TruEffect Blog

Is the FTC getting superpowers?

I know, I know. At TruEffect we like to talk about online consumer privacy – a LOT. We’ve talked, sometimes ad nauseam, about the Federal Trade Commission’s Staff Report on Behavioral Advertising, and have closely followed the debate on the state of industry self-regulation.  While the FTC’s report is quite clear, the industry has largely disagreed with the positions posited by the FTC, and ignored their not-so-thinly veiled threats of government regulation – believing that the industry can certainly regulate itself long before a need arises for the government to do it for us. Well, it’s not that we take pride in saying, “I told you so,” but……

Yesterday Wendy Davis from MediaPost wrote about the online industry having their panties in a bunch around the new legislation before Congress that will make it much easier for the FTC to create rules and bring civil law suits. She writes “The current House version creates a new consumer protection commission while also beefing up the FTC's power in a few key ways. The bill removes administrative hurdles to the FTC's rulemaking ability, makes it easier for the agency to pursue civil litigation, and allows the FTC to target ad companies that aid and abet unfair practices.”

And if you want to know what the FTC considers unfair practices, you need only to read their aforementioned “Self-regulatory principles on behavioral advertising.”  I keep remembering FTC Chairman Jon Leibowitz’s comment, “A day of reckoning may be fast approaching.” If the IAB feels the need to lobby against this current legislation, does that mean self-regulation has failed? Will third-party data models like those used by behavioral targeting companies and third-party ad servers be at risk?

– Layne Salter

The Cookie Controversy

I went to Boston a few weeks ago week to present at the International Association of Privacy Professionals Academy (IAPP Academy). I was armed with data on how 500 advertisers leverage their cookie space across First-Party, Third-Party and Flash cookies.

The recent positioning papers on Behavioral Targeting from the FTC, "Self-Regulatory Principals for Online Behavioral Advertising," and IAB, "Self Regulatory Principals for Online Behavioral Advertising," started a firestorm of additional articles from Business Week, "Is Regulation Coming" to Clickz's, "A Strong Nudge from FTC may lead to Draconian Measures."

The issue here is that Behavioral Targeting has become a major part of the online advertising industry, and data is transferred from the Advertiser to a third-party Behavioral Targeting company for analysis and profiling. At that point in time, the data is anonymous but still becomes owned by the Behavioral Targeting Company where it can be resold as targets back to the originating company and other Advertisers.

There are two issues that are fueling the controversy:
1)    Data Transfer
2)    User Notification

The FTC is arguing that there is limited transparency and notice that the users are being tracked by the third-party. The data transfer is usually mentioned in a passive mode in the Advertisers’ privacy policy and it's up to the user to go to either the National Advertising Initiative (NAI) site or to the BT company site to opt-out of the tracking. The FTC would like to see a more active opt-in notification where the users have to take action to be included.

The Industry response has been for increased self regulation which would enable the users to easily get to their data so they can make an informed decision as to whether they stay in a program or chose to opt-out. These options are good for users as long as there is education to help them understand how they are being tracked, and how to take action to prevent this tracking if they feel compelled to do so.

The next big firestorm surrounds something that has been flying under the radar, but used at an accelerating rate, is Flash Cookies. They are not cookies, rather Local Shared Objects which closely resemble a traditional cookie in function. The problem arises because the Flash Cookie is not controlled by the browser, it’s controlled by the flash player and is significantly more difficult to view and delete. Two articles came out the day before my presentation. One from the Behavioral Targeting Insider,  "Moving Flash Cookies into Direct Response BT" and the Daily Online Examiner "Hidden Cookies Privacy Landmines". The articles are from completely different ends of the spectrum. One encourages their use because they bypass browser security features, and the second alerts privacy professionals to the fact that they bypass browser security features.

The overriding factor is that users build relationships on the web by going to their favorite sites for products and information. When the user builds that relationship, who owns the data? Does the site (Advertiser/Publisher) or a third-party, engaged by the site to help drive deeper relationships, own the data?

