The Financial Meltdown & Media Deregulation Connection

Much of journalism has a `deer-caught-in-the-headlights’ quality as it reports on the current fiscal crisis. Why was this issue off the radar screen for so many reporters and producers? Part of it is that the very system that underlies professional reporting is connected (and funded) by the very forces that have helped wreck the economy. But over the last ten years, journalism in the U.S. has undergone a further serious deterioration, with its ranks thinned. Investigative reporting is on the endangered professions list (with investment bankers perhaps now joining that list as well).

Media consolidation has helped play a role here, further contributing to a news culture where reporters and their parent news organizations really don’t spend time examining beneath the surface of events. All the media mergers we have witnessed since the 1996 Telecom Act has decimated newsrooms, slashed news budgets, and has left journalism on life support (at best).

Just as the Congress failed to engage in meaningful oversight of the financial markets–and spurred the crisis along through deregulation– so too have they largely failed to address the impact of what’s called media deregulation (which meant eliminating rules designed to benefit both the public and press with policies that favored their largely giant corporate owners). As we write in Digital Destiny, Republican and Democrats have long been captured by the influence-wielding (and job promising and donation giving) Big Media “well-connected.” We blame the current deep crisis that has undermined the country’s system of reporting and journalism on the failure of policymakers to ensure meaningful diversity of ownership, public service rules, and new proactive policies which would have addressed this critical problem.

Former FCC Chairman Michael Powell’s key congressional patron was Sen. John McCain. Powell’s enthusiastic and uncritical embrace of a deregulatory philosophy during his recent tenure at the helm of that oversight agency helped spur media mergers, journalism lay-offs and other editorial cutbacks. Powell is currently a “technology adviser” for the McCain campaign.  For those of you who are interested in learning more about Mr. Powell and Senator McCain, it’s covered in Digital Destiny (New Press, 2007).

We don’t want to suggest our column is intended to be partisan. Many people know we have been equally critical for the failure of William Kennard, Mr. Powell’s predecessor during the Clinton era, to respond to the call by consumer groups to implement open access for broadband (now known as network neutrality). Mr. Kennard is one of Senator Obama’s major donors. We were also critical of Reed Hundt, Mr. Kennard’s predecessor. Both Pres. Clinton and Al Gore hailed the passage of the 1996 Telecom Act. Frankly, we have concerns about the fate of public interest media and telecommunications policies regardless of who wins the election. But it’s important, in our view, to recall history–including the recent events involving former FCC chairman Michael Powell. How both candidates would fix the mess with our communications system–including ensuring meaningful content and ownership diversity for digital media–should be part of the national debate.

We should realize by now that deregulation of the financial markets contributed to a culture of greed that bought down—at taxpayers expense–an economic house of cards. Fixing our system of journalism for the digital era must be on the policy agenda [we need legions of investigative reporters asap].

Google Policy Blog Fails to Address Yahoo! Deal & Threat to Competition & Privacy

Google’s post today by Tim Armstrong on why its proposed deal with Yahoo! isn’t a competition problem attempts to weave and spin this critical issue. It’s very revealing as well about Google’s own failure to develop into a company which honestly engages in self-examination and reflection. As one can see from the current melt-down of the financial markets, making money shouldn’t be the sole motivation for behavior. Google should have been able to acknowledge that a major deal with its leading search competitor raises serious questions worthy of broad debate and critical analysis.

The failure of Google to respond to the concerns raised by the World Association of Newspapers this week is reflective of this. Newspapers and content publishers are rightly worried about ensuring a diversity of funding sources for the production of news and other information necessary for a democratic society. It’s not as simple as Google’s Tim Armstrong (who wrote today’s post) suggests, that this deal with give consumers “relevant ads” and help keep Yahoo afloat as a robust competitor. In fact, Armstrong and Google, we believe, aren’t being candid here. When an online ad company dismantles (or turns over) a core part of its search function to its leading competitor, it becomes fatally wounded. As Google knows all well, search and display (and online content) are all intertwined. Yahoo’s future, in my opinion, as a full service online ad company is endangered, as more businesses realize that its search ad business relies increasingly on Google.

There are many troubling privacy issues with this deal, something Mr. Armstrong tries to dismiss by saying that [our emphasis]: “[W]e have taken steps in the Yahoo! agreement to make sure that neither company has access to personally identifiable user information from the other company.” But that leaves open an array of personal data collection points, such as cookies, IP addresses, and other statistical analysis online related data. (The failure, by the way, for the privacy issues of the proposed deal to be investigated by the FTC and Congress, is also disturbing).

