Category: annals of behavioral targeting

WSJ Begins Online Ad/Privacy Series. Plus Online Marketers Explain Behavioral Targeting, including role of social media for predicting people’s behavior “before they do it”

The Wall Street Journal launched an important new series on the online marketing and data collection/targeting industry.  Julian Angwin and colleagues have the the first main piece entitled “The Web’s New Gold Mine: Your Secrets.”  The subhead underscores what we have been telling policymakers and others for the last several years:  “…one of the fastest-growing businesses on the Internet is the business spying on consumers.” The theme of the series: “Marketers are spying on Internet users – observing and remembering people’s clicks, and building and selling detailed dossiers of their activities and interests.”

They have done a terrific job, including producing a innovative video on how cookies work, including its history online. There are special graphics as well illustrating the data tracking process.  They also discuss the growth of so-called predictive behavioral targeting, including the use of social media.  The OpenAmplify CEO explains “Social media is an amazing opportunity. For the first time in marketing history we have hundreds of millions of people online telling us what they like, what they hate and what they’re going to do before they do it … That’s extremely valuable data.”

Meanwhile, online marketers are preparing to place the forthcoming behavioral ad “icon” from the online ad industry– that’s supposed to help the industry politically head off consumer protection rules.  Here’s how one legal expert working with online marketers, in discussing the icon, describes behavioral targeting:

“Behavioral ads use technology that tracks a user’s surfing behavior on the Internet. Key data includes clickstream data such as searches made, content read, site-visit times, and websites visited. With this key data about a specific user, advertisers can create a behavioral pattern that can be linked to a specific online demographic, which becomes the basis for ads that target the specific demographic…For example, a frequent traveler can be tracked to different locations through geographically different IP addresses, and then by combining this information with cookie data, an advertiser can draw a clear picture of the person’s travel habits – destinations, length of stay, travel frequency, preferred airlines – plus much more.”

I doubt the forthcoming digital data collection and targeting “icon” and its accompanying information will stand the truth test!  How do you explain an entire “ecosystem” of data collection and profiling techniques, including social media marketing, neuromarketing, “immersive” video, online ad exchanges, etc. with a tiny digital [and appropriately named] ‘bug.”

Multi-Billion $ Stakes for Online Consumers in How Congress Protects Their Privacy and Transactions

It’s time for policymakers to act and protect online consumers–who are at risk confronting a largely invisible, sophisticated, and far-reaching digital marketing system.  It’s useful to see how much was spent targeting U.S. consumers online.  This is from the IAB’s 2009 online advertising revenue report [my bold]:
Retail Advertisers Continue to Drive Consumer Ad Spending –2009 Annual Results
 Retail advertisers continue to represent the largest category of Internet ad spending, accounting for 20 percent of revenues for the full year of 2009 or $4.5 billion, down from the 22 percent ($5.0 billion) reported in 2008.
 Telecom companies accounted for 16 percent of 2009 full year revenues or $3.6 billion, up slightly from the 15 percent ($3.5 billion) reported in 2008
 Leisure Travel (airfare, hotels & resorts) accounted for 6% percent of 2009 revenues ($1.5 billion) compared to the 6 percent or $1.4 billion reported in 2008.
 Financial Services advertisers accounted for 12 percent of 2009 full year revenues or $2.8 billion, down from the 13percent ($3.0 billion) reported in 2008.
 Automotive advertisers accounted for 11 percent of 2009 full year revenues or $2.5 billion, down slightly from the 12 percent ($2.8billion) reported in 2008.
 Computing advertisers represented the fifth-largest category of spending at 10 percent of 2009 full year revenues or $2.3 billion, in line with the 10 percent reported ($2.4 billion) in 2008.
 Consumer Packaged Goods and Food Products represented 6 percent of the full year 2009 revenues ($1.4 billion), in line with the 6 percent or $1.5 billion reported in 2008.
 Entertainment accounted for 4% of 2009 full year revenues ($1.0 billion), up slightly from the 4% ($917million) reported in 2008.
 Media accounted for 4 percent of 2009 full year revenues or $881 million, up slightly from the 3 percent ($764 million) reported in 2008.

[and to underscore its importance, note the definition of financial services online marketing used by the IAB:  Financial Services—includes commercial banks, credit agencies, personal credit institutions, consumer finance companies, loan companies, business credit institutions and credit card agencies. Also includes companies engaged in the underwriting, purchase, sale or brokerage of securities and other financial contracts. 