An article written by Ben Edelman, "Towards a Bill of Rights for Online Advertisers," highlights the heart of the issue. Advertisers are the ones spending the money to fund the web, and deserve the rights to know where their ads are shown and use their data as they see fit.

It seems logical that the Advertisers should have the right to control and use their own data. I wouldn’t be surprised to find that Advertisers push for Advertiser cookies as an option for the future. There would be no controversy as to who owns the cookie and the data and where you need to go to opt-out.

– Greg Neal

Ad Exchanges – Never mind the quality, feel the width

What a great week! Adobe pitches $1.8bn for Omniture, validating the continued convergence of creativity and measurement, and Google launches its new ad exchange, legitimizing this new channel of media buying. Gotta love bright, shiny new things.

Reaction seems to have been fairly mute, given responses to articles such as Robert Hof’s Business Week piece. Or maybe we all just knew it was coming, so we left the streamers and poppers in their box. Given Google’s proximity to Apple, they should learn to create a little surprise, shock, and awe – nothing rocks like a Jobs keynote, followed by a Mossberg ‘here’s why it’s too cool’. . .

But for most, the ad exchange is evolutionary, not revolutionary.  We’ve had new types of buying platforms emerge, from Adbrite’s approach, to Right Media’s model that allows greater flexibility. The hope that Google’s entry will enfranchise the long tail, make this easier ,and thereby create competition appears to be a solid rationale. Just as there was Search before Google, so there was Display before them too.

However the fundamentals are a little different to make Display work with same ease as changing the user interface, or the economics of buying by click. Search works well because there are relatively few moving parts to the puzzle, and we are dealing with a fairly self-selecting bunch. In the funnel of customer purchasing, we are down somewhere between knowing I have a need or interest, and about to take action. If I search “Flights to Cancun” I am either interested in flying to Cancun or a plane-spotter (where’s my anorak?).

Display demands we deal with more numerous levers than simply creating engaging words that snag pre-qualified users. To do Display well, we need to understand oddities such as reach, frequency, message optimization, etc.  We’re also dealing with users in different states within our funnel, where awareness and interest are as important as action and need. However, the table stakes for awareness and interest are a lot higher, and the distance from awareness to action a lot longer. This is one where time is money, and how long or patient the long-tail is, remains to be seen.

Google’s advantage is it knows how to simplify this type of management so it’s not onerous for the user to manage and operationalize. Whether an exchange is the right vehicle for it remains to be seen. It certainly won’t be a boring few months with Microsoft and other players emerging with their competitive solutions.

– Martin Smith

Data mining in the media economy

It seems things always come in threes. This also holds true in Privacy News. Over the past holiday week, the US saw a series of pieces related to the on-going privacy/targeting debate in the media.  Stories percolated into Business Week and The New York Times related to the regulation/self-regulation discussion of behavioral targeting, while in the UK it was announced that British Telecom was terminating its controversial trials of the Phorm targeting service. What’s different this week? Just maybe the industry trade bodies are finally taking seriously the threat of external regulation? With that there is an escalated need to aggressively pursue a self-regulatory path.

A cross-section of industry groups have now produced 7 guiding principles for behavioral targeting and taken a passable stab at defining it:
“The collection of data online from a particular computer or device regarding Web viewing behaviors over time and across non-affiliate Web sites for the purpose of using such data to predict user preferences or interests to deliver advertising to that computer or device based on the preferences or interests inferred from such Web viewing behaviors. The Principles do not apply to a Web site’s collection of viewing behavior solely for its own uses” ¹

The specificity of the definition is very interesting in that it draws some very specific data practices into question. These relate to specialist companies that aggregate data across sites such as NextAction, Acerno, and data aggregators such as Blue Kai. However it may exclude companies such as Media6Degrees, that makes inferences based on your association to users you are connected to via social media. While such companies are very familiar to interactive advertisers, they are practically anonymous to the consumer and are, as such, clearly in the target area of regulators because they hold an ambiguous and undefined role.  Do we want to go this route and call out companies?

