Google and WPP Fund Neuromarketing Research for Digital Ads: Ethical Issues and the Need for Policymaker Scrutiny [with an update on the grants!]

The Wall Street Journal and other publications report that Google and ad giant WPP will announce today the $4.6 million grants it will award for academic research designed to “improve understanding and practices in online marketing, and to better understand the relationship between online and offline media.” Among the research efforts given funds are projects that will “analyze internet users’ surfing habits to determine their thinking styles, such as whether they are most influenced by verbal or visual messages or if they are more holistic or analytical, and how to tailor ads accordingly” and an “analysis into how online ads effect blood flow to different areas of the brain. This research would seek to show the role that emotions play in decision making.”   Academics from MIT, Stanford, and Harvard will receive funds, among others. (And for those of us concerned about the role online advertising and data collection is playing in China–and impacts human rights and environmental sustainability–one of the new grants will fund “how Chinese web users respond to different online-ad formats, such as display and search ads”).

As we will tell the European Commission at the end of the month, at a workshop they have organized to discuss interactive advertising and consumer protection, the evolving role of neuromarketing with online advertising raises a number of troubling concerns–and should trigger a serious policy review.   We have not yet seen a final list of the grantees.  But Google should be funding independent research that will honestly explore the impact and ethics of online marketing.  They should be ensuring that the ethical issues of online marketing–such as the concerns raised by their new behavioural profiling and targeting system–receive a honest scholarly review.

The growing controversy over the role pharmaceutical companies are playing with scholarly research on drugs, we think, has implications here.  We believe all the academic institutions receiving these grants must vet them to ensure they truly address the real impact online ad techniques have on individuals and society.

Update:  Google & WPP made the academic research announcement–eleven grants awarded.  Here are some to ponder–and raise questions:

*  “Targeting Ads to Match Individual Cognitive Styles: A Market Test”; Glen Urban, Professor, MIT Sloan School of Management;

*  “How do consumers determine what is relevant? A psychometric and neuroscientific study of online search and advertising effectiveness”; Antoine Bechara, Professor of Psychology and Neuroscience, Department of Psychology/Brain & Creativity Institute, University of Southern California and Martin Reimann, Fellow, Department of Psychology/Brain & Creativity, University of Southern California;

*“Unpuzzling the Synergy of Display and Search Advertising:Insights from Data Mining of Chinese Internet Users”; Hairong Li, Department of Advertising, Public Relations, and Retailing, Michigan State University and Shuguang Zhao, Media Survey Lab, Tsinghua University;

*”Are Brand Attitudes Contagious? Consumer Response to Organic Search Trends”; Donna L. Hoffman, Professor, A. Gary Anderson Graduate School of Management, University of California Riverside and Thomas P. Novak, A. Gary Anderson Graduate School of Management, University of California Riverside;

*“Marketing on the Map: Visual Search and Consumer Decision Making”; Nicolas Lurie, Assistant Professor of Marketing, College of Management, Georgia Institute of Technology, College of Management and Sam Ransbotham, Assistant Professor of Information Systems, Carroll School of Management, Boston College.

Why Google Can’t Say a Word that Starts With “P”—Privacy

The senior execs and DC lobbying team at Google really have a major problem addressing one of the company’s gravest problems–its lack of leadership protecting consumer/citizen privacy. While Google claims to reporters and others it’s been proactively strengthening its privacy policies, most of the changes have come as a result of pressure from policymakers and privacy advocates.

This week, Google released a booklet which “spelled out…2009 policy priorities” for the new Administration and Congress, including several Internet related issues. The booklet’s release coincided with a speech Google CEO Eric Schmidt gave at the New America Foundation in Washington, D.C. Missing from the booklet’s agenda was any discussion of privacy or the role and structure of online advertising (You would never know, for example, that Google was just forced by the Department of Justice’s antitrust division to drop its proposed deal with leading rival Yahoo!).

Google should be playing a leadership role supporting the enactment of serious privacy rights for the public–including “opt-in,” real transparency, user control, limits on retention, etc. If Google believes its golden digital goose will be baked once consumers better understand and control how they are being profiled and targeted, they should examine how it defines corporate social responsibility. But Google’s current approach—we can’t admit we are collecting your data for interactive marketing and cannot even say the word privacy in public-– will ultimately have consequences for Google’s future–including its share price.

Google’s new funding program for Academics: $ for studies on “Brand Development,” Click Generation” and “for moving traditional video spots from broadcast to broadband”

The advertising industry is engaged in a growing research effort to push the boundaries of marketing. It wishes, for example, to reach deeply into our unconscious mind in order to generate a range of behavioral responses. Marketers are exploring how the new tools of digital advertising can influence consumer emotions.

