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Bill May Upend Online Marketing Model

Bill May Upend Online Marketing Model Alan Chapell
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Have you ever had someone tell you that they had some good news and some bad news? I get that a lot-- as I bet do many of you. My eight year old and I have made a game of it actually. But when it's not part of a game, it's not very much fun. Well today, ladies and gentlemen, we in the online business world have a situation of good news / bad news. Why Well, let me start from the beginning.

As most of us know, the whole internet economy is driven by consumer information. So what would happen if companies were legally required to delete the information they collected from and about consumers after a short period of time?


This isn't just speculation, kids. Legislation has just been proposed that attempts to regulate the data retention practices of our industry. In early February, Representative Edward J Markey (D-MA), introduced the "Eliminate Warehousing of Consumer Internet Data Act of 2006" on the House Floor. According to the Congressman, "Personal information about consumers' internet use shouldn't be stored unnecessarily to await data thieves, or fraudsters, or disclosure through judicial fishing expeditions." So in order to avoid these consumer risks, the proposed bill would require online companies to dispose the consumer data they collect.


Daddy, what does legitimate mean?


However, exactly how quickly they must dispose of the data is up for debate. The bill states that information no longer "necessary for the purpose it was collected or any other legitimate business purpose" must be deleted [emphasis mine]. The bill doesn't go on to explain what these purposes might be, but since it references data breaches and judicial fishing expeditions as what it intends to combat, we might be able to predict what purposes would be judged as legitimate. In any event, the trouble with leaving "legitimate business purposes" undefined is that it would make compliance very challenging.


…and scope?


Although the bill references specific types of personally identifiable information (PII) -- name, physical address, date of birth, social security number -- the scope of the bill seems much broader. For example, much of the wording in the bill's preamble suggests the bill focuses on IP addresses, entered search terms, and other types of data that "can be traced back to individual computer users." Could the bill directly impact cookies and web logs? It would seem that the answer is a YES, albeit an enigmatic one.


So if the Markey Bill passes there may be cause to seriously rethink how online businesses interact with consumers. For example, there may be increased pressure for email marketers to delete addresses from consumers who haven't responded to recent messages or opted out of past mailings. And what are the implications for you if you're in the behavioral targeting business? Or Affiliate Marketing? Or Ad serving? Or research? Heck, what if you just run a website?


Costs of compliance


If the bill is passed, many in this space will face a unique set of challenges. To start with, all businesses that collect, store and use consumer information are going to continually need ask themselves the following questions: what information am I collecting? What business purpose does this data serve? And how long do I keep this data? (Just as an aside, I would suggest that we should be asking ourselves these questions anyway-- and often shudder at the infrequency in which such data process evaluations take place in many online businesses.)


If these types of compliance challenges seem painful to you, you're not alone. A colleague of mine, a well respected privacy professional from a large online company believes that Representative Markey's bill would leave many online businesses with little obvious response. "Compliance with this will be unwieldy for so many big players," he said, "Actually, for nearly anyone who has a web presence. It will create immediate cookie lifetime issues, log retention issues, and data integration changes. And that is just to start."


Requiring businesses to keep track of the information they collect -- and delete what is no longer necessary and risky to keep -- is a worthy goal. But as privacy guru Ruth Day puts it, this is the "right problem, but the wrong solution." Notwithstanding that "building consumer trust means purging data" that is unnecessary or sensitive, Day thinks that the proposed legislation goes too far in its regulatory standards. The bill's application, she says, "would be industrial policy at its worst."


I promised you some good news and some bad news-- so here it is. The good news is that from what I hear, this particular piece of legislation does NOT appear to have any legs. The bad news, however, is that this bill could very well be a harbinger for what awaits our industry over the next year. And that would definitely be no fun.


Alan Chapell, CIPP, is president of Chapell & Associates, a consulting firm that helps companies understand privacy and incorporate consumer perception into product development. Chapell has been instrumental in the development of emerging best practice standards for privacy and interactive marketing and can provide a real world evaluation of where your organization's practices fit within that spectrum. He has been in the interactive space for more than seven years with firms such as Jupiter Research, DoubleClick and Yes Mail. Mr. Chapell is the New York chapter co-chair of the International Association of Privacy Professionals and publishes a daily blog on issues of consumer privacy.


