TruEffect Blog

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.”

Doug Brown at Bank of America echoed this perspective, “We are actively testing different solutions. Our customers expect us to be stewards of their data but also recognize the relationship we share. The two should not be at odds. Our customers want us to be relevant but not intrusive, secure but accessible.”  Research supports Brown’s view 61% of users expect 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

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

Data-driven Display 3.0

I like recessions because they sharpen the focus of what’s in front of us and demand that we look at business in new ways. I’m also a big fan of data-driven advertising.  I believe, in my delusions, that I’m actually one of its earliest and best practitioners, having been one of the few database directors to ever share an office with a creative director and live to tell the tale.  The results we achieved were the ability to improve yield by 100%-200% by applying what now seem to be relatively rudimentary techniques to improve circulation.

So, I enjoyed reading Ashu Garg’s blog on Data-Driven Display Media (Display 3.0). However, the real data I’m seeing through our Trueffect ad platform challenges at its core some of the established folklore of online media. It turns on its side some of the metrics the industry uses, and creates through its disruption, a new set of standards.  To understand this, the first thing I need you to do is put aside the fixation with trash-to-treasure stories of taking some inventory or data,  fusing it together and voila –  you now have inventory that matches high quality contextual media.  As the head of Procter and Gamble recently said, "what makes you think this is media?"  The second fixation I would lay to rest is that display is a broadcast medium. Again, we’ve nurtured a generation of interactive media personnel who think ‘reach’ not ‘relationship,’ ’impressions’ not ‘circulation.’ To paraphrase Ogilvy, they’re dependent upon data "Like drunks to a lamppost, for support not illumination."

What’s being measured in the current model is flawed because it doesn’t comprehend the number one driver of response – relationship. That's why I think Ashu has it half right.  Advertisers need to use their data, but it’s the way they’re using it that needs tuning.  Current industry practices associate pixels across domains, which is not only counter to the spirit of the domain security policies, but also being lambasted by the FTC in their Self-regulatory Principles. Any good circ planner knows that to do data-driven advertising, you need to stratify circulation across 5 key dimensions – audience, timing, offer, creative, and context. When you do this, it lays out perfectly to revenue. Fourteen percent of users generate 63% of sales.

Display 3.0 can do this, not by increasing the media vendor pool, but by changing the way the advertiser engages with the consumer at the time an ad is being served.  The only way to do this is to alter the characteristics of the ad server, which neither Google, Microsoft, nor emerging vendors have chosen to do. In an environment where the pendulum has moved to the publisher side, why should they support the advertiser in a model with a proven 200% - 300% lift? Because maybe the pendulum will move back again. Gravity and 80 years of advertising history suggests it will – it's only a matter of when. What’s needed is not new technology; TruEffect has already developed and implemented this on a very scalable basis, but some new vision on the client and agency side. At that point, Data-Driven Display 3.0 will not just drive improved media performance; it will completely recalibrate the metrics and the investments of online advertising.

We’ve seen a major advertiser reduce or reallocate media spend by 50%, without the need for new budget or the expense of being held hostage by non-value add players in the eco-system.  This is based on reviewing the actual results when you apply a stratified circulation methodology, and knowing how to control 50% of the traffic quality. It's just a matter of adoption. Unreasonable advertisers wanted!

– Martin Smith

It's a Brave New World

It's easy to forget how new the internet actually is. A lot of recent coverage is devoted to following the ins and outs of the new presidential administration's use of the internet to build the national community it promised during the election. Not since Kennedy bested Nixon in the 1960 television debates, has the use of technology been so prominent in politics.

It's hard to imagine that it was only about a decade ago that Clinton ushered the White House into the online world with the creation of Whitehouse.gov, and a mandate that all federal agencies get online. David Almacy, Bush's Internet Director said, "Clinton was the first Web president. Bush is the first digital president, and Obama is the first online social networking president." Even Congress is tiptoeing in the waters of YouTube, though it may take better directing to 'whip' our representatives into a believable presentation. Maybe Oliver Stone is available.

