Google’s Eric Schmidt on Mobile Marketing [Annals of Why We Need Mobile Privacy and Consumer Protection Safeguards]

Google CEO Eric Schmidt gave the keynote address at the Interactive Advertising Bureau’s “Ecosystem 2.0” conference.  As reported, he explained that [our emphasis]:

“The smartphone is the iconic device of our time,” Schmidt told the record IAB audience of 750 in Palm Springs, California. A year ago, he added, he predicted that mobile use would surpass PCs within two years. “It happened two weeks ago. And the PC is not going to catch up,” Schmidt said, as he labeled the new era, “Mobile First.”…The hyperlocal potential of mobile, Schmidt continued, means that smartphones and tablets bring a practical application to marketing that no other medium can match: A connection that will lead you to the store, open the door, and direct you to a product you need. “A RadioShack ad can tell you where you are and how to get to the nearest store.” And equipped with Near Field Communication chip (NFC), the newest generation of smartphones not only can tell you what to buy, it can enable a tap-and-pay transaction…Think of the offers mechanisms for advertisers,” Schmidt offered. “We’ve spent 20 years trying to get here. And now there’s an explosion in commerce. Particularly for the consumer who says, “I want to buy something and want to buy it right now,” he added, “We can do it.”

And, in large part, that capability means that mobile media consumption “is happening faster than all our internal predictions.”

Some 78% of smartphone internet users already use their smartphones as they shop. And, as consumer comfort with – and acceptance of – new mobile technology continues, Schmidt envisions “a world, in the very near future, where computers remember things and you never need to worry about forgetting anything. You want it to remember something and it will. And you’re never lost. No one is ever lost. You never turn off the [mobile device] and you’ll always know where you are. And where you want to go….”

Statement of Jeff Chester on the Department of Commerce’s Internet Policy Task Force Privacy and E-Commerce: a Bill of Behavioral Targeting “Rights” for Online Marketers?

The Obama Administration asks some important questions about protecting the privacy of U.S. consumers.  But given the growth of online data collection that threatens our privacy, including when consumers are engaged in financial, health, and other personal transactions (including involving their families), this new report offers us a digital déjà vu.   The time for questions has long passed.

Instead of real laws protecting consumers, we are offered a vague “multi-stakeholder” process to help develop “enforceable codes of conduct.”  If the Commerce Department really placed the interests of consumers first, it would have been able to better articulate in the report how the current system threatens privacy.    They should have been able to clearly say what practices are right and wrong—such as the extensive system of online behavioral tracking that stealthily shadows consumers—whether on their personal computer or a mobile phone.   The paper should have firmly articulated what the safeguards should be for financial, health and other sensitive data.  The report should have rejected outright any role for self-regulation, given its failures in the online data collection marketplace.  While the report supports a FIPPS framework, these principles can be written in a way that ultimately endorses existing business practices for online data collection and targeting.

This illustrates one of the basic problems with the Administration’s approach to protecting consumer privacy online.  The Commerce Department is focused on promoting the interests of industry and business—not consumers.  It cannot play the role of an independent, honest broker; consequently it should not be empowered to create a new Privacy Policy Office.   Having the Commerce Department play a role in protecting privacy will enable the data collection foxes to run the consumer privacy henhouse.  We call on the Administration and Congress to address this issue.  A new Privacy Policy Office should be independent and operate under the Administrative Procedures Act—ensuring there are safeguards for meaningful public participation and transparency.

The Commerce paper’s real goal is to help U.S. Internet data collection companies operate in the EU, Asia/Pacific and other markets as “privacy-free” zones.  Under the cover of promoting “innovation” and trade, I fear the U.S. will craft a crazy-quilt code of conduct regimes that they will claim should pass muster in the EU (which has a more comprehensive framework to protect privacy).  The Obama Administration appears to be promoting a kind of “separate, but equal” framework, where it will argue that no matter how weak U.S. privacy rules are, other countries should accept them as the equivalent of a stronger approach.  The new paper should have acknowledged the U.S. has to play catch-up with the EU when it comes to protecting consumer privacy.