For example, Google is now engaged in consumer neuroscience research to make its YouTube ads more effective. But Google wants more academic help so it can improve its digital marketing prowess. So Google and global ad giant WPP have joined forces to create “a new research program to improve understanding and practices in online marketing, and to better understand the relationship between online and offline media.” The program will be run by a trio of scholars, including Google’s own Hal Varian, Professor John Quelch, senior associate dean of Harvard Business School (who is a a non-executive director of WPP), and Professor Glen Urban, former dean of the Sloan School of Management at the Massachusetts Institute of Technology. Varian told DM News that “We want to encourage more research about how online and offline media work together to influence consumer choices. We think that such research will contribute to more effective and more measurable advertising performance.” DM News also reported that Mark Read, CEO of WPP Digital and WPP’s director of strategy explained that “[T]he industry, our clients and our companies will benefit from the application of some of the world’s finest academic research minds into how online media influences consumers.”

Don’t expect, by the way, any grants to be awarded that examine the ethical dimensions of interactive marketing; or new threats to personal privacy and autonomy; the implications of Google’s growing global control over online ad revenues on publishing; or the negative environmental and social consequences of promoting a digital marketing system which could lead to over-consumption.

Here are some of the research questions Google hopes will draw academics into its program:

    • How does a brand establish a framework for assessing how much should be spent online? How much advertising should be directed at brand development versus specific click generation?…
    • How do you set digital advertising budgets and tactics when in intensively competitive product categories?…
    • What are good guidelines for moving traditional video spots from broadcast to broadband?
    • What is the causal relationship between brand health and search success? And what is the link between search and sales? How does search contribute to word of mouth recommendation?
    • How can banner ads be more effective?
    • How do you model the consumer response to digital advertising in social networks or mobile media?
    • What do we know and what more do we need to know about on-line audiences?
    • How can advertisers be welcome in social networks?
    • Recipients will be invited to attend a conference in Fall 2009 (Sept/Oct) where they can share their preliminary findings.

The Financial Crisis, Debt, Consumer Society, Digital Advertising & a new Consumer Protection Policy Agenda

Reading a review by John Cassidy on the insightful new book by George Soros [New York Review of Books], it’s evident that we must also address our overall consumer culture. Too easy credit, deregulation, and the promotion of a `boom,’ never gloom’ ethos has contributed to the global economic mess. It’s clearly time we shift our priorities, so that spending and consumption are placed in a healthier balance. That’s why the emerging generation of interactive advertising and marketing technologies should be on a new proactive consumer protection policy agenda.

Our communications system around the world is in the midst of a crucial transition. Digital media–broadband video, social networks, mobile content–are ushering in a new set of content services. Most of new media is fueled by the forces of interactive advertising. The messages will be flowing non-stop to promote products and services. But such a new “media and marketing ecosystem,” as advertisers have termed it, must have reasonable regulatory safeguards. Digital advertising requires online privacy and other relevant consumer protection policies. We should not permit highly targeted and more precise marketing messages to permeate our lives, unless consumers/citizens are firmly in control.

Digital marketing communications promoting behaviors of consuming need to be transparent, understandable by the average person, and created in an above-board way (so the brands working on neuromarketing and even behavioral engagement strategies better take notice). The ad industry bears some responsibility here for what has happened economically. We all do–for either doing too little or not enough. But this is an important time for serious reflection to help put our lives–and the planet–in healthier balance. That’s why action is required by the next Congress and states. Here’s an excerpt from the review of the new George Soros book:

“As described by Soros, the “super-bubble” developed over the past quarter-century and is the result of three underlying trends: globalization, credit expansion, and deregulation. By globalization, he means not just expansion of trade in goods and services, and the rise of China and India, but the US’s emergence as the world’s biggest debtor. In the past couple of years, he reminds us, the United States has been running a current account deficit of more than 6 percent of GDP—a level usually associated with a developing country about to suffer a foreign exchange crisis…In 1980, the total amount of credit market debt outstanding in the United States was roughly the same as the GDP: by 2007, it had risen to about 350 percent of GDP. The bundling of residential mortgages into widely traded securities—”securitization”—played a significant role in this transformation, but so did increased federal lending resulting from large-scale budget deficits, the securitization of credit card debt and auto loans, and an expansion in corporate debt issuance.”

The IAB (US) “mobilizes” to Fight Against Consumer Protections for Online Media

Watch this online video of Randall Rothenberg speaking before a June Federated Media Publishing event. In Mr. Rothenberg’s worldview, demon critics of advertising (such as myself) are deliberately trying to undermine democratic digital media. This would be absurd, if it wasn’t so sad. Mr. Rothenberg is using scare tactics to whip up his members into a frenzy-all so they can fight off laws and regulations designed to provide consumers real control over their data and information. Luckily, Mr. Rothenberg will be on the losing side of this battle to protect consumers in the digital era. Regulators on both sides of the Atlantic understand how the digital marketing ecosystem raises serious concerns about privacy and consumer welfare. We have to say we are disappointed in John Battelle, the CEO of Federated (who wrote a very good book entitled The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture). Mr. Battelle should know that the online marketing system requires a series of safeguards which protects citizens and consumers. There is a balance to be struck here. Online advertisers have unleashed some of the most powerful tools designed to track, analyze, and target individuals–whether on social networks, or watching broadband video, or using mobile devices. We have never said there shouldn’t be advertising. We understand the important role it must play, including for the underwriting of online content. But the online ad system should not be designed and controlled solely by ad networks, online publishers, trade groups and online ad lobbying groups. It must be structured in a way which promotes as much freedom for individuals.

