Jeff Chester Reports on Digital Media and the Public Interest
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.â€
Joseph T. Plummer. Journal of Advertising Research. June 2007
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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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.
via NMA [sub required]:
Letters: Google fails to answer monopoly concerns
“Google UK MD Dennis Woodside failed to address the concerns of Microsoft and much of the online industry that it’s creating a monopoly within the online ad industry (NMA 19.04.07).
First, it’s no use his referring to the fact that online has only 11% of the overall ad market. That’s irrelevant as we’re only concerned about a monopoly being created within the online ad market.
Second, he says advertisers can choose to place their campaigns elsewhere. But nearly all large newspaper and magazine publishers use DoubleClick ad serving products, so Google will have complete control, or at the very least will be able to see who’s spending what with who down to campaign level.
Also, DoubleClick has at least 50% of the agency third-party ad serving market. Now that Google has acquired this, it can dominate the online display market within the media agency area as well as search.
The key argument is that there aren’t “plenty of opportunities”, be it in online display media or technology, to avoid Google’s spreading tentacles.â€
Phil Nott, sales director, Adrevenue
NMA magazine | Published: 07.06.07
excerpt: “Google expanded its Washington staff to 13, including five lobbyists, and then scored a victory this week with the hiring of its sixth: Johanna Shelton, senior counsel for telecommunications and the Internet to Representative John Dingell. Dingell, a Michigan Democrat, is chairman of the House Energy and Commerce Committee, which oversees media, telephone and Internet issues….The company last week retained outside lobbyist Makan Delrahim, former deputy assistant attorney general in the Justice Department’s antitrust division, to help win approval. Former Republican Senators Dan Coats and Connie Mack, both partners in the Washington law firm King & Spaulding, began lobbying for Google last year, as did the mostly Democratic Podesta Group. Google staffers include Republican lobbyist Jamie Brown, a former Bush aide whose job included lobbying senators on the confirmations of Supreme Court Justices John G. Roberts and Samuel Alito; and Democrat Robert Boorstin, a former speechwriter for Clinton on national security issues.”
via Bloomberg news
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From Mediaweek (excerpt): “Google said that it has reached an agreement to acquire FeedBurner, a Chicago, Ill.-based company that provides a host of RSS feed services for publishers, including the delivery of contextually targeting advertising to RSS readers…Feedburner, launched in 2004, manages thousands of RSS feeds for publishers like Dow Jones as well as dozens of bloggers…Recently, the company launched AdClimate, a product that is designed to make RSS advertising more palatable to mainstream brands by letting them prevent their ads from appearing alongside any objectionable language that appears within an RSS feed…While RSS advertising is still a verdant market, this acquisition also provides Google access to a wealth of information on the habits of RSS users, something that likely made the startup firm that much more attractive to the search giant. In a statement on an official company blog on June 1, officials insisted that Google will protect the privacy of Feedburner users, and instead emphasized the advertising potential of RSS. “…We think we can create opportunities for advertisers to reach their target audiences while maintaining a high quality user experience.â€
Source:”Google Nets RSS Provider FeedBurner.” Mike Shields. Mediaweek. June 1, 2007.
PS: Here’s what Feedburner wrote about AdClimate on April 26, 2007 (excerpt):
Today we announce AdClimate, a new feature of the formidable FeedBurner ad server for blogs and RSS feeds. AdClimate gives marketers and advertisers the power to suppress their ads from being served into content they might deem questionable… In addition to screening a multi-language default list of inappropriate language, advertisers can submit their own list of keywords next to which they don’t want their ad to appear…
In the world of distributed media, brands need to be protected which is why the AdClimate concept has been met with very positive feedback from agency execs across the land.”
And via ClickZ: “The acquisition will give Google access to FeedBurner’s network of 431,171 current publishers to add to its AdSense network…”
Also from Online Media Daily: “FeedBurner has created an effective set of tools,” said Susan Wojcicki, Google’s vice president of product management. In addition to the basic distribution, it offers strong analytics, promotion and monetization capabilities…The deal will give Google AdSense advertisers access to this new inventory… The idea is to integrate FeedBurner publishers deeply into AdSense and to create a highly integrated analytics package tying FeedBurner stats into Google Analytics, Wojcicki said.”
