The term “lipstick on a pig” has been used in one variation or another from the mid 16th century and used most recently by the Obama folks to describe John McCain’s presidential
campaign. The reference is to make something appear more beautiful than it really is or to make something useless appear useful.
All the lipstick in the world can’t make behavioral
targeting any less porcine.
Before we go any further, let’s define what we mean by behavioral targeting since it means different things to different people. For the purpose of this
article, the FTC definition will suffice:
"... the tracking of a consumer’s activities online – including
the searches the
consumer has conducted, the web pages visited,
and the content viewed – in order to deliver advertising targeted
to the individual
consumer’s interests."
For all the hype, behavioral targeting has such limited utility that one can only shake one’s head in bewildered disbelief at its growing acceptance.
The army of mathematicians that once were lionized on Wall Street has invaded Madison Avenue. Computational finance wizards now seek to become computational marketing mavens.
They are
finding a receptive audience among agencies, VCs, industry trade publications, ad networks and marketers across the country. Desperation has a way of bringing people together. But there is a major
problem; the same underlying math that destroyed Wall Street underlies BT and will destroy online marketing (indeed, BT-inspired online performance has declined more than 95% over the past decade) .
The adherents of behavioral targeting seem to be blind, deaf and overwhelmingly dumb to the metaphysical issues surrounding BT and to the existential implications confronting it.
Consider
some of the specious and/or fallacious claims of BT proponents:
1) Human behavior is rational.
2) Future behavior can be predicted on the basis of
past behavior.
3) Stalking, collecting and measuring minute surfing behavior is neutral and does not influence the behavior being measured.
4) Behavioral
data cannot be traced back to the individual.
5) People actually want relevant ads.
6) Behavioral Targeting will remain legal.
Let’s take
the issues one at a time.
1) Our economic models all assume that human beings act rationally. But today, amidst the carnage of the financial system, we see that our “animal
spirits” are more highly engaged than reason. Case in point: John Nash’s game theory presupposed rational behavior and he has since recanted his position.
Alan Greenspan
said that there was a “fundamental error in their model of human behavior”. That error was rationality. Emotions rule human actions much more than reason or rationality. By developing
marketing methodologies that ignore emotion and elevate rationality way beyond what is reasonable, behavioral targeting has a flawed foundation.
2) There are many aphorisms that support the
notion of predicting the future by looking back. But try driving your car looking only in the rear view mirror and see how that works for you! This, according to Nicholas Taleb, is nothing more
than data bias, sometimes referred to as “data-snooping bias”.
BT allows for thousands of hypotheses to be tested within a very short time frame. The statistical significance
becomes more suspect the more we drill down. The idiotic “one-to-one” mantra has led us off the statistical cliff in search of “hidden” relevance. This "science" has
produced a performance death spiral with CTRs now hovering around an abysmal .2%.
3) More and more people are becoming aware that their surfing behavior is being monitored. Some do not
like it at all. But awareness of the practice can actually CHANGE THE BEHAVIOR. The literature on this is quite overwhelming, supported in large measure by common sense. That is why the FBI
practices secret surveillance. They know that once their monitoring becomes known, behavior changes. BT literally affects behavior once those being stalked realize that Big Brother is watching.
4) Many privacy statements of BT practitioners claim that no personal surfing behavior can be tracked back to the individual. With ever growing databases of personal behavior, the potential
for matching - even without direct information being stored - is now possible approximately 75% of the time. The matching will get “better and better” (or, worse and worse, depending upon
your POV.)
5) Even if we could inject relevancy into the equation, it's a huge leap to suggest that people want more advertising. Marketers like to say, “if we can only deliver
the right ad in front of the right person at the right time…” But as audience targeting techniques have become more refined, what has happened to performance? Once again, it bears
repeating: our industry-average click-through rate has plummeted to .2%, when 10 years ago it averaged 5%! It doesn't take a genius to conclude that in an on-demand world, nobody
demands more advertising, yet despite overwhelming evidence to the contrary, advertisers and marketers still insist that the Emperor is fully clothed.
6) There are many legal hurdles on the
BT horizon. Professor Andrea Matwyshyn of the Wharton School said:
“…questions are inherently intertwined not just with privacy
laws, but also with contract law, computer-intrusion law[and]
consumer-fraud law.”
If you are a betting person, how much would you like to wager that the
practice of behavioral targeting will remain legal? We all allocate resources where we think they have the greatest chance of success. Given the hurdles confronting BT and the looming legal battles,
is this really where you want to allocate your time and money? Or are you just putting lipstick on a pig?