MARKETERS WANT TO GET THE BIGGEST BANG FOR THEIR ADVERTISING BUCK IN TODAY’S ECONOMY, AND NOT SURPRISINGLY, MANY ARE TURNING TO BEHAVIORAL TARGETING TO DO JUST THAT. BUT IS IT A WAY TO GET THE RIGHT MESSAGE TO THE RIGHT CONSUMER — OR A STEP DOWN A MORALLY QUESTIONABLE ADVERTISING PATH? JAFFER ALI AND MATT WISE DEBATE THE ISSUE.
We stand on the precipice of a new age of advertising that is being threatened by a misguided debate on privacy. For the past 200 years, advertising has been purchased under the same paradigm — buyers forced to buy entire readerships of magazines or newspapers, knowing full well a large segment of the audience wasn’t the desired target of their ads. A media buyer’s job was to attempt to mitigate this waste.
The digital age makes it technically feasible to reach only the audience you wish. No longer must Pampers buy an entire edition of O, The Oprah Magazine. Now Pampers can buy only women with children from birth to age three. And now Orvis can advertise its $750 carbon fiber fly fishing rod, the Helios, in The Washington Post, to people who have both the financial wherewithal and a history of viewing and buying fly fishing equipment.
Such technology democratizes advertising, allowing smaller niche advertisers to reach their target audiences on stages, such as The New York Times, that historically have been the exclusive territory of only the most powerful marketers. For these ailing print publishers and producers of professional content, this would seem a boon to retaining high CPMs in the digital age. And for consumers, more advertising will be relevant to their needs and desires. Additionally, to the U.S. economy, improving the effectiveness of advertising can inject billions of dollars back into more productive uses.
So what stands in the way of this new age of intelligence in ad-vertising? What stands in the way of saving billions of dollars in wasted advertising spend? A well-intended but misguided debate about privacy.
Some argue that consumers should have to opt in to let online publishers target ads using their data. But asking them to do this in the offline world would be absurd. Is Walmart not able to optimize product displays by watching shoppers walking through its stores? Moreover, in the online environment hundreds of small innovating companies enable online targeting. It’s not reasonable for an average consumer to investigate all of these companies to make an informed decision about what to opt into; they need to rely on publishers like The New York Times to vet these companies.
Others argue that information should be kept for a limited amount of time, such as a day or for six months. But data on gender or age and many life milestones are timeless — why delete this information and dumb down our advertising? If you know a mother has a baby in 2009, then you can target her four years later as her child becomes a toddler. For car purchases, the consumer cycle is every three years, and every seven years for homes.
Others argue that behavioral data should not be matched to an individual’s name. Such limitations are not practical. For Orvis to reach that well-off consumer of fly fishing rods, data sources from offline and online sources need to be combined with registration data from The Washington Post to make the connection possible.
There are reasonable concerns about how data should be used. No one wants a person to be discriminated against due to ethnicity while attempting to secure a mortgage. No one wants a person to be denied health insurance because he or she researched a disease. People don’t want criminals to gain access to information that could enable identity theft. Americans don’t want their every action to be reviewed by the government.
The collection of data should not be the debate. The protection of consumers by providing transparency on the use of data, empowerment of consumers to control this data, and encryption standards to protect the access and use of the data are excellent issues to be agreed upon by all parties. Fear, coupled with a desire to hold back the progress of advertising, is not the path to the future.
Next Page: Jaffer Ali
[Is targeted advertising a boon or a privacy violation waiting to happen?]
Behavioral targeting (BT) is the new snake oil, a veritable cure-all for the online marketing industry. There is a difference, however, between BT and 19th-century snake oil; those touting BT actually believe they have a magic elixir, while the itinerant salesman in the Conestoga wagon knew full well that he was fleecing the unsuspecting and gullible town folk.
Upon closer examination, the rancid formula of this “BT elixir” should give any and all in the media food chain pause for concern before ingesting. And in the long list of what’s wrong with targeting ads by behavior, three elements stand out as particularly toxic.
Let’s use the FTC’s definition of behavioral targeting: “… the tracking of a consumer’s activities online – including the searches the consumer has conducted, Web pages visited and content viewed – in order to deliver advertising targeted to the individual consumer’s interests.”
BT is an invasion of our privacy, for even if we opt in to the process, we’re often exposing personal data then obtainable by the government via subpoena. The purposely stealth nature of this pseudo- science evokes chilling, Big Brother-esque imagery, and defies the notion that something of such questionable moral foundation could proceed this far unchallenged.
The fact that private industry now works in tandem with the government to stalk and track us online may deflect but cannot dilute the moral argument. It seems little considerations like the prohibitions against “unreasonable search and seizure” enshrined in our Bill of Rights never made it onto the BT agenda.
Besides being creepy, targeting relies on spurious predictors. Once, Wall Street hired thousands of learned mathematicians to portend the future of the financial markets. They poured over millions of transactions and developed sophisticated algorithms to predict market trends. Science was heralded as a welcome savior capable of taming the chaos of the stock market. The underlying principles of the mathematics were developed by John Nash, who found that there was an underlying predictive order to minute human interactions.
Amass enough data, they said, and the Ph.D.s could ferret out the predictive variables that made people do what they do.
Only one problem: They were all wrong.
None of the models that identified predictive variables envisioned the bus careening off the cliff because all of these models were conceived through the rearview mirror. The flawed variables derived from past, irrational behavior did not (and could not) predict the devastating financial collapse that ensued.
Thousands of suddenly unemployed Ph.D.s left Wall Street. Where did they end up? Next stop: Madison Avenue, Google and BT shops.
The underlying mathematical ingredient of BT is snake oil, but with “a spoonful of sugar to help the medicine go down.” (For a thorough examination of the mathematical nonsense, see Nicholas Taleb’s two books, Fooled by Randomness and The Black Swan.)
As instability increases, mathematical reductionism renders predictions of future behavior untenable. Simply put, driving by looking in the rearview mirror is a sure recipe for disaster.
The main ingredient in this serpentine concoction is relevancy, the composition of which comprises “getting the right ad in front of the right person at the right time.” It sounds so logical and reasonable.
Of course, witch trials were also considered logical and reasonable once upon a time.
What the relevancy ingredient assumes is that people want relevant ads. In truth, the data suggests just the opposite. They don’t want ANY ads at all! But by asking questions in a subjective, self-serving manner, you can pervert the Socratic Method to get the answer you want.
Former FBI director Louis Freeh said: “Ask the American public if they want an FBI wiretap and they’ll say, ‘no.’ If you ask them do they want a feature on their phone that helps the FBI find their missing child they’ll say, ‘Yes.’”
If audiences are asked, “Do you want more ads?” all data suggest they will answer with a resounding NO! But if they are first asked, “Do you prefer relevant ads over irrelevant ads?” they may reasonably, albeit reluctantly, say yes. Ask a stupid question, get a stupid answer.
In an on-demand world, nobody demands more advertising. An audience so empowered makes advertising a challenging endeavor, especially when all this snake oil leaves such a bad taste in our mouths.