We have been promised meetings with the new White House subcommittee on privacy, where consumer and privacy groups will raise these and other concerns.

Neuromarketing & Privacy: German Data Protection Authority Enacts Safeguards

We have long been sounding the alarm over the role of neuromarketing in advertising, especially for online marketing.  We are gratified that the Data Protection Authority in Hamburg Germany, according to this law firm post, just imposed safeguards on the role of neuromarketing.  It explains that [excerpt]: “[O]n November 23, the data protection authority (DPA) of the German Federal State of Hamburg imposed a €200,000 fine [link in German] against the Hamburg-based savings & loan Hamburger Sparkasse due to violations of the German Federal Data Protection Act (the BDSG) for, among other reasons, using neuromarketing techniques without customer consentIndeed, according to the head of the Hamburg DPA, Prof. Johannes Caspar, the intent was to send a clear signal to the market against the use of modern neuromarketing and comparable methods in violation of data protection law.  The case also clearly illustrates that German regulators are willing to enforce the new data protection regime and are well prepared to impose significant fines upon companies rather than giving them merely a warning notice…The decision of the Hamburg DPA may also attract attention beyond Germany and influence the interpretation of data protection laws in other countries, in particular with respect to the compliance of neuromarketing and brain sciences techniques with data protection laws.  Due to the sensitivity of such activities, it is likely that regulators in the EU will follow the approach taken by the Hamburg DPA.”

The new “Digital Advertising Alliance” self-reg plan. See if it tells consumers what its sponsor ad groups really say to each other. That they track and target your “digital footprint”

On Monday, the new self-regulation magical “icon” that is designed to make the online ad industry’s privacy problems disappear will be unveiled.  A new group called the “Digital Advertising Alliance” will unveil the icon-based plan–all timed to help head-off the kinds of protections and safeguards consumers require.  The current financial crisis affecting tens of millions of Americans require that government and big business groups do more than pay digital lip service to consumer protection.

As a kind of litmus test for the new self-regulation effort, see if the icon and the information connected to it really informs you about how data on you is collected and used for profiling, tracking and targeting. For example, last week, the Interactive Advertising Association (IAB), one of the key backers of the new Alliance, released a guide to targeting consumers at the local level.  Here’s excerpts of what they say.  See if that little icon is being honest when you click it.  Of course, we really require rules that eliminate the kind and amount of data that can be collected on you and you family and friends in the first place–as well as honest disclosure on the process.  Note as well that all that data on you is expensive–and others are cashing in on information that belongs to you!  From the new “Targeting Local Markets” guide:

Explicit profile data Targeting. definition–
Explicit data is “registration quality data” collected either online or offline. For online registration data, the user has certain attributes in his or her registration profile at a particular site or service, and that data is associated with the user’s Web cookie or some sort of audience database when the user next logs in. Offline registration data includes the sorts of data held in the massive offline direct response industry databases built up over the last several decades. These are then matched to a user online when that user logs in somewhere that is a partner of the data company. The site at which the user logs in, usually an online mail or similar site, sends the name/email combination to the data company, which then makes the match and sends back data…pricing–In general, first party data commands a far more variable premium than third party data…Third party data is usually available in much larger quantities, and yet there is often a fee of anywhere between $0.50 to $2.00 or more paid to the data provider by the ad seller – thus increasing the cost of goods sold (COGS) on the ad, and therefore increasing the price…

Behavioral Targeting (Implicit profile data Targeting)-definition-
Behavioral Targeting is the ability to serve online advertising based on profiles that are inferred from an individual user’s technical footprint and viewing behavior…As the medium has grown from a “browsing” experience to interactional so have the levels of information gathered. Newer forms of information include the data collected about influences, social preferences through social networks and an individual user’s content created online…The data is often gathered in real-time and can be used for real-time decision-making so that relevant advertising can be delivered dynamically to an individual user during their online session…Behaviorally targeted advertising commands a higher price because of targeted placement versus general run-of-site (ROS) advertising…Behavioral Targeting can be highly accurate when the user is leaving a digital footprint of their activities as they move through the Web.

