Lions, tigers, bears, and quid pro quo. Part one of a three-part series.
Much has been said about how to make behavioral marketing more effective. A lot has also been said about how great it is. In fact, you've probably heard the term "Holy Grail" used more than once about behavioral marketing.
But we rarely have the conversation in this industry about how advertisers should think about behavioral marketing with a long-term view. To be sure, potential future regulation is a major issue. But marketers should be equally concerned with how they can protect their data as behavioral advertising becomes more and more common.
Data is the currency of the Internet. It is transacted more frequently than anything else in online advertising, even dollars and impressions; and yet online marketers don't value data very well. They don't value it highly enough. And typically they don't protect it very well.
The reason that data is rapidly rising in importance is because search has become a mature market for most marketers. Arguably, search's portion of the online marketing pie is as high today as it will ever be.
In the meantime, non-search efforts (particularly in display) have lots of room to grow. Display growth will largely be fueled by dialing in behavioral marketing and retargeting strategies. And as display rises in importance, a marketer's ability to compete and succeed in display will be based on their data advantage. Unique and proprietary data is what will separate the winners from the losers in exchange-traded display. Advertisers who neglect their data will see their data commoditized and monetized by someone else.
Marketers Are Having the Wrong Discussion About Data
Most of the advertising industry has not even begun to address data protection. I believe that this process has to begin with a discussion. In fact, in an attempt to be dramatic, the future of the industry as a whole – and the fate of individual players – will be decided based on the willingness of industry players to have a conversation about data protection. It may seem easy, but it's not. What makes this conversation so difficult is that marketers need to discuss data rights and leave that discussion with a simple articulation of the quid pro quo. What do you give and what do you get? Until we have that discussion, it's hard to talk about protecting data.
In its simplest form, here is how the data protection conversation needs to start:
Advertiser says to consumer: "When you come to my site and give me data, here is how I use it, and here is what I give you in return."
Technology company using data says to publishers: "When you place this pixel on your website, I will gain these insights and use them in this way, and here is what I give you in return."
It sounds simple. But the reality is that to date, most players in the industry have avoided this discussion. Others have tried burying the details in their terms and conditions and calling that a discussion. It's not.
Advertisers should have the right to draw conclusions about the impressions they buy. And on the flip side, publishers should be able to restrict exactly what insights they provide about that user. This discussion is not happening today.
Pixels, Pixels, Everywhere
There are other problems in our industry that need attention in order to protect data, for instance: the pixel population. (For definitional clarity, when I talk about pixels, I'm referring to tags, container tags, piggyback pixels, and beacons of all kinds.) The population of pixels is growing to an unbelievable size. Every time a pixel fires, an insight is shared about that user and about that transaction. This is why the status bar of every page you land on goes crazy for a couple seconds after your content has loaded on nearly every page you visit.
If you're an advertiser, you may be asking: Why is protecting my data so important?
Let's look at an example (this is only a hypothetical example and is not intended to represent the intention or actual actions of these companies):
Visa, the advertiser, buys a single ad impression on MySpace, the publisher. It's a basic transaction that happens at least a hundred billion times every day on the Internet. Here's what's going on behind the scenes:
With each of these ad servers, there are pixels firing. Let's say there are four pixel fires for each of those ad servers. That means that in this one example, to serve one impression to one customer on one website, 20 pixels were fired.
Now of course, some of those 20 pixels are benign and aren't being used for data mining. But many of the pixels are being used for exactly those purposes. And most advertisers, publishers, and Internet users have no idea about the data transaction happening behind the scenes.
What does all this mean to Visa? Visa paid MySpace for ad impressions. If Visa and MySpace had had the right conversation about data rights, each would gain insights (in an anonymous way) about this specific user's interest in Visa, and about what visiting this particular MySpace page says about the user.
Additionally, Visa likely has its own insights from all of the gazillions of credit card transactions about this user that it may have applied to this display ad. The insights in play are much more valuable than the single display impression transacted.
But the problem is that Visa and MySpace haven't had the data conversation in the right way. Even worse, they've had their conversation with 20 other people (all of those pixels) in the room, listening. If Visa indirectly shares its insights with those 20 other pixels, everyone else can leverage the insights that exclusively belonged to Visa only a few seconds ago!
Lions, Tigers, and Bears
So how do we fix some of these problems and stay away from the lions (regulators), tigers (unscrupulous marketers), and bears (those competitors that benefit from your data)?
First, if you're an advertiser or a publisher, you need to have the conversation about who owns the data. Make clear what data is yours, and what you have the rights to do with that data. This is a tough conversation, but it has to be the first step. While being explicit in defining data rights is important, it's not enough. Terms and conditions, or a contract, will not be enough; there also has to be a means for enforcement if and when data is leaked.
Second, protect your data. There's so much more that can be said about this, and I'll explain more in future columns. But advertisers need to control delivery of their ads as much as possible and limit the number of players in a given transaction to fewer than the number of ad servers in the chain that I described earlier. Of equal importance is what insight each player in that chain has access to. For advertisers and agencies, the best solution is making sure that you store your data with a carefully selected technology company that buys media on your behalf. Often this is a well-constructed demand-side platform that is built around data protection. Be skeptical of those who once operated on a different level of transparency on data rights management.
Third, be selective about who you partner with. Advertisers cannot control delivery themselves. Publishers often can't either. Middlemen will be involved, as they are in any large, scaled, and efficient market. But advertisers and agencies especially need to trust their partners - so choose wisely. As you talk with demand-side platforms, ad serving companies, and tracking and analytics firms, data protection needs to be part of the conversation.
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Jeff started his Internet career working for a small interactive agency, where he led media buying and trafficking and managed all vendor relationships. Afterward, he founded a CPA network, eBound Strategies whose technology was designed by Jeff and later acquired by Nami Media in 2003. Jeff worked for Nami Media as the VP of operations, and subsequently left to found AdECN, the first exchange for online advertising.
Jeff is considered one of the few pioneers of the ad exchange. As COO and founder of AdECN, he led all strategy, product, and business development. Jeff is a thought-leader in real-time bidding technology. At Microsoft, Jeff oversaw AdECN exchange business, ran all reseller and channel partner business, as well as advised the all-up strategy for the online services division. In October 2009, Jeff left Microsoft and AdECN to found The Trade Desk.
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