Archive for the ‘Behavioral Targeting’ Category

The Privacy Man cometh. Now it’s time to figure out who is going to payeth!

The industry has formally taken a stance to thwart the strong arm of the FTC by enforcing compliance of self regulatory guidelines on data collection and usage.  The Digital Advertising Alliance, which is comprised of the leading advertising trade organizations AAAA, AAF, ANA, DMA, IAB, NAI & the BBB, has selected Better Advertising’s monitoring technology to help enforce compliance. Enforcement is said to begin Jan 1, 2011., and the enforcer will actually be the BBB. I’ll also add that this initiative is in its very nascent stages and surely will continue to be shaped by adoption and the economics of the process. AdSafe Media and TRUSTe have partnered  to become the second provider of compliance enforcement, and will be applying for the same accreditation that Better Advertising received from DAA. You can bet that a handful of others will enter the space as it grows. This is a good thing. We need multiple options for healthy competition, as well as many minds working to keep the FTC from passing ‘baby & the bathwater’ type of regulations for online advertising targeting. However, it is notable that Better Advertising is the only company solely focusing on this.

Compliance is Everyone’s Responsibility, Sort Of

The onus of compliance is going to be more on the publisher/network/DSP side than the advertisers.  When placing buys on networks, exchanges, DSP’s, and even sites directly, when using behavioral targeting, an advertiser can license the icon via the publisher, or choose to use their own, so to speak. The icon overlay can be served via the publisher’s account and over the advertiser’s third party served ad without any technical implementation by the advertiser, or the advertiser can work directly with Better Advertising (and  at some point in the future, a provider of choice). Of course the cost always comes back to the advertiser somehow. But adding more line items of marketing technology fees is not something that advertisers embrace quickly.  So ultimately it is too early to tell whether the standard practice will be the advertiser or publisher being responsible for compliance. However, the big agency holding companies, in addition to the ad networks and publishers, have all bought in and are slowly ramping up delivery of BT ads with the “Advertising Options Icon”, which provides consumers with disclosure regarding data collection and usage, and the ability to opt-out of  specific targeting. Currently when consumers opt-out of targeting they are opting out at a data / targeting provider level, not at an advertiser level.

The Cost of Compliance Enforcement

Publishers & advertisers who are compliant will be able to license the use of the icon for $5,000 per year (if annual BT revenue is less than $2MM this fee is waived). This fee helps fund the DAA and enforcement of compliance. Better Advertising is paid a nominal CPM for the service, which consists of the delivery of a java script overlay of the icon and the functionality of disclosure,  compliance monitoring, and opt-out facilitation. They also offer additional reporting services for additional fees. Essentially the bigger media companies, networks and agencies will be subsidizing the early stages of these initiatives by adopting and paying for the technology so that eventually the costs for everyone can come down with volume.

Challenge: The industry will have to fork out millions of dollars for this.

A new role of planning will include mapping out where compliance is necessary, in which case the icon needs to be visible, and where it is not. Note to agencies – there may be an audit trail requirement here to ensure that you are not paying for enforcement of non BT targeted ads. Nominal CPM or not, it adds up just like ad serving, or ad verification. Ideally it would be nice to have this built into the ad server – but I can say that about so many things! Assume that compliance and the use of the icon will be a part of media terms & conditions in the not too distant future.

One of the elephants in the room is the slightly ambiguous definition of compliance – or more accurately what the compliance is ensuring. The following are the DAA’s Self Regulatory Principles:

The Education Principle calls for organizations to participate in efforts to educate individuals and businesses about online behavioral advertising and the Principles.

The Transparency Principle calls for clearer and easily accessible disclosures to consumers about data collection and use practices associated with online behavioral advertising. It will result in new, enhanced notice on the page where data is collected through links embedded in or around advertisements, or on the Web page itself.

The Consumer Control Principle provides consumers with an expanded ability to choose whether data is collected and used for online behavioral advertising purposes. This choice will be available through a link from the notice provided on the Web page where data is collected.

The Consumer Control Principle requires “service providers”, a term that includes Internet access service providers and providers of desktop applications software such as Web browser “tool bars” to obtain the consent of users before engaging in online behavioral advertising, and take steps to de-identify the data used for such purposes.

