edo is building out an advertising channel where a swipe of a credit or a debit card becomes the signal to serve up ads. The swipe at the point of sale (PoS) activates Geocommerce Offers, a mobile advertising platform that combines purchase and location data to target ads and offers in real-time. The targeted coupons and offers are based on historic purchases, spending behavior and location. Two banks will pilot the product, which should roll out within the next 45 days. One bank recently signed on as a partner, while the other has worked with edo's card link system that connects banks and advertisers. The Geocommerce technology does not rely on geolocation targeting technology. The transaction through the point-of-sale (PoS) terminal becomes the signal. It does, however, tap into audience segments, purchase behavior and purchase history to serve up offers and discounts. And it allows merchants to serve up consumers limited-time or time-constraint offers that might support impulse buys. A customer can walk into a Starbucks and pay for the coffee, for example -- and before he reaches for the door a text message or email provides $5 off a burger at Bistro, a nearby restaurant, when the bill totals $15 or more. Consumers who take advantage of the deal will receive the refund after paying with a debit or a credit card linked to participating financial institutions or banks. Geocommerce links into edo's core platform launched last year. Jeff Fagel, VP of marketing at edo, said the company supports a handful of banks and more than 150 merchants from retail to dinning to service, such as Verizon, Quiznos, and The Body Shop. "By the end of summer, we'll have 15 million active cardholders in the network," he said. "In Q3, the total will reach 25 million; and Q4, more than 30 million. These are cards in the process of being activated and partners being integrated." Fagel believes Geocommerce can do for offline merchants what search did for online. Retailers are trying to solve the instant gratification one-off mentality that Groupon created, and turn it into a longer-term relationship, according to Emery Skolfield, senior director of ecommerce at The Body Shop, which launched a campaign two weeks ago. It's scheduled to run three months. The Body Shop's promotion provides a cash-back offer, targeting consumers who purchased from the retailer or other brands that align with the company's products. "The bank cards make it an easy form of interaction, because consumers usually use their card when they shop," Skolfield said. "And when they do they get cash back." Promotions will vary by retailer. Each week, consumers could receive between three and five offers from their participating bank. edo connects banks with advertisers to target the offers through online banking portal, email, text messages or mobile application. Consumers are bucketed into segments based on spending behavior. The offers might come from nail salons or restaurants. The ad platform works off a pay per performance model. Fagel said a national retail chain ran a program that returned dividends. Banks with active cardmembers have seen a 20% use in cards. One retailer offered a promotion giving consumers $1 off each $7 spent. That retailer lifted its average transaction amount from $8.30 to $11.43. About 2,500 new customers participated in the retailer's offer, and 70% of them returned within the following 60 days. Existing customers increased their buying frequency by 25%.
In his book "The Believing Brain," Michael Shermer spends several hundred pages exploring just how powerful beliefs are in forming our view of the world. Beliefs affect not just what we think, but they literally filter what we see and do. And, once in place, beliefs tend to be stubbornly unshakeable. We will go to great extents to defend our beliefs with rationalizations that are often totally or partially fabricated. As Shermer says, “Beliefs come first, explanations for beliefs follow.” In the world of consumerism, this becomes important in any number of ways. For one, we have beliefs about brands, both positive beliefs and negative ones. And, as previous neuro-research has shown, those beliefs can dramatically alter how we sense the world. In a study at Baylor University, Dr. Read Montague found that the reason Coke devotees are so loyal has almost nothing to do with the actual taste, and much more to do with the Coke brand and what it says about them as people. It’s not the taste of Coke we love; it’s the idea of Coke. A few weeks ago, I saw a press release from another study that takes this concept even further. The implications for understanding consumer decision-making are dramatic. In the study, Ming Hsu from the University of California, Berkeley, conducted an fMRI test of individuals participating in a multi-strategy economic investment game. As they made decisions based on the actions of their opponents, the parts of the brain that were firing were recorded. Games of this sort require that the participants learn from events and adjust their strategies according. Here’s an excerpt from the media release: “The researchers focused on two types of learning processes. So-called 'reinforced-based learning' (RL) operates through trial and error. In contrast, more sophisticated 'belief-based learning' requires decision-makers to anticipate and respond to the actions of others. The researchers computed the areas of the brain where activity tracks these two types of learning. In addition, they discovered that the prefrontal cortex is an area that processes learning about others’ beliefs. The same area also predicts an individual’s propensity to engage in either belief learning or simply RL.” This is interesting. Reinforced learning is completely reactive in nature. It’s learning after the fact. But if that was the only way we learned, we wouldn’t survive long. So the brain needs to adapt a proactive learning framework, and that framework relies on beliefs as its primary construct. We act based on what we believe the best outcome will be, and alter as necessary based on the success or failure of our decisions. Now, if we were purely rational and empirical in the way we form those beliefs, this would seem to be logical way to live our lives. But, as we’ve seen, our beliefs are often anything but rational. They are usually formed with little thought or input, and once formed, tend to resolutely remain in place, even in the face of overwhelming evidence to the contrary. If you think I’m exaggerating, consider this: 55% of Americans believe in angels, 39% believe in evolution, 36% believe in global warming and 34% believe in ghosts. I’ll leave it you to decide which of those stats you find most troubling. The other note in the above excerpt that’s interesting is where this belief mechanism sits in the brain: the prefrontal cortex. This, by the way, was the same area of the brain that lit up in Montague’s test when his subjects knew they were drinking Coke. It’s the one part of the brain that really makes us who we are -- quite literally, in fact. Even in something as fleeting and supposedly unemotional as using a search engine, I’ve seen firsthand the powerful impact a strong brand belief can have. It physically alters what we see on the page of results. We’re just getting preliminary results from our own neuro-scanning study, done with Simon Fraser University, and it appears that looking for a favored brand affects how quickly we can find relevant information, how much time we spend looking at it (counterintuitively, we actually spend less time engaging with favored brands) and how easily distracted we are by other information on the page. Truly, in consumerism, as in all areas of our lives, our beliefs determine how we see and sense the world around us.
