Nowhere has this been more prevalent than in the media space where a reliance on a “burn to learn” approach has been utilized by media planners and analysts for some time. In this practice, a media planner may have a hypothesis on a particular audience and due to various exigencies like client budget and competition for campaigns the need for certainty is paramount before a commitment can be made.

So in order to see the results, they might spend a little money on a little media to just get a sampling of what’s to come. This form of testing is employed in a myriad of industries and is a reliable safeguard in managing potential risk.

This approach may be effective in getting real data so that the first step in the media buying process is a confident one, especially when millions of dollars are at stake in selecting the right set of inventory or audience. However, there’s an alternative approach in achieving this goal but it’s rarely employed.

Why? Because it challenges the everyday minutia of our lives that has increasingly become more busy, more distracted and more demanding.

If done wrong, using the “burn to learn” approach can be a losing proposition.  Here’s a quick look at the costs that it take to run this type of test:

Speed Kills

In this case speed kills in a positive way.  If testing can be done in a quick and efficient way then that’s ideal.  But if test results take time then the lack of speed kills.  It kills client enthusiasm, team motivation, chances to iterate and time to market.  So in order to extract any value from this type of approach, speed is essential.  Without it, the risks go up.

Money Is Scarce

Budget dollars for testing is only marginally easier to get than expanded budgets. Why? Because it’s somebody else’s money and gambling with somebody else’s money is risky especially when you don’t have any data to support your bet.

Testing Inventory vs. Audience

This is flat-out wrong. At its core, advertising needs to touch actual people, so testing proxies will distill little information about an audience.

You Could Be Wrong

Using a small sample audience doesn’t paint an accurate picture of the types of results a media planner might get at greater scale. Testing a small sample will only result in data on a small sample. It’s difficult to extrapolate data to begin with so it’s vitally important that the ends justify the means in this process.

The next revolution of audience targeting eliminates this practice of “burn to learn” by giving media buyers data on a large enough scale that will enable them to make better and informed decisions before spending media dollars through analytical solutions. With analytics, media buyers can better understand which first party audiences need to be targeted, eliminate any costs to model or simulate multiple audiences in real-time and make audiences go live when appropriate.

While a true data democracy might be a stretch for our industry in the near term, putting a stop to the “burn to learn” approach is within our grasp today and good first step.

The conversations taking place about behavioral targeting is occurring between the wrong parties. As DNT stands today, the dialogue is happening between consumers and monetization platforms, which are providing a universal opt-out feature at the browser level. Rather, this conversation should be between consumers and publishers.

Publishers need the ability to monetize their content either through subscriptions or ad-supported content, while users need to know how their information is being used. Therefore, what’s needed is a more balanced approach that acknowledges the benefits of subsidized content and illustrates trade-offs in a non-advertising world.

What is not being discussed is how DNT in its current form is a mechanism for shutting down this process that otherwise funds content that provides value to both consumers and publishers.

Much has been made of the similarities between DNT and the Do-Not-Call list introduced by lawmakers in the 1990s to address the rising concern of telemarketers. This comparison is misplaced and points people in the wrong direction.

Since phone bills have always been paid by the consumer, there is no value for them to take telemarketing calls. So Do-Not-Call was created to give the ultimate choice to the paying consumer. Sounds fair to me.

But let’s be clear that there is no parallel to DNT where consumers are getting free content. Would consumers have agreed to get telemarketing calls if their phone service was free? Maybe. Does it make sense to offer free phone service if there is no value to the provider?

That’s the question we need to address with DNT. Otherwise, DNT should be named the “Do Not Pay – let someone else pay for me” feature.

What is needed is not less or more regulation, but a revision to the current DNT proposals that preserves the interests of both consumers and publishers by giving them control over DNT. So what would that revision look like? Here’s an example:

• Users would have the ability to select DNT settings in their browser.
• This preference would be recognized by the publisher site the user navigates to.
• The Publisher site presents the user with a message that acknowledges their DNT setting and asks if the Publisher can override that setting to give them a better site experience, more free content, etc.
• Users choose! (Their DNT preference is applicable for this publisher site only.)

This model would open the lines of communication between consumers and publishers on the application of DNT while preserving the benefits of monetization for publishers and the service (aka free content) provided to consumers. It is also vitally important that DNT not erase cookies as this would still be counterproductive in the disruption of the monetization process for ad-supported content (e-commerce would be severely impacted). What it should ensure is that the state of the cookie be intact while DNT is present.

We would be supportive of a revision of DNT to include the above consumer-publisher dialogue. However, we also want to make clear that the principles being adopted by the DAA and NAI, where consumers get global and local opt-out capabilities and transparency through the about ads icon offers another viable implementation of this same goal.

This self-regulatory approach (we have heard industry estimates of over a trillion ads being served with this icon enabled) is already receiving wide adoption and aims to deliver on the goals of transparency and simplicity for the consumer.
DNT promises to alter the way advertising is served and needs to be transparent in its impact on both consumers and publishers.

Let’s be clear and upfront on what exactly DNT is designed to do. We can start by bringing the right parties together to have a fruitful and productive conversation about the pros and cons of sponsored or free content.