The Data Security Principle calls for organizations to provide appropriate security for, and limited retention of data, collected and used for online behavioral advertising purposes.

The Material Changes Principle calls for obtaining consumer consent before a Material Change is made to an entity’s Online Behavioral Advertising data collection and use policies unless that change will result in less collection or use of data.

The Sensitive Data Principle recognizes that data collected from children and used for online behavioral advertising merits heightened protection, and requires parental consent for behavioral advertising to consumers known to be under 13 on child-directed Web sites. This Principle also provides heightened protections to certain health and financial data when attributable to a specific individual.

The Accountability Principle calls for development of programs to further advance these Principles, including programs to monitor and report instances of uncorrected non-compliance with these Principles to appropriate government agencies. The CBBB and DMA have been asked and agreed to work cooperatively to establish accountability mechanisms under the Principles.

It’s a Big Job But Somebody’s Got to Do It

Can an amalgamation of  of a number of industry trade groups that historically have not been involved in technology nor enforcement keep the FTC satisfied? We better hope so.

Personally I feel that a lot of it has to do with the economics behind the process. Can the DAA generate sufficient revenue to properly resource enforcement? Will the industry accept these costs in stride? Do we all understand the alternative?

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The increase in buzz and actual growth of the Demand Side Platform (DSP) / Real Time Bidding (RTB) market is not news anymore. The trend of separating audience profiles from media and empowering media buyers  to bid on specific audience profiles across large exchanges of media inventory is a hot topic of conversation, and rightfully so. But of course with any growing trend, it is essential to take the time to identify which players provide true and unique value propositions to the marketplace. Beware of impostors trying to capitalize on the hype rather than helping to perfect the concept of what a DSP facilitates.

In Theory, Practice & Theory are The Same – In Practice They Are Not

In theory, each agency or media buyer needs only one DSP to bid into the entire exchange and second channel media ecosystem, with all the data plugins available at their disposal. The market would have a high degree of bid density (a lot of actual demand side activity) and liquidity (stable supply of replicable “inventory” that establishes and holds its value – which of course is an entire issue in and of itself). Of course, we don’t live in a perfect world, yet. Neither bid density nor an ability to value inventory properly exists in the RTB marketplace.

Give Me a D…

Adding the acronym DSP to your product offering gets more feet in more doors today, and therefore we will see many large networks and new players adding “DSP” to their offerings. However, in concept, many of these new platforms are limited to specific network inventory (albeit large amounts of it), static data profiles or targeting options (albeit fairly sophisticated options), and sometimes lack the total transparency that the more savvy buyers have come to expect from a true DSP (albeit some are willing to work on a CPA basis, so sometimes the buyer doesn’t care). A “true DSP” is one that can bid in real-time into the entire exchange and second channel ecosystem, works with all or at least most of the data providers and maintains total transparency on media and pricing. The holding company-level media agencies have all either developed their own or white labeled AppNexus or other third part technologies. Much like ad servers, as the market evolves, your agency or in-house buyers will only be working with one DSP (or maybe we will start calling them real time bidding engines at some point?) – or at least a primary DSP. Speaking of ad servers – I predict that ultimately Google (DART) and Microsoft (Atlas) will be the two leading DSP’s on the market (although MediaMind will be a third major player, particularly with the impending IPO). This will happen through acquisition, and the first in the category was Invite Media – check one off for Google. Some of the other current acquisition contenders include DataXu, X+1, Media Math, and AppNexus, with new players claiming market entry seemingly monthly. Degree of sophistication of advanced optimization engines should soon become a unique point of differentiation between companies.

Wanted: A Stable Market

Imagine a series of interconnected Venn diagrams, where the overlapping areas represent consumers that satisfy multiple advertisers’ criteria. These criteria are compiled using a combination of data points from several data providers, all integrated into your DSP and available to select from an intuitive  interface. Every single available impression in the exchange is assessed in real-time by every DSP on the market, and multiple bids from the appropriate advertisers within each DSP are all processed in real-time. Those buyers with the highest bids will get the inventory. All of this bidding happens in real-time – billions of times per day. Sound familiar? The bidding part at least? Google built the biggest cash cow in our industry on a similar model – using far less data and sans cross category competition for the same consumer.

