Category: consumer protection

Online Ad Industry Exec Warns of Dangers from “Targetocracy”/Urges IAB to Take Privacy Issue Seriously

We’re glad other online industry leaders see that addressing consumer privacy issues is required–instead of the denials coming from the IAB online ad lobbying group.  Doug Weaver, CEO for the UpStream Group writes in response to the IAB’s op-ed in USA Today, for example that:

“I think a sustainable privacy strategy begins with acknowledgment of the problem that exists.   Facts is facts: the “Targetocracy” in our business is big, wildly overcapitalized and a little bit out of control.  What I think consumers want to hear from Randy and the IAB is “we take the issues raised by the Journal very seriously.  The issues and the technology are quite complicated, but we remain committed to rooting out the bad guys and maintaining an environment that’s rich, free and privacy focused.”

As one of the IAB’s earliest board members and one who’s contributed a great deal of time and effort toward its mission over the years, I believe it’s time for the group to act less like the Chamber of Commerce and more like the Internal Affairs Department.  There are both rogues and careless polluters in our industry and their actions poison the environment for everyone.   Not everyone wants regulation, but the consumer wants to know someone’s in charge.  Who’s that going to be?

Data Tracking, Online Ads and the Creation of Editorial Content: Part of the Behavioral Targeting Debate

The relationship between the pervasive online marketing consumer tracking system and its impact on the funding and creation of editorial content is one of the most important policy issues confronting policymakers–as well as journalism professionals.  Producing content that sells is very important; but how do new capabilities that instantly assess what we are interested in affect the overall editorial mix?  Will we see even less investigative reporting, foreign news coverage, etc. as data collecting bots scour our online activities in order to help marketers and advertisers take better advantage.  It’s an issue we have long raised, and will be focused on as part of the privacy debate.  For now, here’s an excerpt from a new IPO just filed at the SEC by Demand Media [our emphasis]:

Content.  We create highly relevant and specific online text and video content that we believe will have commercial value over a long useful life. During the quarter ended June 30, 2010, we generated an average of over 5,700 wholly-owned text articles and videos per day. The process to select the subject matter of our content, or our title selection process, combines automated algorithms with third-party and proprietary data along with several levels of editorial input to determine what content consumers are seeking, if it is likely to be valuable to advertisers and whether it can be cost effectively produced. To produce original content for these titles at scale, we engage our robust community of highly-qualified freelance content creators. As of June 30, 2010, our content studio had over 10,000 freelance content creators, a significant number of which have prior experience in newspapers, magazines or broadcast television. Our content creation process is scaled through a variety of online management tools and overseen by an in-house editorial team, resulting in high-quality, commercially valuable content. Our technology and innovative processes allow us to produce articles and videos in a cost effective manner while ensuring high quality output. …Monetization.  Our goal is to deliver targeted placements to advertisers who seek to reach consumers based on the content these consumers are seeking and discovering. Our platform generates revenue primarily through the sale of online advertisements, sourced through advertising networks and to a lesser degree through our direct advertising sales force. The system of monetization tools in our platform includes contextual matching algorithms that place advertisements based on website content, yield optimization systems that continuously evaluate performance of advertisements on websites to maximize revenue and ad management infrastructures to manage multiple ad formats and control ad inventory. In addition, our platform is well-positioned to benefit from the continued growth of advertising networks by giving us access to a broader set of advertisements we can more precisely match with our content, thereby increasing advertising yields.

Google’s interest in better bandwidth access for video and interactive ads—do negotiations with Verizon reflect recent changes for YouTube?

Google recently made an announcement that will require likely greater bandwidth for Google’s YouTube.  According to its July 9, 2010 post, “Today at the VidCon 2010 conference, we announced support for videos shot in 4K, meaning that now we support original video resolution from 360p all the way up to 4K…We’re excited about this latest step in the evolution of online video.” Also perhaps relevant to its Verizon dealmaking is Google’s move towards long-form ad supported videos on YouTube, to better position itself as a commercial video provider. If they want to ensure they are first in the `que’ with other entertainment companies, then reversing its position on network neutrality is part of their business plans.  They are ultimately in the same show biz/advertising space as everyone else is.   Btw, given that the media/telecom companies really don’t see a difference when marketing and distributing across multiple platforms, inc, mobile, it’s outrageous mobile would be exempt from network neutrality rules.  But perhaps blame it on Google’s Admob acquisition and its [and everyone else’s] plans for mobile location ad targeting!