Online Marketers, Privacy & Self-Regulation: “Repeatedly Failed Promises Syndrome”

To help undermine the impact of the forthcoming FTC proposal to protect consumer privacy, a coalition of online ad lobby groups will unveil yet another self-regulation plan.  According to Mediapost, online consumers will soon see “[I]cons to signify behavioral advertising — or serving ads based on people’s Web activity.”  Since 1999, online ad groups have rolled out self-regulatory regimes promising to protect consumers online.  Each has failed to do so.   This new effort involves the very same groups and companies that offered self-regulatory promises in the past.   For example, see the World Privacy Forum’s report on the failure of the Network Advertising Initiative’s self-reg schemes; that group is part of the new effort, btw.

This new effort is seriously flawed–and before marketers and advertisers adopt it, it must be independently evaluated by consumer groups, independent academics, and the FTC.  We believe that the system will fail to protect consumers–because it will not candidly inform them about how the data is collected and used.  Meanwhile, in a revealing flip-flip, the IAB’s UK counterpart deep-sixed its just released safeguard on retargeting.  According to a new report, “[O]nline advertising trade body the Interactive Advertising Bureau (IAB) has withdrawn a code of practice which recommended that behavioural advertising retargeting cookies should expire after 48 hours. The IAB’s Affiliate Marketing Council (AMC) published the code last week. It applied to the practice of ‘retargeting’ web users who had visited a site with ads for that site on other people’s websites, using cookies to track their movements and activities…That code has been withdrawn and will be reworked after further industry consultation, though, the IAB said. The code has disappeared from the IAB’s website.”

Consumers and citizens require real safeguards governed by law and regulation–not flimsy digital promises designed to sanction ever-expanding data collection practices.

Google’s Ad Targeting on Finance & Health via its Exchange: Do you know this?

Google tells users, policymakers and reporters that its “ad preference manager” is an effective consumer tool that addresses behavioral marketing.  But on its Doubleclick Ad Exchange, advertisers can use Google provided tools to target online consumers based on a wide range of product and issue “vertical” categories, including health and finance.  Here’s what Google says advertisers can target in the health and financial area.  Ask yourself.  Did you know this and shouldn’t all this be truly transparent, under full user control, with real safeguards about how such information can be obtained and used?  We do. Google isn’t the only one doing this, of course:
Doubleclick Category Targeting Codes:
category::Finance
category::Finance>Accounting & Auditing
category::Finance>Accounting & Auditing>Tax Preparation & Planning
category::Finance>Banking
category::Finance>Credit & Lending
category::Finance>Credit & Lending>Auto Financing
category::Finance>Credit & Lending>College Financing
category::Finance>Credit & Lending>Credit Cards
category::Finance>Credit & Lending>Debt Management
category::Finance>Credit & Lending>Home Financing
category::Finance>Currencies & Foreign Exchange
category::Finance>Financial Planning
category::Finance>Grants & Financial Assistance
category::Finance>Insurance
category::Finance>Insurance>Auto Insurance
category::Finance>Insurance>Health Insurance
category::Finance>Insurance>Home Insurance
category::Finance>Investing
category::Finance>Investing>Commodities & Futures Trading
category::Finance>Retirement & Pension