How does this apply and does it also challenge re-targeting and other practices related to data collection?  Re-targeting shares data from advertiser sites with media networks to allow the re-solicitation of visitors to an advertiser site.  You may have experienced this when you visit a site and then almost immediately start to receive ads from that company. A recent article by Wendy Davis in Mediapost shed light on this practice when she reviewed AT&T’s data sharing activities. Greg Neal , VP of Product Strategy at my company, TruEffect, observed in his analysis of the top 500 advertisers that, on average, data is shared through cookies 7-20 times, depending upon the industry.  

“AT&T is by no means unique" said Neal. "In fact they are better than many and have a very clearly articulated privacy statement related to these practices.  We typically see data being shared with between 3 and 10 companies.” What is more concerning for Neal is companies that do not understand how their sharing of data impacts their business and the brands they support.

“When reviewing client data practices it is not unusual to see data they have shared for specific re-targeting to be driving advertisements for competitive advertisers. I think advertisers often over-estimate the control they have of their data. When they share that data with another party, there is little control or regulation over the specific purposes and re-purposes for which the data may be used. It’s also extremely difficult to monitor or track. When the data is gone, it’s gone!”

This is a view shared by Match.com’s Jim McDonald who said, “We have rationalized the range of networks with whom we work based on compliance to our data standards. We have also begun investigating other methodologies such as managing all media within our domain. Users have a relationship with Match not any third party company they’ve never heard of.” Research supports this view with 61% of users expecting their interactions to be private, but nearly the same number also want advertising to be relevant.

Chris Ahrens of agency Draft/FCB reiterated this sentiment saying, “Draft/FCB has taken a pragmatic approach to the BT area and deployed different technologies when most appropriate.  We were the first to use ad serving without cookies as well as supporting the use of the advertiser option when appropriate”.

Given advertisers have options, is the industry’s response really getting ahead of the issue or simply acknowledging a changed reality?  Behavioral Targeting comprises less than 9.5% of all display media sales² although they do comprise a much larger part of media selection and retargeting.

Nielsen’s Marc Ryan believes that many consumers have already created their own opt-outs. “For quite some time we have been noticing an increasing trend in users managing their data more aggressively, this includes deleting or simply not accepting cookies. Typically we see more than 50% of media being managed in this way by better tools and options in the browser and use of security software.”

Webtrends, a leading web analytics company, saw similar trends.  “We believe about 28%-33% of users now manage how their data is used in media.  Consumers are ok with sharing data with companies they know (and trust).  They are often a little more savvy than the industry gives them credit for or wants to admit as it impacts measurement accuracy and performance.  In site-side analytics we saw this a number of years ago and made adjustments by working in the domain of the advertiser. We see the same trend in media and believe companies such as TruEffect offers solid alternatives to current practices.”

– Martin Smith
¹ Self Regulatory Principles for Online Behavioral Advertising
² eMarketer, June 2008

At Least Get My Profile Right!

Friday I was reading Steve Smith’s recent blog on MediaPost that discusses the recent increase in visibility of academic research around behavioral targeting and consumer privacy on the web.  He discusses how http://www.zabasearch.com displays it’s “profile” of consumers publicly – that’s their model.  Of course I checked my profile on ZabaSearch and found a host of inaccuracies.  (I guess I have lived in Erie, CO and Boulder, CO during some blocked-out phase of my life.)  But what this reinforced for me is how the online community is so dependent on offline sources of data.  When I worked at a very large corporation in the 90s, we “e-enabled” a host of consumer databases that had been buried deep within the bowels of the IT department.  By exposing the data we identified a lot of inaccuracies.  What that did was generate a flurry of “error correction” efforts that ultimately created a data set that was both leaner and far more accurate.  Perhaps one simple objective of our industry would be to provide consumers adequate reason (and incentive?) to purge their profiles of inaccuracies.  Knowing a data company has my data is one thing.  Attributing inaccurate data to me is simply salt in the wound.  What do you think?