Here’s an excerpt from today’s Ad Age article on Google’s new higher resolution and more bandwidth system for YouTube:  “YouTube recently announced support for “4k video,” meaning video files with a dimensional size up to 4096 x 2304 pixels — in other words, much larger than your computer can handle.  Online video is booming, and marketers are still trying to figure out how to create the optimal user experience and achieve the best results for their campaigns…YouTube mentions that watching videos in 4k requires an “ultra-fast high-speed broadband connection,” but this is actually the least-important requirement. While users on slower broadband connections can always wait for enough of the video to download and buffer before watching it (though why would a marketer force consumers to do that?)…

Tracking Consumers to Identify their “Intent” to Purchase Products and Services. Safeguards Required for Predictive Behavioral Targeting

As the FTC and Congress work to create new safeguards, they must address a range of issues related to new forms of data collection, profiling and tracking.  As the WSJ series illustrates [which used information provided by my CDD], privacy is at risk in today’s digital marketing system.  The growth of so-called “predictive” behavioral targeting is one example of marketers pushing the data collection technology envelope without considering the consequences to consumers and citizens.

Yesterday, for example, display ad company Dapper released a new ad product designed to improve display marketing that incorporates “user intent determination” with the “real-time” online ad auction process that sells access to individual consumers to the highest bidder.  In its release, Dapper explains that it can:  “Infer users intent: Through IntentMatch, Dapper DisplayDR goes far beyond retargeting to harvest and combine behavioral (via the advertiser’s own data or 3rd party data), semantic, contextual, geographic, and performance signals to match each product and offer to user intent and inform the bidding process. This multi-dimensional approach improves accuracy and performance, and significantly expands the reach of display efforts beyond behavioral targeting alone…Serve dynamic display ads that match products to intent and are optimized for performance: With Dapper DisplayDR, advertisers can show each consumer the most relevant offers from the Product Search Engine matched to their intent…Receive insightful analytics on a product level: Each campaign is tracked for clicks, conversions, and interaction down to the most granular level of specific products and offers.”

All of this is combined with the online ad exchange system that sells us to advertisers as if we are cattle at an auction: “Advertisers using Dapper DisplayDR can buy media at the impression level in real-time and algorithmically through the ad exchanges. Dapper DisplayDR features the first real-time bidding engine optimized for dynamic advertising, bidding the right price for every impression based on the probability and value of conversion – at scale – as determined by individual purchase intent, product preference, price, time to purchase, geolocation, and more. As advertisements run, Dapper DisplayDR integrates business rules and performance cues to price each bid efficiently. Dapper also leverages performance lifts to bid higher for the most profitable audiences…”

Google tells investors via SEC: New privacy laws could be “inconsistent with our data practices” And the “hundreds” of engineers they have working on display ad technology

Google’s 10Q second quarter report just filed at the SEC has an interesting reflection on how the online ad giant views the privacy issue.  It wrote that:

Regulatory authorities around the world are considering a number of legislative proposals concerning 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 an adverse 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.

And a somewhat related angle–Google’s focus on generating more ad dollars online.   Brandweek reports, in an article on all the venture investment going into expanding online targeting that:

Neal Mohan, the vp of product management at Google who leads its display ad efforts, believes the display ad market could be five times the size it is today, if the system for buying ads was more efficient and the performance measurement was better.

“It can be done, frankly, a lot better than it is today,” Mohan said, noting Google now has “hundreds” of engineers working on display advertising technology.

 

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.”

Ad Lobby Research Says Vast Majority of Online Ads Involve Behavioral Profiling & Targeting

The online ad industry lobbying group–the Interactive Advertising Bureau [IAB]–has revealed results from its own research that show the widespread use of behavioral targeting.  In a post on its criticisms of privacy legislation introduced by Chairman Bobby Rush, the IAB explains that:

“In an IAB survey of ad agencies conducted earlier this year, we found that 80% or more of digital advertising campaigns were touched by behavioral targeting in some way.”

That means the majority of what consumers do online–including when they deal with sensitive transactions involving their finance, health or other family matters–are being closely tracked and profiled.  In addition, the IAB attacks the important civil rights provisions in both the Boucher/Stearns and Rush bills.  That provision would ensure that data collection about a consumers racial, ethnic or sexual orientation would be better under the control of the individual.   You would think that the IAB leadership, including Google, NBC, CBS, and Disney, would support a policy that would restrict the potential use of online racial profiling.  But the IAB claims these provisions protecting multicultural and other consumers “could constrain multicultural marketing and media…These types of services provide great benefits to their audiences and the proposed restrictions would actually harm the very group of people they seek to protect.”  That’s an irresponsible position.  We should be able to protect civil rights and promote diverse online publishing.
The IAB’s claims that behavioral targeting is anonymous doesn’t hold up to the facts, as well.  The time for action by both the FTC and Congress has arrived.

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.