Forget Targeted Ads -- I'd Rather Pay For Content
The Federal Trade Commission's recommendation to legislate a "do-not-track" list may force publishers into a decision they might regret later. It may also force a polarized opt-out solution where compromises are not clear to consumers. The government should be clear and up front when talking about all the ramifications of "do-not-track" with consumers and say what it really means: I want to pay for my content, so please don't serve me targeted ads.
Consumers can't have it both ways, and given the choice between paying for content and being served targeted ads, they would choose the former over the latter. Every time a consumer visits a site, the content being consumed is supported through ads. From TV to radio to print, it's a system that has clearly worked and has been performing the same value for the Internet. So do consumers love ads? Most will tell you no.
Think about the difference between the TV ad model and the Web ad model. In TV, you are forced to stop enjoying content in order to watch several minutes of ads. On the Web, the ad experience is more integrated and more targeted. There are only two ways that advertising grabs attention. Ads can become more relevant or more interruptive. The job of ad targeting is to reduce the amount of ads a consumer would see by showing the relevant ones.
The more monetization a publisher can get from an ad, the fewer ad slots that publisher will need to put on a page. The alternative is to go untargeted but interruptive -- think interstitials or pop-ups). So, given a choice, a consumer wants free content and fewer ads. Without targeting, the consumer would suffer both outcomes -- more payment for content and more ads per page.
Subsidizing content for consumers with targeted ads should not give marketers a free hand to do whatever they want with data. Madison Avenue and federal regulators have every right to be concerned. In order to meet the needs of both consumers and publishers, the advertising community must work in concert with lawmakers in providing practical bookend solutions that give choice and transparency to consumers that take into account the benefits of ad-supported content and the need for broad opt-out tactics.
We have already witnessed strong progress on the industry's part in applying consumer-friendly standards to online behavioral advertising across the Internet through such programs like Online Behavioral Advertising (OBA) and the Digital Advertising Alliance (DAA).
The online advertising community can do more, like working with publishers on developing their own data collection disclosure standards in building more transparency with their users. This will provide the reform the government is demanding and looking for, and enable a thriving digital ad economy to continue on its path to recovery from the Great Recession.
While the rise of government interference has been based on the need for more transparency in regulating online marketers in tracking the behavior of consumers, what federal regulators are not saying is that there's a cost to their intervention. Let's not forget that advertisers pay top ad dollars to reach target audiences, who are more likely to buy their products. Eighty percent of online ads rely on third-party cookies for some form of audience targeting.
Without the ability to offer audience segmentation, publishers will be faced with increasing pressure to find new ways such as pay-wall mechanisms to generate revenue and remain solvent. And it's a price that many consumers are not willing to pay.
According to a recent survey by Marketing Sherpa, 87% of more than 1,300 consumers surveyed said that they would accept receiving ads based on their tracked online behavior, as long as the content they were viewing was free.
Further, the paid wall strategy doesn't come with any guarantees. Last year, when The Times of London and Sunday Times started to charge readers for content, their readership decreased by more than 60%.
Ad-supported content has proven to be the most reliable and added government regulation will only exacerbate this shift to a paid content model. This will have a profound impact on the publishing industry and the community it serves, and it will cannibalize audiences highly coveted by advertisers.