 60783, e-mail peter.eberl@ec.europa.eu), Ms Vera Pozzato (Tel: +32 2 29 93012, e-mail: vera.pozzato@ec.europa.eu).

Thank you for your help and co-operation.

A. General questions

Please give the contact details of the person responsible for replying to this questionnaire
Company:
Contact person: Phone:
Position: Fax:
E-mail:
Address:
Country:
Company web-site:

Please give a brief description of your organisation, of its size and of your activities. If your company is a subsidiary please indicate the group to which it belongs to.
Description of your organisation:

Please indicate the countries within the EEA in which you are active as online publisher (website owner):

B. The provision of display ad serving, management and reporting infrastructure technology
The provision of display ad serving, management and reporting infrastructure technology could be distinguished according to whether services are provided to advertisers (and agencies) or to publishers (including self-provisioning).
The Commission understands that advertisers create advertisements and upload them onto the advertiser-side ad server. Once a website publisher has agreed with the advertiser (directly or through an ad network or ad exchange) to run the ads on its website, the publisher enters the campaign terms of the ad (location, price, targeting criteria) into the publisher-side ad server. There is then a relationship between the publisher-side ad server – which records the “impression” generated by the user’s visit of the web site and determines the advertiser to call – and the advertiser-side ad server – which chooses the appropriate ad to deliver on the web page. The relationship between the two servers also enables the advertiser to obtain information relating to the user’s online behaviour in the context of the placed ad via browser cookie technology.
1. What is the value of the online advertising revenues generated by your website(s) in Europe?

2. Through which channels do you sell advertising space on your website/s?
Direct sales: YES/NO
And/or
Brokers, intermediaries, ad networks, ad exchanges: YES/NO

3. If you use both the direct channel and the indirect channel (ad network/ad exchange), please indicate (broadly) what % of your online revenues originate from the direct channel.

4. Do you foresee that direct sales of online advertising will decrease in the future in favour of intermediation through ad networks and ad exchanges?

5. Do you foresee that numerous ad networks and ad exchanges will be able to survive in the near future (2-3 years)? Please briefly elaborate.

6. If you use a 3rd party ad serving supplier (e.g. DoubleClick, OpenAdstream, AdManager…): if the price of 3rd ad serving services was to raise by 5-10% (all else equal) would you switch part of your inventory to an integrated network like Google AdSense?

7. Do you consider the cost of switching ad serving technology supplier to be high / moderate / low?

8. If you use more than one supplier of such technology/services, please describe briefly the advantages and disadvantages of such a solution compared to a situation in which only one supplier is used. Please also indicate why your company chose to use more than one supplier for this technology/services.

9. If you only have one supplier for this particular product/service, do you consider it possible/usefull using another supplier for a comparable product/service at the same time? If yes, please name these other possible suppliers. If not, please explain the reason why you choose single homing (e.g. exclusivity clauses, cost saving, quality of service …).

10. Please name other providers of display ad serving, management and reporting infrastructure technology that you consider as competitors of your provider/s at EEA level.

If you sell advertising space through direct sales

11. Which provider/s of display ad serving, management and reporting infrastructure technology is directly supplying your company?

12. Have you ever experienced a switch of supplier for this particular product/service? YES/NO
If yes, please:
explain the reason why you made such experience:
provide the name of your former supplier:
the name of the replacing supplier:
the cost caused by the switch:
the time it took to complete the switch

13. What is the % represented by the cost of ad serving in the total revenue generated by your advertising space? Please provide broad estimates.

If you sell advertising space through brokers/intermediaries/ad networks/ad exchanges
14. Which provider/s of display ad serving, management and reporting infrastructure technology is/are indirectly supplying your company?

15. Have you ever experienced a switch of supplier for this particular product/service? YES/NO
If yes, please:
Explain the reason why you had to switch:
provide the name of your former supplier:
the name of the replacing supplier:
the cost caused by the switch:
the time it took to complete the switch:

16. If you use the indirect channel, what is (a) the % represented by the cost of ad serving in the total revenue generated by your advertising space; (b) the % represented by intermediation fees in the total revenue generated by your advertising space? Please provide broad estimates.

17. If you multi-home, why have you become member of several ad networks?

C. Effects of the merger

18. According to you, is DoubleClick’s large publisher customer base an advantage for the quality of services offered by DoubleClick to publishers? In other words, is there a direct benefit to a publisher to use an ad serving supplier with a larger publisher base? If so, please briefly describe the benefit(s) (e.g. does the ad serving service improves the monetization of inventory if the ad server processes the data on user behaviour accross numerous publishers?).

19. If Google and DoubleClick were to merge, do you consider that integrated networks like Yahoo! (with RightMedia) and Microsoft (with aQuantive) would be able to provide strong competition to Google/DoubleClick? Please briefly elaborate.

20. Would you consider open source ad serving software as a viable alternative to commercial ad serving software? If so would you consider it suitable, in conjunction with a standalone ad network, as an alternative to Google’s AdSense? Please explain.

21. What are, in your view, the main effects of the proposed operation on:
a) your company?
b) the markets for (display and text) ad serving, management and reporting services for publishers?
c) the prices of (display and text) ad serving, management and reporting services for publishers?
Please give reasons for your answers.

22. Do you have any other comments that you wish to bring to the Commission’s attention?

Thank you for your assistance!
Please do not forget to add a non-confidential version to your response.