Until there is a higher level of bid density and inventory availability, the marketplace will not be ripe for all advertisers and will favor select categories, and not all publishers will provide inventory into the RTB marketplace. It’s the classic chicken and egg problem. Hence some of the non-DSP DSP’s.

The Opposite of DSP

Publishers on the other-hand utilize yield optimizers to interface with the DSP’s to manage inventory, data relationships,  real time bidding and maximize revenue generated. Companies such as Rubicon Project, Ad Meld and PubMatic will soon become necessities for any publisher who wishes to participate in the second channel (inventory not sold at a premium directly by its sales force – which BTW is a lot of inventory!) Even some of these companies are releasing so called Demand Side products. Can they sit in the middle ground of both the supply and demand side worlds? Only time will tell, but my gut says no way. While technology might be able to play both side sof the fence more objectively than people, buyers still want separation from sellers. Of course Doubleclick did it – there’s the whole DFP / DFA thing, but the instances of one company becoming a leader on the buy and sell side of the same technology coin are few and far between.

Anyway, as you can see it’s all really simple …

But in all seriousness, it is as exciting as it is complex. We are participating in the evolution of the digital media world as we know it.

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With the announcement of the Open Graph, Facebook has once again provided an evolutionary leap for the entire industry. Publishers, brands and consumers alike will benefit from “a smarter, personalized web that gets better with every action taken”, as concisely described by Mark Zuckerberg at yesterday’s F8 conference.  With Facebook’s critical mass (nearly 500 million members as of today), the Open Graph is poised to become the most powerful move the company has made so far – if successful it will revolutionize the web as we know it and propel Facebook into a position to compete with Google for the throne of dominance.

The Open Graph – We Like

Facebook is already fairly ubiquitous among consumers. Facebook Connect has extended that ubiquity to sites outside of Facebook, but the process for consumers, publishers and marketers was not seamless. While successful, Connect was not the technology that extended the social experience of Facebook to the entire web. But that is exactly what the Open Graph will do. Facebook has simplified the process of implementing the code for developers and for sharing and connecting with content and brands for consumers. It is truly a win-win-win. One line of code (an iFrame for those who care), will enable publishers to include a “Like” button, which will facilitate social actions anywhere on the web. As long as you are logged into Facebook, your cookie will allow your social graph to augment the experience on any site with the code. Bret Taylor said it best during F8  yesterday that “Lowering the friction of sharing will increase the volume of sharing”.

Vaults of Data

Facebook already sits on a data goldmine, but these vaults will become far deeper with wider ranging application as the Open Graph further connects social graphs of individuals, brands and publishers around the web. For now the targeting opportunities resulting from the additional data will be limited, most likely providing marketers the opportunity to target interests “liked” for the time being. But the potential of the data applications are profound – think Minority Report-like, as mobile and geo-location converge on the Open Graph.


Inevitably there will be some privacy backlash, as all forms of behavioral data applications are under severe scrutiny by the FTC and advocacy groups. Of course Facebook thought about this too – and they will be rolling out a new simplistic privacy panel where you can opt out of the Open Graph. Ultimately there will be collection of an amount of non-personally identifiable data at a scale that we have never witnessed before, and the proximity and ability to connect it to personally identifiable information will most likely become the issue at hand. But the benefit of the Open Graph adding significant value to the overall consumer experience, and the affinity with Facebook as a trusted brand powering the collection, storage and usage of the data will trump any privacy backlash. Make no doubt about it – there will be some backlash – there always is – but we will get past it rather quickly. The social web is here in a big way, and our lives have been changed forever – and soon everyone will realize it.

A Monumental Day

For marketers, in the short term this turning point will make it exponentially easier to turn fans into advocates, identify new prospective customers, and drive peer influence through the coveted Facebook newsfeed. In the long term, the potential is far wider reaching and as mobile and geo-location (Facebook is launching their own geo-location service as well) converge with the Open Graph, this may be the catalyst that soon connects the online and offline world. It is truly a monumental day.

You can see the F8 conference videos here.

