Category: FDA

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.

Retargeting 3.0–It tracks and observes a consumer, adds new data–and changes its sales pitch

Yesterday, the New York Times ran a front-page story on retargeting--the practice of stealthily tracking an individual user online in order to keep delivering sales pitches–including for health and financial products.  We gave the NYT lots of information, including how so-called “smart” ads technologies are now melded with retargeting–for so-called “Retargeting 3.0.“  [My CDD and USPIRG, btw, asked the FTC to investigate retargeting back in 2007 and to protect consumers].  Here’s some of what we sent to the Times.

From Criteo:“Retargeting allows you to find your previous website visitors across the Internet and display relevant banners to lead them back to your website to complete their transaction. Bringing ready-to-buy users back to your website after they have left should be a key part of your customer acquisition and conversion strategy. Criteo provides a breakthrough dynamic personalised retargeting solution…Criteo has revolutionised retargeting with the most sophisticated form of dynamic personalised retargeting. Over the past decade there has been a slow evolution of retargeting. This third generation of retargeting enables an advertiser to show each lost visitor a unique banner based on his/her very specific past interactions on the advertiser’s website. This new form of retargeting involves on-the-fly, real-time personalised banner creation and has a dramatic impact on campaign performance.”

Retargeting data now incorporates user information from outside demand side platform sources, and can the rights to retargeting you can be sold to the highest bidder via online ad exchanges, such as the one run by Google.

A recent MediaPost panel sums up how retargeting has evolved:
Re-Thinking Re-Targeting 
Re-targeting continues to be the tried and true workhorse of behavioral targeting. Tagging and retrieving someone who has already shown an interest in your business is about as simple a use of the BT model as it gets. But it is not so simple any more, and like everything else in this complex ad economy, re-targeting too is in for a upgrade. Dynamic ad creation driven by recommendation engines offers new opportunities to marketers to be even more effective. Demands for greater accountability, control over placement and clearer attribution press the ad networks and tech providers to provide new levels of transparency. And just like everyone else in the ad economy, re-targeting is working its way through questions about metrics and pricing, do marketers optimize and pay according to clicks, conversions, purchase? And what role does retargeting now play in this larger field of audience creation and the age of the DSP?

Retargeting illustrates how online marketers have deployed armies of digital private detectives to shadow us online.  They watch us closely, take notes, even learn about us, and then appear when we don’t expect it.  Consumers shouldn’t have to confront such digital surveillance.  Retargeting is “Exhibit A” in making the case to lawmakers that consumer privacy online should be protected.

Questions should also be raised about retargeting and consumer protection.  Should I get a better discount because the data collected about me indicates I spend more or live in an expensive neighborhood? Or that because they believe I am a certain ethnicity, I might spend more on certain products.  Retargeting is a non-transparent marketing technique that raises important consumer protection issues about the use of digital advertising.  Consumers require a fair deal online.

PS:  Here’s how Google explains its retargeting service–which in typical Silicon Valley meets George Orwell fashion, it calls “remarketing’ [for the Google Content Network]: “Remarketing is extremely effective because it targets a highly-relevant audience. With it, you can target users who:

  • have visited your website or viewed specific product categories on your site
  • didn’t convert or who abandoned their shopping cart
  • have converted (in order to up- or cross-sell to them)

If you’re already driving traffic to your site through other means, like contextual targeting or your search ads, remarketing is a great complement to those efforts to increase your return-on-investment (ROI).”

and we believe in fair play.  Here’s what Microsoft says its “remessaging” service can do:   “After consumers visit your site, see one of your campaigns or click through on an ad, remessaging offers several ways to continue the conversation and ensure that your message is seen by the people to whom it matters most.  With site remessaging, you can re-engage a consumer to complete a purchase or further engage with your brand. Creative remessaging drives brand perception, awareness, and favorability, and enables advertisers to re-engage audiences who have seen or clicked on an existing campaign. Email remessaging complements email assets such as newsletters by placing tags and accessing the same email recipients to reinforce your message to a loyal audience.”