Digital Technology - faster than the speed of....
uh, the latest fast thingy?
It's not surprising that technology leaders, advertisers, marketing professionals, and privacy officers around the globe seem to always be playing catch up. This week an eMarketer report showed the first Direct Mail drop in over 60 years - no big surprise here. But the prior week they also published a report showing that Google, for the first time, is losing, rather than gaining, share in Search. And the hits just keep coming. This week brought us a new Nielsen Report on Social Networking's New Global Footprint that shows "member communities have overtaken personal email." If that's not enough to raise your eyebrow, how about the fact that time spent on Facebook last year not only increased by 566%, its greatest global growth comes from people aged 35 - 49? Even the strongest advocates for social media must be astounded by this speed of adoption.

Couple all these lightning fast changes with a recession spawning massive budget cuts, and I'm sure many marketing professionals feel the need for a long vacation (of the paid variety of course). We've talked about simplifying a lot in the past, but with this schizophrenic environment, it's more imperative than ever. TruEffect does its part by continuing to help advertisers make sense of the digital advertising landscape. It's all about forging meaningful relationships with customers, while spending less time and money on it and, of course, keeping kosher with online privacy regulations.

– Layne Salter

Newspaper impressions

Jim Nichols takes a different angle on recent newspapers' demise in his iMediaConnection article.  He points out the fact that while the internet has played a major role in killing paper news by giving consumers free news and content, it's still largely in the infancy stage of figuring out its own business model.  But he also reminds us that many papers are doing a fantastic job creating and offering digital content.

I think he's hit on something. It's true that news content has the ability to generate a highly sought after audience. Couple that with the fact that online offers superior technology in ad targeting. Unlike newspaper readers having to wade through pages of huge furniture and auto ads that may have no bearing on their interests, digital content can provide its readers with targeted, even custom ads. Online targeting promises a lot, but will it deliver enough to boost display advertising?

I second Jim's call to advertisers to go out and buy some impressions on a digital newspaper. Who knows? You might save a journalist's job, and keep the world safe from glib and depthless television news.

– Layne Salter

Rocky Mountain News - Rest in Peace

Today I was saddened to hear the long-awaited announcement that tomorrow one of our local newspapers will be ceasing operations.  The Rocky Mountain News is two months from its 150th anniversary and has won a Pulitzer Prize for journalism four times – an accomplishment shared by very few newspapers in the world.  And other awards stack up behind the Pulitzers. 

Now it would be easy to ask why I, an internet media guy, wouldn’t see this as another validation that online is the future.  And, isn’t this failure just another example of an industry that has not remained competitive and deserves to go extinct?  Well, it’s just not that simple.  The internet, and internet media, has been an explosive success because it has enabled the sharing of information across society with an efficacy and speed that boggles the mind.  We can learn a great deal about almost anything in seconds, which has redefined business, education, government, global trade, culture, health care, and even how we interact as human beings.  But, the internet does not create the content. 

People are the authors of everything we share online.  Teachers share their lessons.  Analysts share their expertise.  Scientists share their research.  Musicians share their songs.  And journalists share their news stories, photos and commentaries.  The internet has not offered any substitute for this wealth of knowledge, yet it seems to have put into jeopardy the business models that feed some of these authors, journalists in particular.  At its most lofty, journalism is chartered with reflecting every side of an issue as truthfully as possible. Thomas Carlyle’s “Fourth Estate” has been a cornerstone of a free and open society, and has been particularly important in American history. 

So what difference does this make to those of us in digital media?  Each and every one of us in the business can attribute our revenue and our paycheck to the media budgets of the advertisers that pay to get their message in front of consumers.  Consumers want content.  Compelling content.  Entertaining content.  Useful content.  It’s the content that draws traffic that drives ad revenue.  And one of the earliest and most successful sources of content on the web is news.  Journalism.  Obviously, we’ve evolved from headlines on CompuServe to tweets and blogs from “citizen journalists”, but we collectively depend heavily on the news, weather, entertainment and sports reporting from professionals.  Professionals who have failed to morph their business model in a sustainable way, but continue to blindly feed the model that is their Brutus.  Walter Isaacson provides an excellent analysis and a provocative proposal in his recent Time Magazine article.