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ComputerLockWhile the Network Advertising Initiative (NAI), a cooperative of online marketing and analytics companies committed to building consumer awareness and establishing responsible business and data management practices and standards,  has existed since 1999, its policies and lack of ubiquitous participation and enforcement ability have not been enough to curtail the FTC’s scrutiny on our industry’s data practices.

The proliferation of data usage for targeting and providing relevant consumer experiences has been a vital component to the progression and growth of the online advertising industry since the emergence of ad servers and data collection in the mid-to-late ’90’s. The argument has always been that no personally identifiable information (PII) is being collected or used and therefore the anonymous data is harmless and in no violation of any privacy guidelines or ethics. However, data collection and applications used to be limited to far fewer players. Today every ad network, marketing technology firm, and now all the major media agencies have developed or are in the process of developing the capabilities of collecting and applying consumer data in the quest to better identify and target specific consumer audiences.

Of course this benefits the entire ecosystem – including consumers. Publishers are utilizing their inventory more efficiently, marketers are able to reach the audiences we want and consumers online experiences are more relevant.

The Privacy Man

Behavioral targeting has been in the FTC’s cross hairs for the last few years (not to mention the unrelenting cries of consumer advocacy groups). It was only this past February when the FTC issued a last warning that the industry self regulate or the man will do it for us. In fact they issued a report on recommended self regulation principles for the industry. Here are the highlights:

Transparency and Consumer Control: Simply put, clear & concise disclosure of targeting practices and a method for consumers to opt-out. Fair enough.

Reasonable Security, and Limited Data Retention, for Consumer Data: Data should be stored in a reasonably secure manner based on the sensitivity of the data, and only retained for the duration required to fulfill a business or legal need. I can see the data storage duration becoming an issue on both sides.

Affirmative Express Consent for Material Changes to Existing Privacy Promises: Express consumer consent must be provided in order to use previously collected data in any manner that materially deviates from the policy in place and disclosed at the time of collection.  This includes instances when a company merges with or is acquired by another company with different data collection and usage practices.

Affirmative Express Consent to (or Prohibition Against) Using Sensitive Data for Behavioral Advertising: Any “sensitive” data collected for the purpose of BT must be done so on an opt-in basis.  BT data is rarely “sensitive”, however, several otherwise seemingly anonymous data points can be combined and used to create PII, which by definition is sensitive. I can see some conflict arising out of this guideline.

The FTC also (accurately) states that self regulation only works when there is a process in place to “monitor compliance and ensure that violations have consequences.” Commissioner Jon Leibowitz, in a separate statement also warned “A day of reckoning may be fast approaching.” “The jury is still out about whether self-regulation alone will effectively balance companies’ marketing and data collection practices with consumers’ privacy interests.”

Congressional meetings on the subject have been escalated as recently as last month.

The Ad Industry Finally Responds

The biggest hurdle to self regulation was that no industry trade group was prepared to bear the responsibility nor the cost of enforcement. Over the last year the IAB went from not having the desire nor the ability to monitor and enforce any BT guidelines, to seriously contemplating the proposition, to finally collaborating with the Direct Marketing Association,  the American Association of Advertising Agencies, the Association of National Advertisers and the Better Business Bureau to establish and issue formal guidelines and enforcement mechanisms.

Advertisers, agencies, publishers, search engines, ad networks, ISP’s, and marketing technology firms will all be held responsible to disclose data collection and usage practices in a “clear, prominent, and conveniently located” manner on their own sites and at the time of data collection.

It is the disclosure at time of data collection that is the interesting development. This disclosure will include an icon or text link that consumers can click on to go to a (soon to be developed) 3rd party site that provides education on industry-wide data collection and usage options. This may be an easy addition at the  ad server level. Effectively this moves some of the disclosure that may already exist buried in websites’ privacy policies, and brings it front and center. It does beg the question of how long we’ll need to do this? Two years? Five years?  At some point are consumers just educated and BT practices become as normal to them as they are to us? An icon on every other ad served online? Well, according to critics and advocacy groups even that is not enough. Cries for do-not-track lists and more stringent opt-in practices abound, so it is vital that the industry start by appeasing the FTC and enforce violations.