 

iMedia: I read that Randy Falco wrote in a memo to the AOL staff: "The easiest thing and the best thing you can do for advertisers and agencies today is make life easy for them. And Platform-A lets us do that. It'll give them the most extensive reach of any advertising network on the web. It'll give them in-depth analytics. It'll give them superior targeting. It'll give them great information about their customers. And ultimately, which is what everybody wants, it'll give them a solid ROI."


That's a lot of promises to advertisers. Can Platform-A really deliver?


Viebranz: If we close out 2008 having demonstrated to agencies and advertisers that we have the full range of assets to help them solve their problems, and that we can make it happen, I'll feel like we were successful. One size does not fit all, and so our objective is to listen a lot and to bring unique solutions that combine reach, frequency, targeting and insight to help meet specific marketing challenges. We are already seeing some tangible evidence of the combination of these assets, and there will be a lot more to come.


And let's not forget the publishers. We are expanding Tacoda's "people not pages" mantra to all of Platform-A, and we are already demonstrating to publishers that we can drive far higher eCPMs as well as large-volume inventory monetization. This sets us apart from everyone else.

iMedia: Your competitors -- Yahoo, Microsoft, Google -- are making similar moves with similar buys. What sets AOL and Platform-A apart, and why should advertisers choose Platform-A?


Viebranz: We combine the broadest reach on the internet. For advertisers, our O&O sites, combined with our third-party networks, reach more than 91 percent of domestic online users, which is more than Yahoo, Google or MSN. In addition, with the acquisition of Tacoda and Quigo, we have some of the best targeting tools on the internet. We can deliver ads across platforms. That's a powerful combination.


Publishers get better monetization combined with significant insights gleaned from their data.


iMedia: Is it fair to say that AOL lagged beyond the others on the advertising front for quite a while? Do you think the companies it has acquired, and the new structure, gives the company equal footing, or even an advantage? How and why?


Viebranz: While it's true that our roots were in access and not advertising, I'm not sure I entirely agree with your premise. For example, AOL saw the trend toward advertising networks back in 2004, when we acquired Advertising.com, which now has the world's largest third-party display network and is in many ways the envy of the business.


Over the last year, we have added to our portfolio with several more smart and economical acquisitions. As I said earlier, we now have an unmatched advertising network: the biggest reach, the best tools and a superb sales force.


I like to think my background gives us a leg up. After 17 great years in Time Warner, I was fortunate to play a part in building Tacoda, which we then sold to AOL. So I have a good idea of how to navigate a large organization while still working relentlessly to maintain and grow the entrepreneurial zeal that needs to pervade Platform-A.

iMedia: The latest realignment has been combining the AOL and Tacoda sales teams into Platform-A Marketing Solutions. What does this move add to the mix?


Viebranz: Platform-A Marketing Solutions will provide large brand customers with coordinated access to the full Platform-A product suite, including the offerings of AOL, Tacoda and Advertising.com.


Our first priority for this year is to drive more money from the largest advertisers, including some that have not traditionally spent a great deal with Platform-A. As more and more brand spending moves from traditional media to online, we simply have to be positioned to garner a significant share of that spend. By creating Platform-A Marketing Solutions, we can develop deep and enduring relationships with these top accounts -- leveraging all of the considerable assets that we can bring to bear -- and demonstrate our ability to work with our agencies and advertisers to help meet their marketing challenges.


iMedia: On a personal note, as you mentioned, before your Tacoda days, you worked for Time Warner. What's it like to be back in the empire?


Viebranz: When I left Time Warner 10 years ago it was with the intention of playing a part in building something. Doing the Tacoda thing with Dave Morgan was the most fun I've had in my business career. At the same time, as I was exiting HBO, I told my then-boss Jeff Bewkes that if I wanted to be in a big media company, Time Warner was the only place to be. I never would have imagined that things would go full circle and I would end up back in the fold. There are a lot of things within AOL and Platform-A that I am trying to turn on a dime. No small feat but after 10 years away, I think I have more patience about the stuff that doesn't matter and less about the stuff that does. All-in-all, this is a great place, and no one has the breadth and scale of the assets that we do.


iMedia: What does the year ahead look like for you and for Platform-A/AOL?


Viebranz: We're very excited about 2008. We have a powerful advertising network in place, and it will only get better as we fully integrate our recent acquisitions and expand our network internationally. I really believe that AOL is positioned best to take full advantage of the ongoing shift of display ad dollars from traditional media to online.

Chapell & Associates is headed by Alan Chapell. In 1997, Chapell founded the privacy program at Jupiter Research, an internet research firm focusing on the consumer internet economy. During his four and a half years at Jupiter, Chapell also...

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