Health
category::Health
category::Health>Aging & Geriatrics
category::Health>Aging & Geriatrics>Alzheimer’s Disease
category::Health>Alternative & Natural Medicine
category::Health>Alternative & Natural Medicine>Acupuncture & Chinese Medicine
category::Health>Alternative & Natural Medicine>Cleansing & Detoxification
category::Health>Health Conditions
category::Health>Health Conditions>AIDS & HIV
category::Health>Health Conditions>Allergies
category::Health>Health Conditions>Arthritis
category::Health>Health Conditions>Cancer
category::Health>Health Conditions>Cold & Flu
category::Health>Health Conditions>Diabetes
category::Health>Health Conditions>Ear Nose & Throat
category::Health>Health Conditions>Eating Disorders
category::Health>Health Conditions>GERD & Digestive Disorders
category::Health>Health Conditions>Genetic Disorders
category::Health>Health Conditions>Heart & Hypertension
category::Health>Health Conditions>Infectious Diseases
category::Health>Health Conditions>Infectious Diseases>Parasites & Parasitic Diseases
category::Health>Health Conditions>Infectious Diseases>Vaccines & Immunizations
category::Health>Health Conditions>Injury
category::Health>Health Conditions>Neurological Disorders
category::Health>Health Conditions>Obesity
category::Health>Health Conditions>Pain Management
category::Health>Health Conditions>Pain Management>Headaches & Migraines
category::Health>Health Conditions>Respiratory Conditions
category::Health>Health Conditions>Respiratory Conditions>Asthma
category::Health>Health Conditions>Skin Conditions
category::Health>Health Conditions>Sleep Disorders
category::Health>Health Education & Medical Training
category::Health>Health Foundations & Medical Research
category::Health>Medical Devices & Equipment
category::Health>Medical Facilities & Services
category::Health>Medical Facilities & Services>Doctors’ Offices
category::Health>Medical Facilities & Services>Hospitals & Treatment Centers
category::Health>Medical Facilities & Services>Medical Procedures
category::Health>Medical Facilities & Services>Medical Procedures>Medical Tests & Exams
category::Health>Medical Facilities & Services>Medical Procedures>Surgery
category::Health>Medical Facilities & Services>Physical Therapy
category::Health>Medical Literature & Resources
category::Health>Medical Literature & Resources>Medical Photos & Illustration
category::Health>Men’s Health
category::Health>Mental Health
category::Health>Mental Health>Anxiety & Stress
category::Health>Mental Health>Depression
category::Health>Mental Health>Learning & Developmental Disabilities
category::Health>Mental Health>Learning & Developmental Disabilities>ADD & ADHD
category::Health>Nursing
category::Health>Nursing>Assisted Living & Long Term Care
category::Health>Nutrition
category::Health>Nutrition>Special & Restricted Diets
category::Health>Nutrition>Special & Restricted Diets>Cholesterol Issues
category::Health>Nutrition>Vitamins & Supplements
category::Health>Oral & Dental Care
category::Health>Pediatrics
category::Health>Pharmacy
category::Health>Pharmacy>Drugs & Medications
category::Health>Public Health
category::Health>Public Health>Health Policy
category::Health>Public Health>Occupational Health & Safety
category::Health>Public Health>Poisons & Overdoses
category::Health>Reproductive Health
category::Health>Reproductive Health>Birth Control
category::Health>Reproductive Health>Erectile Dysfunction
category::Health>Reproductive Health>Infertility
category::Health>Reproductive Health>OBGYN
category::Health>Reproductive Health>Sex Education & Counseling
category::Health>Reproductive Health>Sexual Enhancement
category::Health>Reproductive Health>Sexually Transmitted Diseases
category::Health>Substance Abuse
category::Health>Substance Abuse>Smoking & Smoking Cessation
category::Health>Substance Abuse>Steroids & Performance-Enhancing Drugs
category::Health>Vision Care
category::Health>Vision Care>Eyeglasses & Contacts
category::Health>Women’s Health

Google & Microsoft Tout their Mobile Targeting Clout, inc. Behavioral, Location, Gender, etc.