Enforcement – The Scarlet Letter Approach

Enforcement includes reporting of violations to government agencies and the general public. There is certainly motivation for the industry to police violators and ensure that the few proverbial bad apples do not spoil it for the rest of us. Will this be enough to ward of the privacy-man and ensure self-regulation survives? We sure hope so.  The strong arm of the law may be less than favorable or practical for the industry.


oanToday was Media Post’s first iteration of a conference specifically focused on the topic of ad networks. (OMMA Ad Nets) I moderated a panel entitled “”Buyers Place Their Bets: Are Networks Living Up to Their Hype?” (details on the panel at the end of this post).

You know, sometimes one can get caught up in the sizzle of social media and mobile and all the great new media channels to reach and engage consumers, and lose sight of the steak of the mainstream digital media world. Today was one of those days that reminded me about that, and the several billion dollars generated by ad networks each year. Ad networks were once a mundane source of cheap remnant inventory at scale, but have seriously evolved. Vertical ad networks are aggregating audience contextually, while horizontal ad networks have become purveyors of sophisticated technology, algorithms and data, which helps agencies and marketers reach specific audiences  based on a myriad of criteria. We see the application of data and technology to media and audiences evolving constantly. Some prime examples – AOL’s purchase of Tacoda in 2007 helped to create the largest network on the internet, Platform A, and more recently Akamai’s recent acquisition of Acerno to “…benefit the ecosystem of ad networks, online publishers and Internet advertisers by providing them with real-time, actionable data to serve more relevant marketing messages”, as stated by Mike Afergan, Akamai’s chief technology officer and SVP of Advertising Decision Solutions.

As a digital media-ologist, if you will, one theme stood out the most today at OMMA Ad Nets…

The large scale media agencies will eventually all have their own ad hoc networks: Data and technology are not only intrinsic to the network model, but competition is pushing the envelope. Soon we will see some of the data ownership shift to the agencies. There is tremendous power and efficiency when you control the data. Apparently, Havas Digital claims to have profiled 1/3 of the internet population and now issues “open insertion orders” for multiple clients at once. Their controlled data points dictate which client’s ads to serve against any given impression.

Don Epperson from Havas Digital was very upfront about it – in fact his keynote focused on Havas’ adNetic product that they developed to control the data and develop ad hoc networks, while other agencies were not as willing to share their strategies and direction in the regard. But make no mistake about it – the big agencies are stepping up. Scale is always a point of discussion when it comes to ad networks, behavioral targeting and generally applications of online advertising technology. Well, if it’s scale you want, look no further than the big media agencies.


Buyers Place Their Bets: Are Networks Living Up to Their Hype?
After hearing the horizontal and vertical nets debate their case, our panel of media buyers enters the fray. Do they buy the arguments from the vertical networks that they curate and cultivate specialized content so advertisers get better and broader reach for niche audiences? Is this vertical inventory really more valuable to a buyer than the targeted remnants from a horizontal channel? Which of these models is aggregating the mid and long tail most effectively? Vertical networks help smaller and independent publishers get better CPMs. They are designed to capture what they hope are more engaged and receptive audiences for advertisers. Are they living up to their own hype? Is this argument over content quality important to buyers, or are most of them still just buying any kind of lightly targeted eyeballs? Our panel of media buyers and marketers explore whether the many offerings represent a fad or a model and whether more value really is being injected into the marketplace.
Moderator: Jason Heller, EVP, The Laredo Group
Lauren Boyer, Partner and Chief Global Strategist, Underscore Marketing
Russell Fradin, President, Adify
Shane Kay, VP, Digital Negotiations Director, Ford Motor Media
Joanna O’Connell, Razorfish NYC
Nate Woodman, SVP Strategic Development, Havas Digital

Blogged live by Joe Mandese

As Advertising Week wraps up, two things are clearer than ever. First – the data exchange business is more embraced than ever before and is alive and kicking. Second, the data exchange business has a target on its back…and the FTC is aiming right at it.

Cookies are good, data is good, relevancy is good. Lack of disclosure is bad! In fact, last week at OMMA, Eileen Harrington, Deputy Director of the Bureau of Consumer Protection for the FTC said the FTC and legislators are not satisfied with the level of information provided by the industry. In fact her actual words ere “They haven’t been forthcoming much at all in any meaningful way.” I have to ask, is that true, or do the FTC and legislators just not understand? Apparently giving consumers access to an easy global opt-out mechanism via the Network Advertising Initiative is not enough for them.