Cross-published at the BlueKai blog.

Just when Madison Avenue was ready to finally put 2010 and the Great Recession behind it, the advertising community got news the Federal Trade Commission was calling for more regulation of our industry. Discussions around consumer privacy and data utility continue to alter the narrative of the pros and cons of digital marketing and pose some significant questions for the advertising industry as we head into 2011.

Putting on my Nostradamus hat, here are some quick predictions on what every “Mad Man” should expect next year.

The Industry Strikes Back. With the rise of government interference, self-regulation is going to play a vital role in the privacy debate and 2011 promises to be a year when the online advertising community produces real progress.

We’ve already seen organizations like Online Behavioral Advertising (OBA) and the Digital Advertising Alliance (DAA) apply consumer-friendly standards to online advertising that provide book-end transparent solutions that is aimed at giving users clear disclosure at collection, clear in-ad notification and universal opt-out choices. Look for more self-regulatory programs like these to be implemented at a rapid pace in 2011 with a few key players driving the majority of the innovation.

The greatest irony of 2010 was that the government convinced consumers that they should have rights to understand their citizen’s behaviors and businesses are the ones that need to be regulated. In my humble opinion, the answer lies not only in self-regulation but also in an equal attempt by lawmakers and privacy advocates to truly acknowledge the benefits of subsidized content and the trade-offs in a non-advertising world.

Let’s focus on practical solutions that give choice and transparency to consumers over broad opt-out tactics that can negatively impact an otherwise thriving industry.

People Not Proxies. If 2010 was the year that audience targeting went mainstream, 2011 will be the year that data will impact the entire media-buying process. For decades marketers have been used to using rough proxies to tell them where they should spend their marketing dollars.

Surveys and panels have helped marketers find the right zipcodes, TV shows, content sites and newspapers as proxies for where their consumers might be. While marketers spent billions on these gold plated slingshots (the proxy tools) – search came along and empowered marketers with heat seeking missiles.

Search taught us to abandon the proxy and go straight to the people who want to find us. Data targeting, simple retargeting and search finally break our dependence on proxies.

People buy our products and people have passion for our ideals. Marketers will flip their planning paradigm to go straight to these people rather than the poor substitutes we find in proxy-based segmentation.

We will even begin to see online segmentation techniques drive cross channel segmentation. Specifically, this means that new planning tools will give marketers the ability to craft their entire marketing funnel based on all available first and third party data. This will inform who their customers actually are and who should see their next round of ads. Goodbye proxies; hello people.

The Rise of the Quants – While there will always be a need for the Don Drapers of the world, many agencies are trading in their cigarettes and whiskey glasses for complex mathematical formulas and spreadsheets.

I have no prediction on whether or not the quants will be popular dates but they certainly will find jobs. Quantitative analysts are the hot hires at agencies, which increasingly need data jocks who can better understand consumer audiences and their purchasing behaviors to optimize for ideal campaign performance.

The rise of the quants will only intensify in the coming year, as more and more agencies adopt media strategies that rely on in-depth data analysis and audience profiling.

As online media continues to transform Madison Avenue, 2011 will be a pivotal year for the advertising community. It must remain steadfast in its commitment to creating real transparent solutions for consumers while staying laser focus on data.

If we can strike that balance, 2011 may go down in the books as one of the most influential for the industry. Happy 2011!

Early results have been very encouraging, but advertisers and agencies are still trying to understand how retargeting works, where its value lies, and where it fits into the online advertising landscape. At the Summit I explained search retargeting with an analogy that resonated with the attendees, so I would like to share it with you here. I call it the Fisherman’s Tale.

A while ago, in a large ocean, there was a thriving fishing industry. The main players were large guide boats that would take you to fishing spots. They made customers pay for the right to fish on the boat. Some customers would complain that many times they came back empty handed. The guide boat salesman would point out that catching a fish took multiple nibbles. In addition, the salesman would point to a framed picture behind them of a smiling customer that caught a huge tuna. If that weren’t enough they would also point out that the boat was typically booked three months in advance. At the end of the day, many of their elite customers returned so the guide boats did just fine.

One day in a place called the Bay Area, a group of guys from outside the fishing industry found a way to attract large schools of fish who happened to be hungry. Unlike the fish that were spread out in the ocean, these fish would come right up to the surface of the water and look for a net! When the fishery in the bay grew, the owners decided to change the way fishing was done. They called it “pay per nibble.” The stated rules were simple:

1. The fishery gave you a smart net that only caught the fish you wanted.
2. You only paid for the fish that nibbled on your bait.
3. Anyone could fish and the amount you paid was set by an auction marketplace.

The ease of the experience, the ability to get only the fish you wanted (no more dead dolphins) and the payment scheme, made it a resounding success. Within a few short years the Bay Area fishery had a market cap that exceeded that of all the guide boats in the ocean put together.

Now, many people liked to point out that fisheries like this had existed before — and they were right. But this fishery had some unique differences: it made it easy for you to fish, easy for you to change the price for each individual fish species (unlike their predecessors that made you pay the same for a guppy and a tuna) and it allowed you to modify your bait on the fly. The Bay Area fishery just gave you a lot more control, and the flexibility made all the difference.