We have heard in the last few days that television seems to be surviving quite nicely, thank you very much.  And that’s true – kudos to the ability of that industry to remain relevant.  But newspapers are the most entrenched source for local issues and the most connected with their communities.  Newspapers at every level provide an enormous amount of quality content that drives a lot of revenue to our industry.  If we fail to recognize the need to nourish and grow quality content, then we’ll find ourselves struggling for relevance as well.  How successful would an internet be if comprised solely of advertising??

I grew up on a Midwestern river which fueled the growth of towns large and small and supports fish and wildlife as well as agriculture and recreation.  As commerce up and down that river grew, the Army Corps of Engineers decided to make the channel deeper and straighter in an attempt to facilitate large shipping barges.  This well-intended move to efficiency and effectiveness turned the meandering river into a fast-flowing “ditch” that has become too treacherous for many swimmers and boaters, and eliminated some of the shallower pools and eddies that were home to all kinds of creatures.  The need of the people living along the river to exploit this natural resource for commercial gain has eaten away at the real value it brings.  What a self-defeating tragedy it would be if the internet ad industry followed suit and drove quality content providers such as professional journalists out of business. 

- Scott Nelson

Facebook loses battle with consumer privacy

 This week we can add Facebook to the online privacy debacles of late. A change in their terms of service got users in such an uproar, I'm surprised it didn't bring down the Twitter servers.  Mark Zuckerberg tried to calm the masses in a blog post  on Monday explaining that they didn't actually want to own all our data forever.

Then, on Tuesday, it was reported that the Electronic Privacy Information Center (EPIC) was preparing to file a complaint with the Federal Trade Commission. Now, if you've read the FTC Staff Report on Self Regulatory Principles for Behavioral Advertising, Principle 3 talks about "material changes to existing privacy promises" and states, "A company must keep the promises it makes with respect to how it handles data. If it wants to make a ‘material’ change in how the data is used, it must obtain ‘affirmative express consent’ from the affected customers." Whether EPIC was making this connection is not known. 

Not surprising, Facebook did an about face today , rolling back their terms of service to the previous version.  It's like a Privacy Tsunami created by millions of pissed off Facebook users. Hmmm....Perhaps the online ad industry needs to take a harder look at that FTC Staff Report.  Even if you don't fear potential privacy legislation, the instantaneous public consumer outrage, courtesy of social media, is enough to keep you up at night.   

– Layne Salter

FTC Staff fires privacy shot across the bow

While I would like to think “everyone” cares as much about online advertising, behavioral targeting and consumer privacy as I do, my gut says most advertising folks didn’t gallop over to the Federal Trade Commission website to download and pour over the Staff Report on behavioral advertising last Thursday.  Based on that assumption, we’re going to devote a bit of effort to getting the word out because the implications of this report are far greater than may be apparent at first glance.  With this report, and, perhaps more importantly, the two concurring letters from Commissioners Pamela Jones Harbour and Jon Leibowitz, the FTC has fired their warning shot to each of us whose business exists because of online advertising.  The call-to-action starts with the first two words in the title – “self-regulatory”. 

Full disclosure – we’ve built our company on the belief that advertisers own their relationship with consumers, and the information defining that relationship should belong to them, not to some third-party technology company or ad network.  For that reason, I was pretty excited when the FTC explicitly validated our approach to data and behavioral targeting.  Their endorsement of the ‘first-party’ model as “more likely to be consistent with consumer expectations, and less likely to lead to consumer harm, than practices involving the sharing of data with third parties or across multiple websites,” profoundly confirms our position.  But as this warm glow of self-satisfaction waned, and we read further into the report, another message became clear – ignore this report at your own peril.   