– Scott Nelson

Would you want this job?

While "Terminator Salvation," sans "Governator" plays in theaters nationwide, President Obama declares that cyberspace is actually a real place, and gives it its own security force. To protect us from hackers, international terrorists, and even SkyNet Research, Obama announced today the creation of a new government post - Cybersecurity Coordinator. Sure, this is not a job most of us would want, but his speech announcing the post certainly underscores the importance of this virtual space we've created and adopted in droves over the past two decades.

He reminds us that the internet is not just about our growing personal communication and entertainment uses, saying "... make no mistake:  This world -- cyberspace -- is a world that we depend on every single day.  It's our hardware and our software, our desktops and laptops and cell phones and Blackberries that have become woven into every aspect of our lives. It's the broadband networks beneath us and the wireless signals around us, the local networks in our schools and hospitals and businesses, and the massive grids that power our nation.  It's the classified military and intelligence networks that keep us safe, and the World Wide Web that has made us more interconnected than at any time in human history. So cyberspace is real.  And so are the risks that come with it."

As geeks around the country rejoice at the administration's plans are to keep this virtual world "open and free," we wonder if the continued emphasis on technology and security will fuel even more government attention to consumer privacy concerns around online advertising and behavioral targeting?  Time will tell.

– Layne Salter

Bartz Boots the "Bucket"

While reading an interview with Carol Bartz, the Chief Yahoo, I found myself cheering her on.  Around here we talk about “buckets”.  Customers and vendors and investors all want to put us into a “bucket” so they know how to think about us.  If they can’t group companies or technologies or products with others, it’s as if they can’t make an evaluation.  In her interview with CNBC’s Jim Goldman, Bartz unapologetically “kicked the bucket” right out of his hands.  “We are not a search company.”  Followed shortly by “There’s no turnaround at Yahoo….”  And then “15% is the new flat.”  I love it.  The digerati have put Yahoo into a bucket of struggling search companies that need to find a new business model because of the dominance of Google.  Bartz vociferously disagreed and made her case forcefully.

 

The point I am making is that we need to break the way we think today.  The internet isn't new anymore and we've become lazy by relying on what's familiar and common rather than what's new and better.  New ideas get stifled because they don't fit the mold.  CPC and CPA pricing is one of the best examples.  Advertisers genuinely believe they are protected from wasteful spending because they only pay for a result.  By bucketing new offerings as CPA/CPC/CPM only, the search engines and ad networks can dictate the model and force advertisers to pay more than necessary.  

 

Bartz is approaching her business with fresh thinking and I wish her all the best in making the rest of us find a new bucket for Yahoo.

 

– Scott Nelson

Display bests Search - how well do your campaigns work together?

We've been hearing more and more about the value of Display advertising, and for good reason. A study released this week by Fetchback demonstrates that its retargeting technology outperforms paid search in tangible returns on the dollars invested in each. Their comparison tests showed between 74% and 112% higher ROI, compared with search campaigns. It's nice to have the validation, but we're not that surprised. The beauty of online advertising has always been its ability to deliver the right message to the right person, and the success of paid search is only a testament to that fact. So it's not surprising that display targeting technologies are rushing to close the gap, and succeeding in spades.

Not only can a well designed, targeted display campaign beat search, but data compiled on how display and search interact shows unequivocally that consumers' exposure to display ads has a definitive impact in lifting search conversion. An MSN/Comscore study in 2008 showed that a combination of search and display doubled site visits over Search alone, and tripled the size of the average purchase spend.

