• by Phil Leggiere , August 13, 2008

With growth typically comes growing pains -- of which behavioral targeting has had its share, over the past six months or so. As the industry has scaled, outside scrutiny, from the public, media and politicians has intensified, and misunderstandings about what behavioral targeting is, and isn't, have proliferated. Effectively addressing those misunderstandings, AlmondNet  CEO: Roy Shkedi explains below, requires an industry-wide commitment to greater transparency.

BI: How has the relationship between behavioral targeting providers and BT data providers changed as BT has become larger and the stakes higher?

Shkedi: I believe that for new BT players to change the marketplace they need scale. There are two ways to gain scale. One is the 'traditional BT data collection' way, which is done by signing-up selected sites to provide consumer data and gives limited access to the Web footprint of a consumer.

The only other way to gain scale is to gain access to consumers' entire Web footprint. This access could be gained either by an ISP or a software located on the consumer's computer.

For example, think about few years back when adware companies felt that since they provided consumers with a few dollars worth of software, it entitled them to deliver pop-up ads to the consumer based on the consumer's entire Web footprint. As we all know, consumers did not agree with the value exchange -- and once given the notice of what [adware companies were] really about to install on their computers, chose not to give their consent and not install the software.

I find the ISPs situation today very similar to the situation of the adware companies then, from the perspective that they built the pipeline enabling the consumers to access the Web -- don't they have the right to tap into that trove of data?

The adware companies were not able to convince consumers to opt-in. In their mind's eye, they own the data, it is on their servers and is only a click away.  The problem is, that while consumers' data looks close to the ISPs, it is not really theirs to give away or use. They do not provide consumers with Web access for free. Consumers pay them for that Web access. Moreover, it is well known (just read the latest Wall Street analysts reports) that broadband is the most profitable offering of the cable firms out of their three offerings (Web access/TV/phone).  As the consumer pays them to access the Web, data about his or her Web browsing belongs to the consumer and not the ISP.  

BI: So it sounds like you believe the notion of connecting or integrating ISP data, even if personally identifiable data is fully ‘scrubbed,' will remain problematic?

Shkedi: Will the consumer paying monthly Web access charges to his ISP opt-in to have his entire Web footprint tracked by his ISP?  If history is any sign, it does not bode well for the success of such a move.
The bottom line is that I do not expect any new BT player to change the marketplace for traditional BT data providers -- they simply won't be able to gain scale. Until the verdict is out whether nontraditional BT data collection (i.e., using ISP data) is acceptable without opt-in, as it is now, or requires opt-in (as suggested) I would advise advertisers to stick to traditional BT data players in order to avoid being caught in a consumer backlash.

BI: It still seems as if, even for behavioral marketers clearly not using personally identifiable information, a pretty steep educational challenge lies ahead. What would you suggest as a strategy?

Shkedi:  For behavioral targeting to be successful, the important lesson the online industry needs to convey both inside the industry and, more importantly, externally, to the wider public, the press and Congress, is that personally identifiable information and the selected behavioral data traditional BT has collected are fundamentally different things. In the event any data from these two buckets overlap, marketers must clearly offer opt-in to consumers.

For advertisers who don't have personally identifiable information, opt-in is not necessary. It's also impossible to scale behavioral campaigns on an opt-in basis. What is necessary is that consumers have knowledge of what data is being used and the option of opting-out. You need to also make sure that if [a consumer] is not sure, they can very easily find out.

BI: How would you assess the education curve and responsiveness to the industry on this issue so far?

Shkedi: I'd say behavioral targeters are working hard, and NAI (Network Advertising Initiative) is promoting self-regulation of the industry. I'd say people on Capitol Hill are beginning to understand the distinction. On the other hand, as behavioral targeting has taken off, more people, a small minority but enough, are pushing the limits. At least 80% of the data collected is by players who are operating within the NAI guidelines. But it's the other small group, whether it's 10% or 20% of marginal players, who are walking on the borderline and making the headlines. If consumers don't have faith, behavioral targeting can't work.

In addition to developing widely accepted best practice standards, which I think we've made progress in, another step, and this has frankly been slower to actualize, is to identify and isolate the marginal players. The only way ultimately to do that really effectively, I believe, is for the industry to boycott those data companies who aren't explicitly adopting best practices for privacy. I personally hope that over the next several months, as we reach out to the public on the educational issues I've already outlined, the industry will take a more active stance.