As part of its lobbying effort to secure FTC approval of its dramatic expansion, Google has hired a former Deputy Assistant Attorney-General for the Antitrust Division. Makan Delrahim, who served at the DoJ from 2003-2005, helped oversee the DoJ’s work work with international antitrust agencies. Among his duties was to chair “the Merger Working Group of the International Competition Network, the recently created virtual network of antitrust enforcers to develop better global coordination and cooperation of competition law enforcement.” Mr. Delrahim’s also worked as Chief Counsel for the Senate Judiciary Committee under Sen. Orin Hatch. One assumes Google wants to use Mr. Delrahim’s contacts at the FTC and at the European Commission to head-off what should be serious opposition to its take-over of Doubleclick. According to press reports, the new lobbyist has, of course, no qualms about the deal. Bloomberg reports Mr. Delrahim said that “[U]ltimately this is a very robust, dynamic industry. The combination of the two companies will only help create a more efficient system for the online advertising world.” Mr. Delrahim is now in private practice at Brownstein Hyatt Farber Schreck.
We have reached a crucial transition period for digital communications and commerce in what should be a global democratic era. It’s too convenient a rationalization to claim that because your mission is to “organize the world’s information and make it universally accessible and useful” you can ignore concerns about user data protection, consumer autonomy, competition, and related civil society issues.
As we consider the various data sets Google now has, in the light of its expansion via the Doubleclick acquisition, it’s useful to reflect on a statement from its May 10, 2007 10 Q filing. The key excerpt, in our opinion, is its discussion on “privacy concerns” and its business (my bold): “In addition, as nearly all of our products and services are web based, the amount of data we store for our users on our servers (including personal information) has been increasing.”
As increasingly with Google, more is unsaid about what the real issues are than stated candidly. Here’s the complete section from the SEC filing regarding privacy: “Privacy concerns relating to our technology could damage our reputation and deter current and potential users from using our products and services.
From time to time, concerns have been expressed about whether our products and services compromise the privacy of users and others. Concerns about our practices with regard to the collection, use, disclosure or security of personal information or other privacy-related matters, even if unfounded, could damage our reputation and operating results. While we strive to comply with all applicable data protection laws and regulations, as well as our own posted privacy policies, any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others, which could potentially have an adverse affect on our business.
In addition, as nearly all of our products and services are web based, the amount of data we store for our users on our servers (including personal information) has been increasing. Any systems failure or compromise of our security that results in the release of our users’ data could seriously limit the adoption of our products and services as well as harm our reputation and brand and, therefore, our business. We may also need to expend significant resources to protect against security breaches. The risk that these types of events could seriously harm our business is likely to increase as we expand the number of web based products and services we offer as well as increase the number of countries where we operate.
A large number of legislative proposals pending before the United States Congress, various state legislative bodies and foreign governments concern data protection. In addition, the interpretation and application of data protection laws in Europe and elsewhere are still uncertain and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. If so, in addition to the possibility of fines, this could result in an order requiring that we change our data practices, which could have a material effect on our business. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business. ”
GOOGLE INC. (GOOG) 10-Q/A filed 5/10/2007
We suggest that the Google takeover of Doubleclick, Microsoft’s aQuantive deal, and related acquisitions will have important ramifications to competition and civil society. Powerful business economics will shape the online medium (mobile, PC, IPTV), potentially diminishing content diversity. We are especially concerned about the future of political campaigns, as one’s ability to access voters and inform the public will be determined–as with TV today–but one’s deep pocketbook. So we find this quote from a Wharton economics professor of interest: “Xavier Drèze, a marketing professor at Wharton, suggests that online advertising prices could increase due to better targeting. “The more targeted the ads, the more valuable they are.”
The Wharton piece goes on, citing a recent report by Susquehanna Financial Group analyst Marianne Wolk.
“Behavioral targeting makes inventory available for sale based on the value of a web site’s audience, generally outstripping the value of the content on a page,” Wolk writes. “Behavioral advertising enables marketers to reach beyond keywords and impressions to the audience segments behind them.”
The Wharton article explains that “[]If Wolk’s assessment plays out, advertisers are likely to have a variety of media to spur behavior. For instance, a television ad could elicit an emotional response from a consumer that then prompts him or her to do a search and ultimately make a purchase. The big difference in the brave new world of advertising is that all of these moves would be tracked.
We think this excerpt from Advertising Age [sub. required] on Microsoft’s recent summit for marketers illustrates where search engines are headed (and how it reflects the converging search, rich media, video and display ad markets):
“You’re in a Microsoft Windows’ Live search-results page after querying “Land Rover,” you mouse over an icon next to the sponsored results and suddenly you’re careening into what in another more offline world would be called a glossy print ad or a detailed brochure.
Want to see the fine print? Just scroll in deeper. Want to see what radio station the car’s audio system is tuned to? Zoom in infinitely until you can read the micro call letters on the stereo display. This technology is called Seadragon and will allow advertisers to push tons of extra data and images to searchers, a big improvement over today’s unsophisticated text ads.”
From: “MSN’s Online-Ad Plan: Let the Web Evolve.” Abbey Klaasen. Advertising Age. May 11, 2007
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