As well as the $1.5 billion spent last year on:  Lead Generation—fees advertisers pay to Internet advertising companies that refer qualified purchase inquiries (e.g., auto dealers which pay a fee in exchange for receiving a qualified purchase inquiry online) or provide consumer information (demographic, contact, behavioral) where the consumer opts into being contacted by a marketer (email, postal, telephone, fax). These processes are priced on a performance basis (e.g., cost-per-action, -lead or -inquiry), and can include user applications (e.g., for a credit card), surveys, contests (e.g., sweepstakes) or registrations. 

Teens and Online Privacy: Empowering Adolescents to Control How Online Marketers Can Stealithily Target Them and Collect Data

Some commentators–and groups funded by online marketers that target teens–are worried that proposals to the FTC and Congress that adolescent privacy be protected will somehow create a system that requires forms of age verification online.  The coalition of leading consumer, child advocacy, health and privacy organizations filing comments at the FTC last week aren’t calling for the parental permission paradigm used by the Children’s Online Privacy Protection Act [COPPA] be extended to teens.  But there are many online commercial services specifically targeting adolescents–that’s their target market.  It’s those sites and services specifically focused on adolescents that we want to have better privacy safeguards.   We want those sites to be governed by an opt-in regime that gives teen users meaningful control of how their information is collected and utilized.  Those sites should be required to engage in the Fair Information Principles known as  “data use minimization.”  Commercial sites targeting adolescents should make its data collection practices fully transparent and under the control by the teen (including a truly accessible privacy policy).  In another words, a privacy safeguard regime that really should be available for everyone.  Teens are ‘ground zero’ for much of digital marketing–for examples see our site: www.digitalads.org [especially the update section].  If you look at the reports on that site, you will see that the most recent scholarly thinking is that brain development in adolescents occurs much later than what was once thought.  They don’t have the ability to effectively understand the intent of highly sophisticated interactive marketing and the corresponding data collection which underlies contemporary digital advertising. That’s why empowering them so they can protect their privacy strengthens their rights.

Google, ITA, Travel, Privacy and also Competition

Travel is a major part of the online marketing industry.  But it has lots of privacy concerns–who knows where you plan to go, spend time [in the exact location via geomapping, etc], how much money you generally spend, with your family or on business, etc.  There are a host of civil liberties issues related to commercial and government access to this data.   That’s one of the reasons why competition and privacy regulators around the world should closely critically analyze the proposed Google acquisition of travel information leader ITA Software.

Google is currently expanding its online travel advertising business–and swallowing ITA will undoubtedly boost its market share–and give it access to reams of additional data on consumers and business practices.  For example, in its Seattle regional office, Google is hiring several marketing specialists, including:


*Display Account Manager, Travel:  [“As a Display Account Manager, you’ll sell and manage advertising for the sixth-largest media property in the world and other Google display offerings. You will be a part of the team on the cutting edge of interactive marketing and media. You will drive the online video marketplace forward and engage advertising agencies and brand marketers in programs that move the needle for their companies. The primary responsibility of the Display Account Manager is to drive new business revenue for YouTube and other Google display services and products with Fortune 1000 advertisers across multiple industries.”]   They also want an Account Manager, Travel Vertical and a Display Account Executive, Travel.  Other travel online ad sales jobs are posted for London [“As a Google Industry Manager, Travel you will be working with clients to provide digital solutions for sales & marketing objectives via a variety of Google’s Search, Display and Tools. This job is a mix of finding and managing new and existing business customer relationships, and working closely with the Industry Head to develop Google’s marketplace in the Travel sector. You’ll combine digital media and deep commercial knowledge with strong presentation and communication skills. You’ll own the relationships with clients and agencies, targeting, educating and developing new clients to grow the business in unpenetrated territory.”]; Australia [Account Strategist, Travel Industry].  Plus its DoubleClick division performs travel related online marketing work.  Of course, given Google’s recently expanded role providing mobile ad targeting, via its Admob acquisition, related privacy and competition issues are also raised.

Harvard’s Berkman Center, its online marketing industry connections, and the need to prominently disclose

The Berkman Center is well-known for its work on digital media issues.  But it has often failed to address–in its research and public work–the negative consequences of online marketing and interactive advertising.  Berkman is partially funded by leading online marketers–including Google and Microsoft.  When Berkman conducts research on such issues as children’s online marketing and privacy [an issue I am involved with], it should always prominently disclose on the first publication page its funding conflicts–including whether Berkman staff work with online marketers.  Berkman should tell Congress and the FTC about such conflicts when it submits research and testimony.

