With the early May introduction of the Boucher-Stearns Online Privacy Act, a bipartisan draft legislation poised to regulate personally identifiable information transmitted online, marketers
focused in interactive media may be facing an evolving informational landscape with regard to their ability to target users on the Web. While privacy advocacy groups have unanimously panned the draft
version of the bill as toothless, online media trade groups like the IAB, favoring self-regulation, still have questions and concerns.
For example, current language in the bill leaves room
for interpretation regarding what types of information are considered 'Personally Identifiable.' While things like medical information and Social Security numbers clearly fall into the categories of
both 'Personal' and 'Identifiable', warranting close regulation, others -- for example, cookies on a user's browser, or a user's IP address -- are less obvious. For example, what if a user reads an
article about Type 2 Diabetes on a popular online health site, and is then cookied as eligible for targeting for products like blood sugar monitors? Is that medical information? Should the user have
to opt-in to be targeted for ads in that manner?
As somewhat of a positive sign for the industry, the current draft does include some special treatment for user information passed between
individual Web sites and Ad Networks. This process, more or less the exchange of cookies for the purpose of behavioral and demographic targeting, is a fundamental piece of audience segmentation on the
Web as it stands today. While the bill states that most personally identifiable information can only be passed when a user 'opts in', an exception is made for advertising companies exchanging cookies,
as long as there is a "clear, easy to find link... that allows users to ... opt out," and users are notified that they are being targeted.
However, if pressure from privacy groups increases, the
possibility exists that this fundamental element of online targeting -- the transaction of cookies from one company to another -- will be concretely defined as pertaining to personally identifiable
information, thus requiring 'opt-in' consent from users and nullifying the exemption clause currently in the legislation. In other words, people would have to volunteer information on their online
behavior, demographic information, and geographic location to advertisers trying to market to them.
If this legislation were to be enacted in this stringent a fashion, what are some possible
outcomes for the Online Media landscape as it stands?
Vendors who rely on Third Party Data to define their product will be challenged.
The groups facing the biggest challenge would be
those that have the most invested in buying and selling third-party data. Sellers of the data, like Acxiom, BlueKai, and eXelate, have built whole portions of their businesses creating and aggregating
cookies based upon user behavior. In the future, they may have to seriously redefine their services and identity. As the sheer volume of user data would likely diminish, the market will likely see
some consolidation and partnership among remaining players.
The other group rethinking their business plan would be providers of DSPs (Demand Side Platforms), second-tier ad networks, and
essentially anyone else relying on exchanges to build their inventory pool. Without the ability to layer targeting data on top of network-level ad impressions, many would be left with groups of sites
loosely bucketed by content similarity and of course, pure RON (Run of Network) offerings -- which for the record, tend to underperform. Ultimately, a 'thinning of the herd' would ensue, as it would
be nearly impossible for these companies to differentiate themselves when pressed by media buyers.
Growth of Reciprocal Data Relationships
As of now, marketers have enjoyed the
one-sided benefit of targeting users based upon a number of data points including age, gender, HHI, online behaviors, offline behaviors, and much more, compensating users solely with content. If the
environment changes in such a way that users would have to be incentivized to give up information about themselves for the purposes of being advertised to, a new value exchange would need to be
created.
One option that will likely appear early on is contesting and sweepstakes. Essentially, the pitch would be: "Fill out this form, we'll cookie you, and you'll be entered to win a trip to
Hawaii." It's an old routine from the playbook. However, collecting data in this manner skews your targeting base significantly, because the demographic and psychographic characteristics of
individuals who respond to those offers is largely different than the population as a whole. In other words, you'll be left with a list saturated by 'sweepstakes junkies.'
Another option, more
fitting of the Web 2.0 environment, is the value exchange created by companies like Mint.com. The free online financial management tool (acquired by Intuit, the makers of Quicken, for $170 MM in
2009), collects sensitive financial data about its users in an opt-in environment. In return, the user gets free budgeting tools and money management advice. Where Mint makes its revenue, however, is
in its recommendation of financial products like credit cards and insurance. To some, it might sound unsavory on paper, but there is something distinctly valuable in being pitched for a credit card
that the software demonstrates will save you money over time, based upon what it knows about your spending habits and available interest rates. Same goes for checking accounts, savings accounts, auto
insurance, IRAs, and more.
A third option, likely to take hold in sponsorships of longer-form content, is ad selection and user choice. Recently, a number of publishers and marketers have made a
greater effort to provide more relevant advertising to their users. Hulu has integrated a 'is this ad relevant to you?' button that appears during commercial breaks, ideally to learn and later to
increase relevancy. Also, Publicis agency Vivaki spearheaded Ad Selector, a more scalable platform that allows users to select product categories for advertising appearing in long-form content, in
real-time.
Increased Focus on Contextual Targeting
There are a number of companies that already have a great head start on this methodology, and would benefit almost immediately from
privacy legislation, as this type of targeting doesn't rely on information about the user. Rather, it uses semantic targeting technology, which can read the text on a page and make a guess as to what
ads would be relevant to the content.
However, the space still has a great deal of room for innovation. An easy example that appeared a few years ago was 'Hilton, Paris.' The difference between
hotels in France and a socialite with questionable values produces very different advertising opportunities, especially when evaluated by a computer, devoid of cultural context. While the
methodologies have certainly become more sophisticated in recent years, computers still show signs of clumsiness on a regular basis. Two companies that have a considerable head start, however, are
Google, with their Google Content Network, and ContextWeb. As more attention is shifted to this technology, more minds will be dedicated to refining the space, hopefully increasing its dependability
to drive performance.
Growth of Vertical Network Segmentation and Emphasis on Content Adjacency
It is likely that advertisers would increasingly rely on traditional media segmentation
models. This includes planning techniques used by most media professionals already, relying on ComScore and Nielsen @Plan, as well as site direct buys that are relevant to the product category.
In addition, the growth of Vertical Ad Networks, or collections of sites that are similar in content or (publisher perception of) audience, will continue an upward trend.
So as marketers, what
do we do?
Like any good investor, you hedge your media budget. Do not rely solely on one technology to characterize your targeting. For example, the online team at Harmelin Media largely favors
Channel Strategy, the marketing equivalent of putting your eggs in several baskets, and optimizing toward top performers. "Planning in this fashion allows us to not only maximize our chances for
successful campaigns, but also increase the opportunity to learn on behalf of clients, and see what really works for a particular brand or message," says group VP Brad Bernard.
In addition, the
industry as a whole may benefit by increasing emphasis on user education. Most people online are not aware of the ways they are currently being targeted, and furthermore, have not been exposed to the
potential benefits. Many users may respond positively to the options to make their advertising more relevant, especially when faced with alternatives like pay walls.