My CDD and USPIRG asked the FTC in January 2009 to investigate mobile marketing and its threat to both privacy and consumer protection issues (Ringleader Digital, now the subject of lawsuits and stories in the WSJ and NYT, was included in the complaint, btw).  Online mobile marketers, including Microsoft and Google, illustrate how regulators in the U.S. and abroad should require safeguards to protect the public from unfair and deceptive practices–including those that involve their privacy.  In Ad Age, both Google and Microsoft loudly proclaim what their mobile marketing services can do for brands, ads and marketers.  Here are some choice excerpts:

Microsoft:  “Microsoft Advertising’s industry-leading mobile display and search advertising solutions engage more than 43 million on-the-go U.S. consumers each month—regardless of a user’s mobile phone or wireless carrier. Its innovative ad placements and ad formats include display, rich media, search, video and custom in-app ad units…

Advanced Targeting Options
  • Profile targeting: age, gender, household income, location, time of day
  • Behavioral targeting: more than 120 custom segments (e.g., “movie watchers” and “business travelers”)
  • Device: make and model
  • Wireless carriers: on-deck inventory
  • Keyword targeting: exact or broad match…Complete mobile ad solutions for automotive, CPG, entertainment, financial services, retail, technology, telecommunications, travel and other sectors…
  • More than 43 million, or 55 percent of active mobile web users in U.S.
  • More than 80 million active mobile users globally in 32 countries.”

Google: “Today’s consumers are on the move. More than ever before, audiences are searching and browsing the web on their mobile devices. How do advertisers connect with the on-the-go consumer…As customers go mobile, advertisers need smart mobile advertising strategies. With Google, they can easily target and tailor messages according to location and automatically show their customers relevant local business information or phone numbers to enable them to take immediate action. Once a campaign is up and running, marketers can measure their results via detailed reports. Additionally, integrated mobile reporting in Google Analytics allows them to track and optimize conversion, e-commerce and engagement metrics on mobile devices. They can take advantage of Google’s mobile-specific ad formats. Click-to-call text ads, animated mobile banner ads, click-to-download ads and other display ad formats are examples of how Google is innovating for the small screen.  Google closed its acquisition of AdMob, one of the world’s leading mobile advertising networks, in May. AdMob’s innovative rich media ad units—including full-screen expandable, animated banner and interactive video—create opportunities for advertisers to engage with a relevant audience on their mobile devices. Now the Google and AdMob teams are working to create new ways to deliver engaging and innovative advertising experiences that will help marketers drive their businesses forward…

CASE STUDY

CHALLENGE: Esurance, a direct-to-consumer personal car insurance company, wanted to ensure that customers could do business with it on their own terms and at their own convenience… To make the connection between mobile users and Esurance agents, Esurance used Google mobile ads with integrated click-to-call functionality. The CTC ads gave mobile users the option of clicking through to Esurance’s mobile-optimized landing page or initiating a phone call with a licensed insurance agent…Results…

  • Boosted conversion rates: Click-to-call mobile ads drove a 30 percent to 35 percent higher response.”

PS:  Attention Music Lovers.  In the same Ad Age piece, the online music service Pandora exclaims that it can provide:“Through powerful hypertargeting, reach the right person, at the right time, without waste. Target based on age, day, gender, location, mobile platform, time and type of music…Pandora offers a broad array of formats and rich media functions to create an immersive mobile experience, including:

  • Tap to video
  • Drag and drop
  • Tap to app
  • Tap to call
  • Tap to e-mail
  • Tap to expand
  • Tap to find a location
  • Tap to iTunes
  • Tap to mobile webpage
  • Standard banners”

Yahoo’s Targets Millions of Users for its Largest Advertisers, via a “Magic Formula” Powering its Ad Auction System

Preston McAfee Magic FormulaThat’s the formula Yahoo is using to please its largest advertisers, explains an article in The Register.  The report explains that Yahoo’s economist Preston McAfee has created a “magical formula” for its ad targeting service:  “a formula designed to keep Yahoo!’s largest advertisers as happy as possible. It lets each of those guaranteed-contract advertisers pick and choose — in remarkably precise fashion — how their ads are targeted, even though there are more than three trillion possible targets…Yes, Yahoo! has advertisers who only want to reach women between the ages of twenty and thirty. But it also has advertisers who only want to advertise in cities where the sun is shining. There are brokerage houses who only want to advertise when the stock market is up…What is really ‘magic’ about this is that it gave us a backdoor way to price three trillion different pieces of advertiser demand,” McAfee says…The setup also gives Yahoo! fine-grain control over each advertiser’s campaign. “It gives us a dial to favor an advertiser,” he continues. “If one of our advertisers is not getting enough impressions, we turn the dial and increase their bids, to make sure we fulfill the contract.”