This week reports show U.S. consumer confidence up in April, so it's a great time to closely examine multicampaign attribution, and rethink online budget distribution. Smart advertisers can take advantage now with a good display/search media mix, as consumers shop and research online, gearing up for purchases as confidence in the economy improves. In their Multi-Attribution report from February, Forrester said "Given today's challenging economic times...marketers should begin measuring multicampaign attribution now, before it becomes a corporate mandate."

– Layne Salter

Measurement and Analytics: Do you know what you don't know

 This is kind of scary. A new report reveals that less than half (47%) of marketers actually use analytics to measure the success of their online marketing. A quarter of those polled said analyzing results is the hardest part of any campaign. Well, duh. And yet for the 6th consecutive year, online marketing investment is predicted to increase. Advertisers are sucking up paid search, video, email, display, social, and anything else they can get their hands on. But without a proper understanding of the true results behind campaign efforts, are they simply flushing money down the proverbial john? David Eldridge, CEO at Alterian said,“With the current economic climate, it is refreshing to see results that show businesses investing in areas that can directly drive sales – essential in this market. What is less encouraging is the low number of marketers who use analytics to evaluate and refine their campaigns.”

Online measurement and technology has definitely evolved, and it's quite impressive. The sheer amount of data available, even for free, is mind boggling. But the complexity of it all, as well as the inability of systems to work together, is scaring marketers off. Data analysis probably conjures up visions of expensive, geeky types we can't understand, sitting in the back office till midnight running SAS and crunching numbers in a spreadsheet. But it doesn't have to be scary weird science. Analysis is really for everyone.

In the 1990's internet advertising was very proud of the fact that it was measurable – impressions, clicks, even conversions! Now, recent opinions actually blame its measurability for recent problems facing the medium. We've backed ourselves into a corner where every dollar must account for itself. Even though, for instance, research shows that paid search is, indeed, impacted greatly by display advertising.

Today's business landscape requires a lot more than simple metrics. And, thanks to new technologies, including ours here at TruEffect, the disciplines and analysis born in traditional direct marketing really can finally be applied to online advertising. It may still take a little training and understanding, but new and better tools mean you don't really need a degree in statistics to understand the big picture of how your customers interact with your brand, and how you can now reach them in a more and more personalized fashion.

– Layne Salter

Webtrends and TruEffect First to the Party

Today we announced our partnership with Webtrends, one of the best companies in the industry.  We’re very excited about the news.  But, I see this relationship as something far more significant than an opportunity to jointly sell or enhance the offerings of each company.  Together, we’re giving advertisers a “seat at the table” within the online ad model by re-establishing the relationship they have with their customers and prospects.  I have been championing more engagement by the brands in the online community.  The folks funding this entire industry are still too detached and together, Webtrends and TruEffect are enabling them to re-insert themselves.

The collective “we”, referring to the companies that sell online ad technologies and/or media, have built quite a business creating and repurposing data about consumer behavior on the web.  Effectively, we inserted a layer between consumers and the merchants from whom they buy.  Now anyone in the business recognizes that this is not untrue offline.  Kodak relies on television networks and magazines just like they do search portals and web publishers.  But offline networks never developed the kind of individual, persistent shopper profiles that have been built for online consumers.  Typically the brand gathers and retains customer data in the offline world, not the channel.

Our partnership with Webtrends is one step toward redefining the brand as the entity with whom customers share data and develop relationships.  We consumers buy Nike Shoes, not Platform A.  We buy from United Airlines, not Acerno.  Technically, the way we approach the data has been coined the “first party” model.  It deploys the value our two companies bring to clients from within that client’s web domain, effectively creating silos of data by brand.  When a consumer views a client ad or visits their website, the transaction will truly be between the consumer and that known and trusted merchant.  The control is in the hands of the brand, exactly where we think it should be.

Congratulations to the Webtrends folks as they kick-off their Engage09 Conference in Las Vegas today.  We’re proud to have their confidence, and we’re already running full steam ahead to bring this new relationship to our clients.

-Scott