Opting In to Conversations About Targeting

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conversationADOTAS – It’s always the same conversation.

Last night hanging out with friends, one mentioned he’s confused because he keeps being served display ads for urban fashion as well as the Mormon Church, neither of which are really relevant to his life. “How on earth does behavioral targeting actually work?” he asked.

“Yeah, yeah,” the group chimed in. “Tell us more about it, digital ad man.”

So I explained that, on a basic level, publishers, advertisers and tech companies analyze your browsing data, place you in various interests-based buckets and then target (what they hope is) relevant advertising.

“Your browsing data?” the chorus asked. “You mean they track you.”

“Pretty much,” I said. “They draw an anonymous profile of you, and then advertisers can bid on your impression in real-time. It’s all automated — there’s not an actual person following you around.”

Their distaste was palpable. I could imagine each of them writing an email to Federal Trade Commission Chair Jon Leibovitz the next day showing their support for a Do-Not-Track list.

“But your data is what pays for Internet content,” I added. “You can either submit that or actually pay for all those sites you enjoy.”

That statement is always followed by silence. My friends should have responded, “But about direct sales efforts or contextual advertising?” I’d respond that they just aren’t paying the bills for most content producers. Though the effectiveness of behavioral targeting will be argued for a while, the data market is proving to be pretty damn lucrative and it’s an accelerating revenue stream for content providers.

If you phrase it “no data, no content (for free, anyway),” most people grudgingly see the light — but explaining the importance of online behavioral advertising is a bit more complicated than that.

I was amused by a comment on an article titled “Digital Ad Industry Isn’t the Bad Guy,” (something I’ve tried to explain before) by TRAFFIQ’s Lori Goldberg on Monday  — “Is the ‘industry’ simply saying that if you don’t allow tracking you will need to then ‘pay for content’ that has been free – up until now? And that a Do-Not-Track (privacy enactment) WILL come at a price?”

This is a big part of the problem: users think the content is free. And we’ve let them believe so much as we tried to hide the price: their data.

But Internet content has never been “free” (beyond the gateway fee paid to the ISPs). It’s akin to the way broadcast television isn’t free — you get your serialized melodrama while the advertisers get a “captive” audience to hawk their goods. You’re effectively paying for the show with your “undivided” attention.

Hence all that screaming about TiVo and DVRs from advertisers — they may be convenient for consumers, but they’re cheating the advertisers out of the marketing time that they paid for.

However, television watchers are notorious for slinking out of “ad time” by going to the bathroom, fixing a snack or just switching channels. But we don’t even have to do that — because most of us have been swamped by advertising for our media-saturated lives, it’s become easy to filter it out (though tools like jingles and taglines are still surprisingly effective).

We can ignore TV commercials even on their most important night of the year — I had to read about most of the Super Bowl ads the next day because during the actual game, I spent the commercial time… Talking about the game with my friends.

When I see TV commercials now, I find myself distracted by irrelevant details such as an interracial couple or the choice of music, which can lead to great fun. I still smirk about how The Stooges’ “Lust for Life,” a song about heroin abuse, was used to advertise a cruise line. More recently, the 70s hit “Brand New Key” by Melanie — which is a very sexually suggestive song that was used as Rollergirl’s theme in the pornography-industry melodrama “Boogie Nights” — played as a cute baby crossed the country in a tire. I don’t remember what the ad was for — I just remembered laughing at the use of that specific song, as well as humming the catchy melody days afterward.

With online display advertising, it was easy to teach ourselves to ignore banners since they were bad. The early display ads (and a great deal of the current ones) are absolute trash — or potentially invitations to download malware. Internet users even grew the ability to zone out jumpy Flash ads and rich media ads.

While advertisers will still pay ridiculous amounts for television even though the attention share is dwindling, they won’t do the same for Internet ad space, particularly on back pages or “remnant inventory.” But they will pay reasonable amounts for display advertising that has a greater potential of grabbing the browser’s attention — through audience, behavioral and social targeting.

One could argue, like AOL has with its Project Devil, that current display ad units are simply ineffective — we sorta stripped the display layout from the print industry. Coming from a magazine background, I know the most effective print ads are full page ones. Those tiny ones on the back pages tend not to make such a splash.

The Internet age has increasingly made the most effective type of advertising no advertising — the perfect blend of content and ad (branded or sponsored content). It’s making YouTube stars so much money that Google just got into the action. A fantastic blog by RazorFish’s Joe Mele: “What marketing departments need to really start doing is stop thinking like advertisers and start thinking like media companies.”

But for now what’s bringing in cash for online publishers is display. The growing money-maker is video, which not surprisingly harkens back to the TV model. Consumers may complain endlessly about pre-roll, but when watching Internet video, we are a captive audience (you can always go fix yourself a snack while the ad plays… OH SHOOT! It’s over, run back, run back!). Imbue video ads with behavioral, social or audience targeting, and watch the revenue fly in.

We’ve found out time and again, that except in limited cases, Internet users won’t pay cash for online content. So publishers came up with a bargain — we’ll keep the content free, but use data to support targeted advertising. But they didn’t tell consumers about it, just kind of hinted at it. And users got upset, privacy advocates got upset and regulators got upset — hence the current brouhaha over online tracking.

But if the industry lays out everything on the table, then users get it. They’re not scared; they get it’s a tradeoff. There are going to be bad seeds using tracking technology for nefarious deeds, but that’s who industry advocates will crack down on through self-regulation (in theory, at least).

Of course, opting out is always an option, but users have to realize it’s a two-way street. If you don’t want your data shared and used for advertising, you’re going to have to expect less content available to you — “for free” that is.

Unfortunately, as an industry we also have to keep shouting this information to make sure it sinks in — that’s what “educating” means these days. I’m sure I will have that opening conversation many more times.

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