Ad industry continues its focus on brain research, inc. meeting at Harvard U

[we have covered this topic in our book and on this blog. Here’s a story from the April 2008 issue of Media Magazine–excerpt]

The meeting, held in a lecture room of the Harvard Business School, was hosted by four leading research organizations that are trying to figure out how to apply the fledgling field of neuroscience to media and marketing research, and to find out whether biometric technologies that map the brain’s responses to media stimuli can be used the way Madison Avenue has used conventional forms of audience research like Nielsen’s TV ratings.

In fact, the field is so promising that Nielsen itself is jumping into it. The media research giant recently acquired NeuroFocus, a Cambridge, Mass.-based firm that is beginning to apply neuroscience to advertising research…What social research was to advertising and media 50 years ago, neurological research promises to be for the next half century…By mapping and understanding how the brain responds to advertising and media stimuli, he [Gerald Zaltman] suggested, researchers would have empirical knowledge about what kinds of advertising and media content were most engaging to consumers. Because the brain – and how it remembers things – is malleable, Zaltman says, it’s not possible to use a map of someone’s thought processes to create rules of thumb. Rather, researchers must use the information to understand how people “coauthor” messages. In other words, people don’t just passively absorb and process information, but react to it, append it and make the content their own. And depending on when and where they are exposed to it, the content could be processed very differently.”

source: Going Mental. Joe Mandese. Media Magazine. April 2008

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Will Al Gore’s Alliance for Climate Protection and its $300m ad budget address the role of advertising and the climate crisis?

We think there’s something ironic about the $300 million ad “We” campaign just launched by Al Gore and several environmental groups to address climate change. We agree that threats to the environment are grave, and require immediate action. But unless Gore’s ads also critique the growing challenge to the environment coming from the advertising industry itself, we doubt whether there will be meaningful change. Marketers are unleashing the most powerful techniques to encourage greater and greater personal consumption. Madison Avenue is expanding the boundaries of what marketing can do by creating what it calls its “Marketing and Media Ecosystem.” From behavioral targeting based on the collection and tracking of our online activities, to “immersive” branded virtual content, to “viral” campaigns using broadband videos, the ad industry has embarked on a full-court press to get the public to eat more junk food, buy more cars, charge more on credit cards and take out new loans, etc.

The campaign, according to press reports, is hoping to encourage “influentials” to press for laws and policies. It’s a noble effort, although is using the same techniques marketers have embraced to target teens and other opinion makers to get friends to buy or like brands and products (called “brand ambassadors” by some). The Gore campaign should include a serious call for the public to be concerned about the consequences from the global and digitally-driven interactive marketing machine. Among the policies it should ask its influentials to support, are safeguards protecting consumer privacy and ensuring that marketing in the digital “ecosystem” is done in a way that truly supports an earth in balance.

PS: Before any of the $300 million is given to buy time via broadcasters, cable companies, ad agencies, and online marketers, the Alliance for Climate Protection should first be required to conduct an environmental impact analysis of how these media each contribute to the climate change threat–and what they should do about it.

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Drive, Google says, as it pushes automobiles via online video, mobile, YouTube, etc.

excerpt from “Google’s View of autos for 2008.” imediaconnection. 2/21/08. An interview with Bonita Stewart, Google’s director of “automotive vertical.”
“…dealers have the opportunity to geographically target their products and services, and mobile technology offers the ability to connect with a dealer during the shopping process…Right now we are particularly keen on the benefits of online video. It’s the new portable TV and offers the sight, sound and motion automotive marketers crave to differentiate their product and to evoke consumer emotion. In November 2007, U.S. consumers viewed more than 225 million auto/vehicle videos on YouTube…Google’s resources and expertise make YouTube’s search experience the best it can possibly be…We will continue to make search and discovery of videos a priority in 2008…Don’t build it and wait for consumers to come to your site. Venture out, find them and communicate with them online through gadgets that provide dealer locators, photo/video galleries, build and price features directly to the consumers in a microsite format…don’t ignore the data. Today it’s more compelling than ever to follow the consumer and lead from behind. Consumer engagement is increasing and driving their behavior as witnessed by the growth in social networking, video, mobile and search. On the horizon I see integrated marketing moving to integrated accountability and ROI. Marketers will develop more cause and effect levers.”

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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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.