But what’s needed is a policy formula–that creates privacy and other consumer protection safeguards.  Online marketing’s use of advanced computing systems and real-time ad auctions of data on individual users underscores the problem–the industry is running amok.   Consumers shouldn’t be subject to powerful invisible technologies that track, profile, target and sell them to the highest bidder.

Google Sells To Advertisers: User Profiles for Consumers Looking for Credit Cards [UK]

The new Consumer Financial Protection Board–and the FTC–will have their digital hands full as they begin to investigate the stealth world of online financial marketing.   Disclosure and consumer control has to be built into these applications–but they are not.  Of interest is a trial run by Google in the UK to sell credit cards, part of its move into “comparison” marketing.  According to New Media Age [my emphasis], “Google is testing its own [credit card] comparison product, launched earlier this year.  Currently focused purely on UK credit card providers, it lets users search on Google, click on an interactive ad showing rates from participating advertisers and takes them to a comparison page. Advertisers bid for user profiles that match their target audience and pay on a cost-per-lead basis.”

Take a look at Google’s credit card comparison site; does a consumer know about the advertiser bidding to buy their profile? See also Google similar product selling mortgages here in the U.S.

Facebook Promotes its “Virtual” Currency–and its data tracking–via Cancer Charity

When big advertising and media companies want to introduce a new or expanded form of marketing, they generally found some non-profit cause.  Who can complain about the techniques used–say for mobile ads, data collection, online games–when the funds are earmarked for a worthy charity?  It’s a time honored tactic, done by the Ad Council, initiatives such as Pepsi Refresh and now Facebook.  AllFacebook reports that “Stand Up to Cancer” is asking supporters to donate using “Facebook Credits.”  It explains that:

Facebook has been making great progress in its goal of making Credits the main or exclusive virtual currency on the site, with Zynga the latest social game company to agree to an exclusive deal. Facebook makes a 30% cut when users spend Credits on virtual goods in social games such as Farmville or Mob Wars… Facebook does gain in other ways from the collaboration, besides feeling good about helping cancer research. The fundraising event will help promote Facebook Credits as a payment system, both on the site through user activity and potentially also through the hour-long celebrity fundraising telethon on ABC, CBS, Fox, NBC and some cable channels …

On the Facebook “Stand Up to Cancer” page, one can learn that “Facebook Credits are the safe and easy way to make payments on Facebook. You can buy Facebook Credits using PayPal, your credit card, or mobile phone. Please keep in mind if your donation includes Facebook Credits that you received for free, the value of your donation will be reduced by those free credits. Also, your donation may not be tax deductible, so please consult a tax professional. For this event, Facebook is waiving its processing fees and 100% of your donations go to Stand Up To Cancer.”

Facebook has ambitious plans for its Credit initiative: it “wants Credits to be the universal currency in social games on its platform.”  The social network is using Credits with a Target stores partnership.  Earlier this month, Facebook took “a step closer to establishing Credits as the exclusive payment system for virtual goods on the social networking site, wrapping up a deal with the biggest social game company, Zynga…Facebook gets a 30% cut from the game developer for all transactions via Credits.” Virtual goods, as its called, is already a major business–estimated with $1 billion sales this year.

But there are questions around Facebook Credits and other virtual currencies–on privacy, consumer protection rules, and digital marketing.  Charities and others should be more cautious when endorsing such schemes.  The FTC, EU and other regulators need to place digital currencies on a real–not virtual–policy radar.