For example, Berkman’s faculty co-director John Palfrey works for a venture investing firm that financially backs behavioral targeting and other online marketing companies.  Professor Palfrey does disclose on his blog that in addition to his Harvard duties, he is also a “Venture Executive” at Highland Capital Partners.  Highland’s “Internet and Digital Team,” which Prof. Palfrey serves on, has one current investment in Affine Systems, a video targeting company. Affine’s Video Platform explains it enables marketers to engage in behavioral targeting:  “Affine integrates behavioral data from exchanges and exclusive third-party partnerships. This data is used to audit and optimize campaigns as they run. Detailed analytics are collected, and valuable retargeting data is generated with every campaign.”  [“What makes the Video Targeting Platform special is the amount of insight it provides…by taking advantage of the data provided by Affine’s data partners, you can even target specific demographic or psychographic groups, and reduce the waste that is currently expected from online video buys.”].  Highland also invests in search engine and interactive TV companies serving the China market and many others. [Given the investments in China’s online market by Mr. Palfrey’s company, it also raises questions about Berkman’s Global Network Initiative role evaluating how companies like Google and Yahoo operating in China and elsewhere address human rights].  Previous online marketing (and behavioral targeted related) investments made by Highland included the youth online targeting company Bolt, Coremetrics, and mobile ad targeting company Quattro.

The well-known online analyst and commentator Dana Boyd is a Fellow at Berkman, and has made it clear she also works for Microsoft Research.  But given Microsoft Advertising global efforts to extend the power of online marketing and personalized data collection, including its online ad research lab in Beijing, its support for neuromarketing in digital ads, and its extensive behavioral and online targeting apparatus–including for junk food targeting youth in its gaming divisions, we hope Ms. Boyd will more closely examine her employers work in the area.

Online Ad Lobby and Chamber Celebrate Victory over Consumer Protection & FTC

Yesterday, the online ad lobby [IAB, ANA, DMA]–working with Chamber of Commerce–scored a major political victory by forcing the Financial reform bill conference committee to drop proposed provisions that would have strengthened the FTC.  Under the House bill, the FTC would have been given the same kind of regulatory authority most federal agencies have [APA rulemaking].  Marketers and advertisers are celebrating their win, because it keeps the FTC on a weakened and short political leash.  While consumer protection is significantly expanded because of the CFPB and new financial rules, the FTC is to remain largely hamstrung.  The online marketing and advertising lobby [including ANA, DMA–see below] were afraid that the newly invigorated FTC under Pres. Obama would require the industry to protect privacy online and also become more accountable to consumers engaged in e-commerce.   I heard IAB and Chamber are dancing in the streets! Congressmen Barney Frank, Henry Waxman and Sen. Rockefeller deserve praise for working hard to protect consumers, including their proposal on the FTC.

Here’s what two of the ad groups placed on their sites about the FTC issue:

Progress on FTC Enforcement Provisions in Wall Street Reform Conference

June 23, 2010

The marketing and media community has made substantial progress on defeating the broad expansion of FTC powers that is included in the House version of the Wall Street reform bill.  But we still need your assistance to keep these provisions out of the final bill.

Yesterday the Senate conferees presented an offer on the bill that rejected the new FTC powers that are in the House version.  Chairman Dodd indicated that while he may support changes in the Magnuson Moss rulemaking process, there is no Senate provision and these issues are too complex and important to be resolved in the context of the Wall Street reform bill.  Conferees hope to finish the conference this week so the final bill can be cleared for the President’s signature next month.

The House conferees may still continue to push for these provisions, so it is very important that marketers contact the Senate conferees to express our appreciation for their support and to urge them to remain strongly opposed to these new powers for the FTC in this bill.  Contact information for the Senate conferees is located here and our letter to Senate conferees is available here.  Please let the Senators know if you have plants or operations in their states.

ANA took part in a very important meeting yesterday with Senate Commerce Committee Chairman Jay Rockefeller on these issues.  We argued that these issues are very important to the entire marketing community and deserve careful consideration outside of the context of the Wall Street reform bill.  The Chairman strongly indicated that he will continue to push for changes in the Magnuson Moss rulemaking procedures this year.