A group of researchers at Microsoft and the CS Department of Technion-Israel Institute of Technology explored methods for modeling query and click behavior in Web searchers, as well as temporal characteristics in query and URLs. The research explores user behavior to predict changes in search queries, identify goals behind the queries, and analyze search results clicked on during Web search sessions. The researchers' paper describes the opportunities found in studying human behavior on the Web through several models based on time series to represent and predict different aspects of search behavior. It examines how these models can learn from historical user-behavior data, and develop algorithms that address several properties seen in the dynamics of behavior on the Web, including trend, periodicity, noise, surprise, and seasonality. Through predictive models, the researchers wanted to determine how user behavior changes over time. The group modeled behavior as a series of sessions in time, focusing on queries, URLs, and query-URL pairs as the behaviors. For example, they looked at the frequency of a query, and number of times a search result is clicked on for that query. The group presented different sequential activates and learning processes to show how to construct models that predict future behaviors from historical data. Part of the research, a little geeky even for me, focused on learning to predict the behavior of users who search based on different temporal models through algorithms that learn from behavior by assigning a set of objects. These objects are given as examples for training the learning models. Among the findings were that time-aware modeling of user behavior can incorporate into many search-related applications. Query click prediction can be used to improve query suggestions to present the appropriate suggestions at the time of the query. URL click prediction can be used to improve re-crawling strategies, by focusing crawling efforts on URLs that are likely to be clicked. Query-URL prediction can produce better rankings more aware of intent.
Search engines have a free-speech right to display whichever results they choose, in whichever order they choose, constitutional law scholar Eugene Volokh argues in a paper commissioned by Google and submitted to the Federal Trade Commission. Volokh argues that Google has the same free-speech rights as newspapers, encyclopedias or other publishers in deciding what content to feature -- even if the decisions are seen as unfair or harmful to other businesses. "For instance," he writes in the 27-page paper, "when many newspapers published TV listings, they were free to choose to do so without regard to whether this choice undermined the market for TV Guide. Likewise, search engines are free to include and highlight their own listings of (for example) local review pages even though Yelp might prefer that the search engines instead rank Yelp’s information higher." The report -- which addresses organic listings, and not AdWords ads -- comes as the Federal Trade Commission is investigating Google for potential antitrust violations. While the investigation isn't yet public, some observers believe that the FTC is particularly concerned about whether Google is favoring its own content at the expense of material created by other publishers. The FTC isn't the only one probing Google. A Senate panel last year also held a hearing addressing Google and antitrust issues. One of the witnesses, Yelp CEO Jeremy Stoppelman, took aim at Google for including Yelp reviews in Google's local search product without a license. "Google forces review Web sites to provide their content for free to benefit Google's own competing product -- not consumers," Stoppleman said in his written testimony. "Google then gives its own product preferential treatment in Google search results." Stoppleman also said at that hearing that he didn't think he would launch Yelp today. "Honestly, I'd find something else to do," he said in response to a lawmaker's question. "When we started there was a level playing field." Of course, at this point, it's still unknown whether the FTC will charge Google with antitrust violations. For now, however, Volokh's paper sets out an array of arguments for why antitrust charges against Google based on its search results could conflict with free-speech principles. The paper includes references to cases dealing with potential conflicts between free-speech principles and laws mandating "fairness." One that he highlights is a 1974 Supreme Court decision overturning a Florida law that required newspapers to allow political candidates to respond to criticism by the paper. The court wrote in that case that questions about what to print, as well as what not to print, were protected by free-speech principles. But Seton Hall law professor Frank Pasquale (who has suggested that search engines should be more transparent about the factors that go into the decisions about rankings) says a 1951 Supreme Court decision about a monopolistic newspaper might be more problematic for Google. In that case, the Supreme Court ruled that the Lorain Journal of Ohio violated antitrust law by refusing to accept ads from companies who also advertised with a local radio station. At the time, the Journal was the only daily paper in town; it reached virtually every household in Lorain. For those reasons, the Journal was "an indispensable medium of advertising for many Lorain concerns," the Supreme Court wrote in an order holding that the Journal's ad policies violated antitrust law. Of course, that case dealt with ads, and Volokh's paper doesn't address AdWords. Still, the decision could be used to show that free-speech principles don't always protect publishers' decisions about when to reject material.