and Yahoo!:  “…Enhanced Retargeting, which combines standard site retargeting with dynamic ad generation. For example, users who visit an airline website to check offers for flights from SFO-JFK can be served a personalized offer for that specific flight when they visit a page within the Yahoo! Network. In a recent trial, a market-leading online travel company saw a 230% increase in total bookings and a 651% increase in click-through rate when comparing Enhanced Retargeting to their traditional retargeting campaign.  Recognizing the need for more focused audience segmentation and improved control, Yahoo! Search Marketing will offer advertisers Enhanced Targeting capabilities for Sponsored Search and Content Match programs. New features are designed to extend the advertiser’s control over where and when an ad is shown at both the campaign and ad group level, including what time of day and day of the week an advertiser would like campaigns to run (ad scheduling) and what age and gender they’d like to reach (demographic). Advertisers will be able to vary their bids for different segments in order to increase their ability to reach the desired audience.”

Google: Creating a “dynasty” in online data ad targeting

From the Connected Marketing Week in SF, via ClickZ:  Google is simultaneously attempting to fill the role of ad exchange, ad network, DSP (through its Invite Media acquisition), and media agency…Michael Rubenstein, president of AppNexus and the former head of Google’s ad exchange efforts, said Google has been admirably fair and transparent. But he said that could change.”Google is putting together the pieces to form a dynasty,” he said. “So far they’re behaving pretty well as far as keeping the ecosystem open to everybody, probably because they need to. But we’ll see what happens over time as they accumulate more market power.”

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.

 

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.

Location Privacy for Mobile Marketing: Time for Congress/FTC/States to Protect Consumers

Last year, CDD and USPIRG filed a complaint on mobile marketing, privacy and deceptive practices at the FTC.  We know that it woke up the commission to the issue–but they are acting too slow.  The recent decision by Apple to expand its data gathering for location ad targeting on the iPhone (and do a about-face on the privacy issue, really) is just one example of why safeguards are required immediately.  As Mobile Marketer explained in an article about what Apple is doing:

“Location is an important element that illustrates the promise of mobile and social,” he said. “Look at the way that the mobile environment is developing—proximity marketing is really the direction that we’re headed [Noah Elkin, senior analyst at eMarketer].

“Being able to marry data about a user’s location and data about a user’s likes and dislikes—being able to present a relevant offer—raises the bar in terms of the relevancy of the advertising messages.”…Apple acquired Placebase and Quattro recently, which gives it a mapping platform and an ad network.

“Collecting user positioning data is the next necessary ingredient for ‘location intelligence,’ which will bridge the gap between these two acquisitions and enable them to deliver a really relevant experience based on place and time,” Mr. Goodman said [Alistair Goodman, CEO of 1020 Placecast].

Meanwhile, companies like Loopt that merge social and mobile marketing techniques are extending how they target consumers, inc. data collection.  Loopt explains in its new “mobile rewards” service for marketers that:

Loopt Star offers retailers a virtual loyalty card, allowing them to connect directly with their customers when they’re out and about, driving foot traffic and encouraging repeat visits. It offers retailers and businesses a unique “cost per visit” business model.

“Hyper-local advertising should be about much more than simply clicking on a banner ad—it should be about connecting with brands and getting rewarded for loyalty. Brands want to turn their existing customers into better ones,” said Sam Altman, co-founder and CEO of Loopt. “Loopt Star enables brands to create customized campaigns that reach their customers in a completely targeted, interactive way that rewards the behaviors they want.”

In addition to brand-specific customized rewards, Loopt Star will also allow the person with the most check-ins at a specific place to become the “Boss” of that location. Leaderboards allow users to compete with their Facebook friends to for the most check in points. Dozens of hidden Achievements will also be available to Loopt Star game players at launch — to be won when certain check-in actions are performed.

Loopt Star adds a key social component by being the first mobile location App based purely on Facebook Connect. Users can share their current location in real-time with all of their friends on Facebook, and alert friends via their Facebook News Feed about special offers they see on Loopt Star that are available to anyone. With its close integration into Facebook, Loopt Star allows Facebook friends stay up to date on where friends are and what they’re doing…

Brands can use Loopt Star to create fun, engaging campaigns that deliver foot traffic, connect with customers, build a strong community and increase their Facebook fan base. Customized brand campaigns can specify:

  • The qualifying retail locations
  • The qualifying time of day, day of week, or time span
  • The qualifying number of check in times
  • Whether they need to check in with friends, and the number of friends
  • Which rewards are available to friends through the Facebook newsfeed (for example, “the next person to check into Joe’s Restaurant today gets free dessert” can appear on the newsfeed to all Facebook friends.)
  • Specific and virtual rewards, such as Achievements, special titles, discount coupons, etc. Special titles allow retailers to offer a custom “Boss” title and graphic to the person who checks in the most at an individual location

Loopt is working directly with top brands to customize all aspects of Loopt Star, from the activity needed to earn the reward, to the type of virtual or real-world reward earned.