If you have any questions about this matter, please contact Dan Jaffe (djaffe@ana.net) or Keith Scarborough (kscarborough@ana.net) in ANA’s Washington, DC office at (202) 296-1883.

http://www.ana.net/advocacy/content/2418

DMA Asks Financial Reform Conferees to Keep FTC Expansion Out of ‘Restoring American Financial Stability Act’

June 10, 2010 — The Direct Marketing Association (DMA) today was joined by 47 other trade associations and business coalitions in sending a letter to each of the conferees on H.R. 4173, the “Restoring American Financial Stability Act” (RAFSA), urging them to keep language that would dramatically expand the powers of the Federal Trade Commission (FTC) out of the final bill.

As the House and Senate conferees work to reconcile their versions of the financial regulatory legislation, the associations — which represent hundreds of thousands of US companies from a wide array of industry segments — expressed strong opposition to provisions in the House version of the bill that would expand the FTC’s rulemaking and enforcement authority over virtually every sector of the American economy.

“The balance struck in the Senate bill is the right one,” said Linda Woolley, DMA’s executive vice president, government affairs.  “That bill makes the most sense in the context of financial reform legislation, maintaining the FTC’s existing jurisdiction without expanding its rulemaking and enforcement authority over industries and sectors that had nothing to do with the financial crisis.  Issues of FTC expansion deserve their own due consideration and debate in the more appropriate context of an FTC reauthorization, as has been done in the past.”

DMA and the other associations strongly believe that granting the FTC broad new authority is not a necessary or relevant response to the causes of the recent recession and, therefore, asked the conferees to oppose the inclusion of any provisions that would expand FTC authority, rather than making changes to the Commission that would have a fundamental impact on the entire business community and the broader American economy.

For more information please visit www.dmaaction.org.
http://www.the-dma.org/cgi/dispannouncements?article=1449

Google says it’s “at the forefront of a revolution in Marketing”– that includes for the health industry.

One of the areas requiring online privacy and consumer safeguards is the health and medical area.  As CDD told the FDA, the use of behavioral data profiling & targeting, immersive multi-media techniques, social marketing [via stealth-like influencer and word-of-mouth tactics, and brand channels, such as on YouTube, raise a host of concerns.  I don’t believe one’s largely private concerns about a health condition or remedy should automatically be fodder for digital marketing.  To see how important the health online marketing is to Google (and others), here’s an excerpt from a “Consumer Packaged Goods or Healthcare Industry Marketing Manager job opening:

Google is at the forefront of a revolution in Marketing – a shift from traditional Marketing tactics to new online, mobile and social strategies. Google’s advertising platforms provide savvy advertisers with multichannel marketing opportunities, linking online marketing to brand impact and offline sales.

Consumer Packaged Goods or Healthcare Industry Marketing Manager position shapes Google’s point of view on the changing advertising landscape. This leader will uncover, understand and explain the impact of evolving online media to industries that have traditionally relied more on offline media, such as healthcare, CPG, restaurants, education and more. This is a unique opportunity to set Google marketing strategy within our Emerging Industries practice and advise Fortune 1000 advertisers on cutting edge marketing strategies. You will arm the Google salesforce with marketing programs that establish fresh thinking in the industry and deepen engagement with clients…

Responsibilities:

  • Ideate, develop, and execute marketing campaigns that drive Google’s advertising business.
  • Develop thought-leadership materials, client/executive presentations, case studies and other content designed to accelerate our business momentum and better engage Google’s customers.
  • Develop compelling positioning and messaging for Google’s advertising solutions targeted to companies in industries relatively new to online marketing, such as healthcare and CPG
  • Partner with Google’s market research team to identify, execute and package compelling market research that supports Google’s value proposition to large advertisers in these industries.
  • Evangelize Google’s value proposition, best practices and perspectives to our customers and our industry peers via events, webinars, and other direct client communications channels.

Facebook: Ads, Data, and Dollars–its revenue comes from targeting “on users’ real life data”

Facebook execs frequently claim they don’t share their users personal information with advertisers.  They also always add that Facebook isn’t really that interested in advertising revenues.  But that’s not correct, as the Facebook Quarterly Business Review: Q1 2010 reflects.  Facebook, now cash positive, was said to earn somewhere between $600-700 million in revenues last year–up dramatically from the $150 million generated in 2007. The Quarterly estimates that Facebook should earn over $1 billion in 2010.  How?  “By growing multiple revenue sources, mostly around advertising,” it explains. Facebook is expected to earn some $350 million alone in 2010 from selling its ad services to big brands, with more growth expected.  In the last year, Facebook has “invested heavily in expanding its brand advertising efforts by opening up offices in Paris, Madrid, Milan, Hamburg, Sydney, Stockholm, Toronto and Los Angeles.”  The report says that Facebook will eventually earn some $20 billion a year, with a huge increase coming from big brand advertisers.