As a brief companion piece to Ken Auletta’s article on Google in the current issue of The New Yorker magazine (The Search Party), this may be of interest. Google’s goal is ultimately to be of service to advertisers and marketers; that’s how it makes 99% of its revenue. There’s a disturbing lack of candor from Google about the conflicts they have. One the one hand, they are (getting PR for) promoting responsible practices such as energy sustainability. But on the other hand, they are using all the company’s incredible resources to push the interactive marketing and selling envelope, including the sales of automobiles. Here’s excerpts from Google advertising sales job openings related to the car and truck industry:

1. The role: Industry Head, Automotive – London

As a Google Automotive Industry Head, you’ll be working with those who produce, market or sell products or services related to cars, trucks, boats or other transportation vehicles. This includes original equipment manufactures, third-party websites, dealers and after-market parts and accessories companies. This is a highly consultative position that reports directly to the Automotive Industry Leader. You’ll be responsible for presenting the team’s strategy and managing a team of experts to increase sales on a national level. Focusing on building strong relationships at the highest possible level, your goal is to help your automotive clients get as many of their marketable assets online in an affordable and measurable way. You’ll combine exceptional Automotive knowledge, deep industry and marketing agency relationships, compelling communication/presentation skills and inspired prospecting/analytical abilities to develop and close new business as well as grow existing business.

Responsibilities:

  • Develop the vision and manage the sales/account strategies that will fully unlock the potential in the Automotive sector.
  • Build and maintain relationships with senior-level clients, industry-specific direct advertisers and relevant agency contacts.
  • Educate the Automotive industry and evangelise Google, particularly at targeted events, conferences and media opportunities.
  • Understand the roles of and manage a team consisting of Industry Managers, Account Managers, Account Strategists and Sales Planners – providing team development, guidance, feedback and motivation.
  • Develop a deep understanding of the business needs of Automotive advertisers and insights into consumer behaviour.

Requirements:

  • High-calibre BA/BSc degree (MBA preferred).
  • Proven record of strategic development of major Automotive manufacturers.
  • Substantial experience in advertising sales/marketing and sales management.
  • Established relationships and presence within the Automotive industry.
  • Broad knowledge of sales and management, and proven team management experience.
  • Ability to influence product development through interaction with relevant colleagues, peers and direct reports.
  • A deep understanding of the industry’s issues, a vision for its growth, and a commitment to advance Google’s forward-looking strategies within the marketplace..

    • 2. The role: Account Strategist, Automotive Vertical (Detroit)

    As a Google Automotive Account Strategist, you’ll work primarily with large automotive clients and agencies. Most of these companies operate multiple sales channels, work with several manufacturing partners and always look to increase sales volume and efficiency. This is a creative position that calls for a strong affinity for the craft of language and a fondness for consulting closely with the auto clients. You’ll distill the essence of our clients’ products and services into targeted keyword lists and text advertisements that connect our advertisers with customers. You will also collaborate with our Sales and Operations team to work closely with clients to maximize the performance of these highly targeted ads.

    3. [based in Santa Monica, CA]  The role: Account Strategist, Automotive Vertical.   As a Google Automotive Account Strategist, you’ll work primarily with large automotive clients and agencies. Most of these companies operate multiple sales channels, work with several manufacturing partners and always look to increase sales volume and efficiency. This is a creative position that calls for a strong affinity for the craft of language and a fondness for consulting closely with the auto clients. You’ll distill the essence of our clients’ products and services into targeted keyword lists and text advertisements that connect our advertisers with customers. You will also collaborate with our Sales and Operations team to work closely with clients to maximize the performance of these highly targeted ads…

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IAB and its Proposed Privacy Guidelines: Will Fail to Effectively Protect the Public

So relieved where some in the interactive ad business when they read the FTC’s staff proposed privacy principles released last month that commentators described the reaction as the industry had “dodged a bullet” and “breathed a sigh of relief” [“FTC Online Ad Targeting Guidelines: Industry Breathes A Sigh Of Relief”].

Now Paidcontent describes plans underway by the IAB to offer “privacy standards,” via a “15-member working group,” that includes Time Warner, Microsoft, Yahoo! and others [“Online Ad Industry Groups Take Steps To Self-Police”]. According to the January 4, 2008 article by David Kaplan “[T]he IAB task force will address issues of consumer notice and choice, in terms of deciding the context for selecting opt-in or opt-out.”

IAB lobbyist Mike Zaneis says in the article that “[T]he level of appropriate choice needs to be flexible…consumer regulation will prove to be more efficient and powerful than government regulation.” Zaneis considers the campaign against Facebook that resulted in some modest–and ineffective in my view–changes in its data collection system as an illustration of “consumer regulation.” It’s clear that the IAB is incapable of developing a policy that will protect consumers. Anyone who understands the contemporary dimensions of the interactive marketing industry–and has the public welfare in mind–should recognize what is required. The IAB will not be taken seriously if it can’t deliver the truth (it’s so far failed to protect the public from troubling online lead generation practices, for example. See our November 1, 2007 FTC filing). Yahoo!, Microsoft, Time Warner and others on the committee should lead–and not follow–advice from the IAB that will lead to prolonged political conflict–in Europe, in Congress, at the FTC and FCC, and with the incoming Administration.

Real governmental rules are required–including measures that effectively protect every consumer and also address vulnerable groups and sensitive marketing issues. The IAB’s old school Beltway mentality will likely give online advertisers a bad name. Where are the ad industry’s thoughtful leaders who can help steer the IAB in an honorable direction?