For example, Loopt Star users can check into any bar in the United States with two Facebook friends, and everyone instantly earns five free songs from leading popular music recording artists. (To see the songs available to win, go to http://www.amplified.com/loopt.)

 

Yahoo uses neuromarketing for online ads: helping “maximize emotional connection and drive higher purchase intent” for Pepsi and others

The FTC and EU will need to develop safeguards on the use and role of neuromarketing techniques in advertising, especially when deployed for online campaigns.  Here’s an excerpt from a Yahoo post on the power of neuromarketing:

“…how do you measure the emotional connection in your advertising? Are some advertising mediums better than others in making that emotional connection? To answer these questions, Yahoo! partnered with NeuroFocus, a market leader in neurological market research. Yahoo! measured the brain waves of 74 people in real-time as they viewed online, print, and television executions of three ad campaigns from Pepsi, Infiniti, and Yahoo!…The simple answer is, consumers can’t hide their brain waves. By measuring the direct response of advertising at the brain level, we are able to observe and quantify pre-cognitive reactions
before reporting biases set in.

In this study, we specifically measured emotional engagement, purchase intent, and overall effectiveness. Ad responses were measured on a 10 point scale, with the median ad performance around 5.0.

GeographicTargeting_web

We found that the ads from all three brands performed above average across all platforms. However, when ads are optimized for the Internet, they maximize emotional connection and drive higher purchase intent. In fact, by designing ads that fully leverage the interactive strengths of the online platform, advertisers can even outperform TV in emotional engagement…When ads are optimized for the Internet, they maximize emotional connection and drive higher purchase intent
By taking full advantage of the unique capabilities of the Internet platform, the Infiniti ad scored higher on emotional engagement, purchase intent, and overall effectiveness than both the television and print version of this ad.”

from:  Making the Emotional Connection:  Advanced neurological research reveals deeper insights into ad effectiveness by medium.  Yahoo.  May 17, 2010.

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

Google to Host Online Ad Lobby as it Campaigns Against Privacy bill

Google is going to help the interactive ad lobby in its campaign to undermine privacy legislation.  The Interactive Advertising Bureau (IAB) plans a DC lobbying blitz on June 14-15, bringing in its cadre of small publishers.   As the IAB explains, “our day of advocacy gets underway as you divide up into teams for individual meetings with members of Congress and their staffs. Each team will be assigned a “chaperone” to help you make your way around the Hill, as well as answer any questions you might have.”

The message the IAB reps will make will undoubtedly be that the Internet way of life as we know it will end if Rep. Boucher’s proposal–or most any other bill protecting privacy–is enacted.  Sort of the Internet meets the film 2012:  all that will be left, if the data stops flowing for targeting, will be a handful of digital survivors.  Google, which serves on the executive committee of the IAB board [along with Microsoft, NBCU, Disney, CBS], plays a key role in the lobbying plans.  The small publisher/lobbyists are to be “guests of honor at a special networking reception and dinner at the Google offices in Washington, D.C.”  Presumably, at the “Cocktail Reception & Dinner – Courtesy of Google,” the troops will be rallied to the `defeat the privacy bill’ cause.  A guest speaker at Google HQ for the event is the IAB CEO Randall Rothenberg.

I know Google uses its facilities to host many meetings;  I have had lunch there and a dinner once at events where Google was discussing its data collection practices.  But Google claims to want to see meaningful national privacy legislation.  Yet they are aiding and abetting the anti-online privacy lobby (which is also leading the effort to undermine the FTC’s role in consumer protection).  The irony here is that Google appears to have successfully convinced Mr. Boucher that its ad preference manager system should be the basis for a safe harbor in the bill.  But Google likely wants to facilitate weakening even Mr. Boucher’s proposal–hence the dinner, drinks and cheer leading that will no doubt be heard across to Capital Hill next month.