So-called performance advertising on Facebook [from social games, for example] is expected to bring in between $500-600 million this year.  There will also be additional revenues from Facebook’s virtual currency [and soon from mobile and location based marketing as well].

Facebook’s users aren’t informed about the datamining that occurs on what they post and communicate, including to their social networks.  We believe these systems require transparency and mechanisms of user control. And FTC and Congressional action.

CDD Statement on Facebook’s new privacy settings [Digital Deja-vu Dep’t!]

Facebook made some positive changes today, but only because of political pressure from policymakers and privacy advocates on both sides of the Atlantic.  Mr. Zuckerberg’s failure to acknowledge the political realities don’t bode well for Facebook’s future approach to privacy.  He appears to be living a Alice in Digital Wonderland fantasy, where changes are made on privacy only because Facebook has the goodwill of its users in mind.  Just last December 9, after all, Facebook made one of its typical self-reverential announcements that it was “rolling out easy-to-use tools to empower people to personalize control over their information.”  These changes triggered a user revolt, letters from Senators, an opinion ordering a reversal from the EU, and concern from the FTC.

There are more simplified and manageable privacy settings, and Facebook has made an important first (or back-tracking!) step.  Unfortunately, Facebook still refuses to give its users control over the data it collects for its targeted advertising products.  The defaults should also be initially set for non-sharing, with the minimization of data collection at the core of Facebook’s approach to privacy.   CDD and other privacy groups will examine these new settings and identify where further changes should be made, including on advertising data.  Meanwhile, we want Congress to hold hearings on social networking privacy, with Mr. Zuckerberg as a star witness.  Mr. Zuckerberg should be asked to explain how Facebook continues to develop new approaches to data collection and privacy–from Beacon to Instant Personalization–that continually lowers the bar–until the company has to do some form of hasty retreat.   Congress needs to examine how Facebook develops its approach to privacy, and what its business plans mean for the future.

CDD will also press the FTC to investigate Facebook, including acting on complaints filed with EPIC and other groups.  It’s time for the FTC to announce guidelines to protect social networking privacy on Facebook and other sites.
Jeffrey Chester
Center for Digital Democracy
jeff@democraticmedia.org

Online ad research done by Profs. Goldfarb and Tucker: fails to address how online marketing really works– and also its implications for privacy, consumer protection and civil liberties

Whenever an industry is in political trouble, there is usually research made public that supports its position.  Often, the research is actually funded by the very companies or trade associations involved in the political fight.  The new paper “Privacy Regulation and Online Advertising” just released by Professor Avi Goldfarb [U of Tornoto] and Catherine E. Tucker [MIT], appears designed to discourage Congressional and FTC policymakers from enacting privacy safeguards.  In this case, according to the authors, the paper wasn’t funded by industry.  But in response to my question, Professor Tucker explained that “we have received funding in the past (for other work on internet advertising) from the NET Institute and from a Google/WPP Marketing Research Award. Avi has also received funding Bell Canada.“  The Net Institute’s board, btw, includes employees of Microsoft and Google, among others.

The new report is already being touted as evidence of the cost to online marketers if privacy rules are enacted.  But the study is very problematic–and I believe fails to really analyze how online marketing works.  The authors examined the impact of privacy rules in the EU and claim they have negatively impacted the effectiveness of online ads.  But by only examining banner ads, they miss the point.  Online marketing in both the EU, U.S., and elsewhere is really an integrated system involving an array of applications and techniques [where data is collected and used at all points]–from viral, to online video, social media, neuromarketing, games, mobile, etc.  Indeed, at our CDD we follow the EU market very closely–including collecting data from EU based online marketers, trade associations, case studies, etc.  These reports indicate tremendous success for online ads (and ironically, much of the innovation for online marketing comes out of the UK;  Admap just reported it’s the German marketers in the forefront of neuromarketing).

Given the study’s discussion of the Boucher bill, it’s clear there is a political motivation here.  But the main fault is how the study misses the key questions and ignores how the market really works.  This paper needs to be revised and gets an incomplete!

PS:  Btw, I also told the authors that Leslie Harris of CDT is a woman.  They had her as Mr. Harris.  Perhaps they also need a better fact-checker.