Mr. Armstrong is Google’s “President, Advertising and Commerce, North America.” He directs their online ad sales. In responding to concerns about competition in the online advertising market–given its links to broader societal concerns–more than just assurances from the sales department is required.

Behavioral Targeters Use Our Online Data to Track Our Actions and, They Say, to “Automate Serendipity.” Attention: FTC, Congress, EU, State AG’s, and Everyone Else Who Cares About Consumer Welfare (let alone issues related to public health and ethics!)

NPR’s On the Media co-host and Ad Age columnist Bob Garfield provides policymakers and advocates with an arsenal of new material that support the passage of digital age consumer protection laws. In his Ad Age essay [“Your Data With Destiny.” sub required], Garfield has this incredibly revealing–and disturbing–quote from behavioral targeting industry leader Dave Morgan (Tacoda) [our emphasis]:

“Now we have the ability to automate serendipity,” says Dave Morgan, founder of Tacoda, the behavioral-marketing firm sold to AOL in 2007 for a reported $275 million. “Consumers may know things they think they want, but they don’t know for sure what they might want.”

Garfield writes that “In 2006 Tacoda did a project for Panasonic in which it scrutinized the online behavior of millions of internet users — not a sample of 1,200 subjects to project a result against the whole population within a statistical margin of error; this was actual millions. Then it broke down that population’s surfing behavior according to 400-some criteria: media choices, last site visited, search terms, etc. It then ranked all of those behaviors according to correlation with flat-screen-TV purchase…“We no longer have to rely on old cultural prophecies as to who is the right consumer for the right message,” Morgan says. “It no longer has to be microsample-based [à la Nielsen or Simmons]. We now have [total-population] data, and that changes everything. With [those] data, you can know essentially everything. You can find out all the things that are nonintuitive or counterintuitive that are excellent predictors. … There’s a lot of power in that.”

There’s more in the piece, including what eBay is doing. As the annual Advertising Week fest begins in New York, we hope the leaders of the ad industry will take time to reflect on what they are creating. You cannot have a largely invisible system which tracks and analyzes our online and interactive behaviors and relationships, and then engages in all manner of stealth efforts to get individuals (including adolescents and kids) to act, think or feel in some desired way. Such a system requires rules which make the transaction entirely transparent and controlled by the individual. The ad industry must show some responsibility here.

Time for National Policy Providing Basic & Free Broadband for All: Metering and Ad-Supported Access Not the Answer

As Time Warner and the other broadband monopolists craft schemes to begin imposing pricing plans for broadband which limit and meter our online use, it’s time to push for a meaningful public interest “universal service” digital age policy. A 21st Century democracy should provide a reasonable amount of free access to every citizen in their home (along with more plentiful free access in schools, libraries, and community sites). Today’s New York Times has an non-analytical article on the Time Warner broadband metering trial [“Putting a Meter on the Computer for Internet Use.” Reg may be required].

Under Michael Powell’s FCC, the Bush Administration gave a broadband monopoly to the phone and cable giants–ending the hope for any serious competition. By rewarding the old monopolists (cable TV & phone) with a new digital domain to lord over, the Powell FCC ensured that consumers and citizens would eventually have to confront threats to both affordable service and content diversity online [that’s the network neutrality part of the story]. The plan by Google and others to free up extra spectrum isn’t a complete answer either. More bandwidth governed by an advertising-centric business model will foreground some kinds of content over others–leaving, we believe, digital content that illuminates democratic expression a hostage to commercial forces.

That’s why everyone must be guaranteed some form of free basic bandwidth so they can access news, information, and even entertainment without fear of running afoul of a cut-off (or huge bill) by their local cable or phone ISP. What that free access amount should be needs to be debated; but it should be generous enough so individuals can consume mighty multi-media amounts of educational, civic, and political content.

It will be a true test for the groups working on communications policies–as well as the leaders of our major political parties–to see if they have the vision and courage to call for what is right. If they merely confine themselves to be a part of the safe and narrow dimensions of what are the usual U.S. media policy debates, they will fail to address one of the critical public interest issues of our time.

World Association of Newspapers Tells DoJ What CDD Has Been Saying: Google/Yahoo Combo Deal Threat to Newspapers and Online Content Diversity

Last July, my CDD wrote to the Department of Justice Antitrust Division raising a number of concerns about the proposed consolidation between Google and Yahoo! In particular, we were concerned about the impact the deal melding together the two leading online ad companies for newspapers would have on that imperiled business. Now, the World Association of Newspapers has issued a statement opposing the deal, citing many of the same issues. Here’s a link and the first few graphs of their important communique:

For over 60 years, the World Association of Newspapers [W.A.N.] has vigorously defended the freedom of the press. From its beginning, W.A.N. has recognized that newspaper journalism can be truly free only if newspaper publishers are economically independent. This means having the freedom to decide what news to publish, where to publish it, and the ability to build sustainably profitable businesses around it. As newspaper publishers endeavor to adapt to the Internet, their independence increasingly hinges on their ability to monetize news through online advertising.