To offer some perspective, since the 1990s, the FTC has kept a careful eye on the online advertising space, but has refrained from directly regulating.  They’ve consciously allowed all of us to go about our business and figure out models that bring value to consumers, and revenue to our top line.  The FTC Town Hall early this decade was the impetus for the formation of the Network Advertising Initiative and is as close to imposing regulation that they’ve come.  Now that we’ve developed more sophisticated methods of collecting data and targeting online ads, and a track record that includes the rise of über-data hound Google and the AOL search debacle in 2006, the FTC no longer feels they can stay on the sidelines.  Commissioner Harbour goes so far as to layout a timeline “directing staff to complete, by Summer 2010, a report that evaluates the efficacy of self-regulation in the realm of behavioral advertising.”  To stoke the fires even further, Commissioner Leibowitz warns all of us to keep our promises regarding the use of consumers’ information.  “If they fail to do so – whether first party or third party, online or offline – we will go after them.”  

I’ve been calling for advertisers to actively engage in this process since before I gave a presentation to the FTC’s Town Hall on eHavioral Advertising in November, 2007.  But companies whose business models are dependent upon the development of third-party profiling databases and targeting solutions are likely to not heed the FTC’s call sufficiently to prevent the drafting of regulation or even legislation.  The folks controlling the media budgets must insert themselves by helping to define acceptable practice.  Already, advertisers are struggling to allocate more of their (dwindling) media budgets to online, failing even to keep up with consumer adoption.  (Only 8% of media dollars are flowing online, even though we consume 28% of media from the internet - Forrester Research, January 2008.)  If regulation or legislation is forced down our throats, further impairing a brand’s ability to make the most of every media dollar, we will only see that gap widen.

Next week I’ll be participating in a workshop hosted by the Future of Privacy Forum in Washington D.C.  This will be a great opportunity to learn from some of the leaders in our industry.  Perhaps one of the most encouraging aspects of the event is the fact that some of the largest advertisers in the world are planning to participate.  Perhaps they’re taking “self-regulatory” more seriously this time around.

– Scott Nelson

Display - it's not just for branding anymore

This week Nat Worden of the Wall Street Journal wrote an insightful article on the state of advertising as a whole. Media titans everywhere are acknowledging that, even once the recession is over, advertising may never return in full force to major media outlets. The world is moving on.

No big surprises here, given that the past few years have shown a growing distaste among consumers for being advertised TO, rather than communicated WITH. Throw in the changing technology landscape and it's no wonder that traditional media is suffering. Disney Exec, Robert Iger, said they're feeling "signs of secular change as competition for people's time is increasing and the abundance of choice is allowing consumers to be more selective."

The rise of Search and Social Media have dominated the online arena as major players in the trend towards better relevance. "I searched on a brand, and voila! There it was!" Or " I'm going to try out this new [fill in the brand] because my BFF said it was so awesome." Well, It's a start. And research continues to confirm what we already knew – people don't consume media in a vacuum. Atlas Institute reports that the average person who converts on a site had 15 to 20 touch points prior to taking that particular action, and nine out of ten were exposed to ads from the same advertiser across two or more sites. So if your strategy to reduce media spend is to stick to only one channel, think again.

Advertisers and agencies might already be rethinking their online approach. Research shows that paid Search spending had its first major drop of 8% in Q4 of 2008. The decrease might simply represent overall ad spend cuts, or it could be signaling a trend towards a more balanced online media approach. With consumers having so many choices, being so selective, and demanding media on their own terms, doesn't it make sense to spread your word more wisely?

With Display ad technologies continuing to improve upon targeting and media accountability, and an inventory glut creating reduced display media rates, there's never been a better time to marry Display with your Search campaigns. And if you're already doing that, you can continue taming the online beast by taking a step back to re-evaluate the cost and effectiveness of all your online technology partners. There's always room for improvement.

– Layne Salter