As much as those of us in the industry know that many of the methods in which data is collected and utilized is not only harmless, but beneficial in creating relevant experiences for consumers, those outside of the industry do not seem to understand this and have perceptions of big brother following them. Of course there is plenty of private and sensitive data collected as well, and guidelines and even laws probably will be required to ensure that nobody pushes past the line of acceptability.

FTC intervention is inevitable, as calls for self regulation by the FTC do not seem to have yielded any industry collective body or effort to define and enforce self regulation. The IAB last week ceded that they do not feel that they are the body to do so. But someone has to, and soon.

In the wake of NebuAd getting shot down for working with an undisclosed number of ISP’s to collect vault-loads of consumer data, this is a real issue and expect regulation to happen one way or another.

Companies like BlueKai are hedging these steps by giving consumers access to the assumed preferences collected in their profiles through behavioral observation, which are anonymously cross referenced by ad servers via cookies. Consumers will have the ability to simply adjust their interests and preferences to help cater more relevant web experiences, or of course they can opt-out altogether.

Ad exchanges have yet to fulfill on the promise of buyer-seller connection at scale, due to the commoditized inventory running through the exchanges. The addition of or evolution into data exchanges   will certainly change that by creating more value in commodity ad inventory.  We’re seeing constant progression in the data exchange marketplace, although I’ve noticed how delicately the behavioral targeting players dance around the term “data exchange”, in light of the many microscopes aiming in their direction. Each of the big four (Google, Microsoft, Yahoo, AOL) have some type of exchange, and therefore the investments will be pursued until successful. Yahoo’s Apt rolled out this week as well, and promises to combine behavioral data with Right Media’s exchange platform to offer publishers and advertisers the ability to better address specific audience segments. I look forward to this next era of the data exchange, and hopefully a self-regulated one.

I moderated a panel at the OMMA Global conference today titled “Competing With Search”, which I thought from day 1 was an interesting title, but somewhat of a misnomer for any conversation relating to digital media. I knew then that this would make for an interesting panel and hoped for some different perspectives and opinions (after all, what fun is a panel when everyone just agrees on everything).

The official description was:

Search advertising continues to attract 40% of today’s online ad budgets, and some projections have search growth continuing to outpace display spending over the next decade. Plus, the direct response model seems to have affected the success metrics applied to all campaigns. How do publishers-armed with a portfolio of display, email, video and sponsorships compete with almighty search for budgets that increasingly demand ROI? How are publishers making the case with clients to maintain or grow their non-search budgets. Is video proving to be a hedge against budgets moving to search? Can a content provider create unique packages that complement or replace parts of a search spending strategy? How can sales teams create compelling display and direct response programs that complement and enhance existing search spends? And how can the sites themselves use search engines to increase the value of their own inventory to clients?

I’ll pull out a few interesting sound bites from the panel…

  • The panel agreed that it’s not about “competing with search” for web publishers, but rather maximizing the value of an audience and packaging advertising in a way that maximizes monetization
  • The last-ad attribution model is broken and unfairly credits search for the entire influence chain rather than the activation of it. Multiple attribution protocol needs to emerge as the standard and is emerging far too slowly. Agencies and marketers need more education about these things.
  • The impression doesn’t mean anything – the value of the impression matters. Applied data helps increase the value of the impression.
  • Video can create emotionally compelling consumer experiences, but successfully adding video to a website requires good content, which requires a real investment.
  • MySpace is apparently so big that Jason Oberfest calls a site with 10 – 20 million unique users “mid-sized” (for the record 10 – 20 million uniques is still quite big, it’s just not MySpace big)
  • Scale matters when it comes to addressability, segmentation and the maximization of profitability for publishers

Ok, no revelations made, but the air was cleared for many in the room. I directed the audience to check out Atlas’ Engagement Mapping demo, and also mentioned Doubleclick’s Multiple Attribution Protocol, neither of which are perfect sciences, both of which are far better than the last ad standard and help to more accurate apply credit to advertising influence.