 

In this pursuit, one company – Google – has emerged as the significant market power in online advertising. Google has built a very impressive business in 10 years, generating billions of dollars by indexing and linking to online content, then profiting from it through Google’s own ads. However, of the very impressive $48 billion in online advertising revenue that Google has amassed since 2001, less than one third of that has been returned to online publishers (1), and a much tinier fraction has benefitted the news and content generation industries. As such, most publishers are acutely aware that Google’s ever-tightening grip on internet traffic, its unbridled use of online content, and its dominance in online advertising poses a very real threat to the continued viability of the independent content generation industry.

It should be pointed out that most of W.A.N.’s 18,000 newspaper title members are, in fact, regular customers of Google (and to a lesser extent, Yahoo). These publishers depend on Google (and Yahoo) for a significant portion of their online advertising revenue and rely on each company’s respective search engines (both their paid search ads and their natural search results) to drive traffic to their websites. To date, competition between both these two search companies has provided a necessary check to any potential market abuses, and has helped to ensure that publishers and content generators are capable of earning an equitable and fair return on their content.

It is in that context that W.A.N. believes that the competition that currently exists between Google and Yahoo is absolutely essential to ensuring that our member titles receive competitive returns for online advertising on their sites, and for obtaining competitive prices when they purchase paid search advertising. In our view, the proposed advertising deal between Google and Yahoo would seriously weaken that competition, resulting in less revenues and higher prices for our members. W.A.N. is also concerned that this deal would give Google unwarranted market power over important segments of online advertising.

While Google and Yahoo have stated that their proposed agreement is limited in scope to North America, W.A.N. believes it will have a significant and adverse effect on all newspaper publishers worldwide, as it could have the potential of reducing the incentive for Yahoo to vigorously compete against Google across the globe.

More Google Ad Tag Targeting & Data Collection via DoubleClick’s new “DART Natural Search”

Google now does the hiring and firing over at DoubleClick. It’s also responsible, of course, for its business activities and privacy policies. Here’s an excerpt from a 2008 “beta programme” called DART Natural Search. We think the growing role of user tracking across a myriad of online content, which other companies are also doing, is a very disturbing practice:

“By working with DART Natural Search, the impact of the entire search experience and click history can provide directional and prescriptive insight for your business’ search strategies. The DART Natural Search solution empowers businesses to better understand consumer search activities, through a robust tool that leverages existing spotlight tags used in paid search management and a simple tag on landing pages. DART Natural Search reports on where your traffic originates via the following search engines properties. [they list Google, MSN, Yahoo, Windows Live, ASK & AOL]…Conversion data from both Paid Search and Display is de-duplicated. And you get full exposure-to-conversion pathway reporting, giving you a snapshot into what influences a customer purchase decision… DoubleClick implements a state-of-the-art, single tracking tag and system for both Paid Search and Natural Search… By understanding the complete picture of the online media mix, you gain insight into the visits and conversions attributable to natural searches. Specifically for Natural Search, you’ll be able to understand what country people search from, and the search engine property they use (images, video, news, etc). Lastly, learn what search terms and landing pages are most valuable to your business.”

source: “Gain Insight into Your Customers’ Natural Searches.” DoubleClick [UK]. 2008.

Behavioral Targeting: A “Guide” from Yahoo!

Here’s an excerpt from a Yahoo! description of its behavioural targeting capabilities,via its UK site:

“What is behavioural targeting? Online has always been able to offer varied targeting opportunities, such as demographic, geographic and interest targeting, based on a user’s claimed interest and activity at one specific point in time. However behaviourial targeting goes one step further. Behaviourial targeting is different in that it allows advertisers to deliver specific targeted ads to consumers interested in a product, when they are close to the point of purchase, by leveraging actual online user behaviour. Even better, because the ad is served to a person based upon relevancy, it can be on a page that’s not directly related to the product…

Behavioural targeting anonymously follows someone’s interests, patterns and behaviours so you can speak to them knowing they want to be spoken to, which means less campaign wastage. This can be done by monitoring a number of consumer actions including:

> Search terms entered
> Editorial content viewed
> Ads clicked on
> Channels or micro sites
…Yahoo! behavioural targeting gives each category a unique “product purchase cycle” to ensure it reaches consumers for the correct duration while they are in market for that product. These cycles are based on a rigorous investigation of a consumer’s actions in the buying process. The frequency and intensity of these actions change the closer the consumer gets towards the point of purchase, allowing distinct periods of brand consolidation and purchase intent to be identified. Behavioural targeting allows ads to be strategically delivered to these exact points of the process…

Yahoo! tracks historical behaviour – who clicked on ads in this category in the past and what actions led to this click? Each user is then scored on how likely they are to respond to ads in this category. The ads are then delivered through behavioural targeting, which will only reach those judged to be in market and ready to respond to that specific product category.

How does it work? Behavioural targeting anonymously follows someone’s interests, patterns and behaviours so you can speak to
them knowing they want to be spoken to, which means less campaign wastage. This can be done by monitoring
a number of consumer actions including:> Search terms entered
> Editorial content viewed
> Ads clicked on
> Channels or micro sites visitedYou can then weight each person according to their relevancy to a particular industry category and their exact position within the buying process. This can be worked out by the frequency and how recently they have shown an interest in a specific product. For example, if someone visits Yahoo! Travel and searches for flights or travel insurance this will increase their rating for the travel category. Naturally they will also fall into the finance and insurance category and their subsequent actions will determine how relevant they are to

Google Pushes Junk Food via Burger King Online “Branded Content” ‘Toon Deal [Do a Search for Obesity Crisis and Search Engines]

Google will launch tomorrow a new online series sponsored by Burger King that features “animated webisodes” created by Seth MacFarlane (of Fox’s “The Family Guy”). Google will be promoting the series via its YouTube service as well as on its Adsense Content Network. Burger King gets its logo and mascot in a spot. Google says, notes one online publication, that its Adsense network will only target “18 to 34” year old men. The same report explained that “Burger King gets a direct line into its consumers, who find these nuggets of entertainment where Google might otherwise post ads. Google says this is its biggest-ever deal using the Google Ad Network to distribute and monetize content. I spoke to Alexandra Levy, the director of Google’s relatively new Branded Entertainment division. The idea is that Google has all this inventory and access and branded entertainment may prove a more compelling way to communicate an advertiser’s message.”

For the folks at Google to empower Burger King ads during the current youth obesity crisis is poor judgement on its part. Google isn’t alone, however. Microsoft, Yahoo and others are also backing the digital targeting of young people with unhealthy food and beverage products. Google should think more carefully about the consequences to the nation’s health from the products it promotes (and also consider what will eventually happen to its brand reputation).

A Few Thoughts on Google, Data Collection, and Privacy: The Search Giant Blinks as Regulators Review

Google’s announcement today is a classic case study on how modern media companies deal with pressure from regulators and advocates. The company announced it would “anonymize IP addresses on our server logs after 9 months.” First, this would not have occurred without the extraordinary pressure brought by EU officials, especially data protection commissioners. [We should also thank numerous privacy and consumer advocates]. Nor would it have happened so readily if Google wasn’t trying to appease policymakers to ensure it can continue unfettered its online advertising shopping spree–such as DoubleClick and the pending joint venture with Yahoo! (and soon perhaps Verizon). Google blinks a bit on privacy when its corporate plans are under the regulatory cross-hairs (such as precisely this moment by the U.S. Department of Justice).

Google still needs to really limit its data collection practices, and become the global leader in privacy protection. It needs to become fully transparent about the myriad–and ever-growing–ways it collects, analyzes, and utilizes consumer data. It shouldn’t take regulatory review, policy pressure, or an attempt to blunt the outcome of a review from competition authorities, for Google to do the right thing. More coming.

Why We Require Rules Regulating Political Ads Online

We have long been calling for rules regulating political online and digital advertising. Beyond the privacy concerns, which are enormous, we fear that the same big-money driven politics will be played out online. The time to impose “free time” and campaign limits for digital political advertising is now (along with rules governing data collection and profiling). Here’s a quote about a new study on search and politics [our emphasis]

“With no restrictions on how much an individual or political action committee can spend buying search terms, and no record of who is buying the ads, the candidate with the most sound search strategy could end up swaying the remaining undecided voters and winning the 2008 election,” stated Kevin Lee, CEO and co-founder of Didit.”

Big money, I suggest, will change the way the Internet (and other digital media, inc. mobile web) as we know it operate.   We should be addressing this issue now, before–like our current corrupt system–it becomes a inextricable part our political culture.