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How targeted advertising can be saved

How targeted advertising can be saved Eric Picard
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At some point, the browsers are going to unilaterally put an end to this debate about online privacy and advertising tracking. Now Internet Explorer has announced that it is going to automatically turn on do-not-track settings by default as of IE 10, which will ship with Windows 8 in the fall. I believe that we'll see the other browsers follow suit and possibly escalate this to help differentiate their products. I personally believe that the only problem with this is that IE has not gone far enough. That opinion can make me a little unpopular in some quarters.


How targeted advertising can be saved


I've gone on the record repeatedly about this issue, and I've laid out numerous reasons why third-party tracking without an opt-in is unethical. I completely understand the hardship that this would cause for third-party tracking companies, and I understand that many in our industry are concerned about the future of their businesses. I am not. I believe that there is a path through this that is both completely ethical and ultimately will significantly improve the results of online advertising.


At my core, I'm a product guy. And as a product guy, I essentially review the business scenarios that would be solved for customers through the use of a product, then work with engineers to innovate around those scenarios in ways that invent new technologies and intellectual property. This skillset is really about empathy (being able to put yourself in the customer's shoes) and logic (if this, then that). And since I'm not building a data company right now, I thought I'd lend my product expertise to the industry and make some specific recommendations to ad-tech companies in the data space, as well as to publishers. We can work together to reinvent the way that targeted advertising functions, in order make it both highly profitable and ethically defensible.


First: The distinction between first party and third party


First-party tracking and targeting takes place on web pages owned either by an advertiser or by a publisher. These are pages that consumers have decided to visit. In the case of consumers visiting an advertiser's website, they are there of their own volition and attempting to either research a product or service, or they're trying to interact with the brand in some way (perhaps reach customer support or find out about other products that the company offers). If the consumers are customers of that advertiser, they have an explicit relationship with the company. They can "vote with their feet" by not buying their products and not visiting their website.


In the case of consumers visiting a publisher, they've clearly come to consume content of some kind. In these cases, there's been a long-standing quid pro quo between the audience and the content owner regarding a trade-off between free or reduced-cost content and advertising being shown. Tracking of the delivery of ads is required in order for the publisher to sell the advertising; therefore, tracking is a true business requirement. Likewise, when a consumer visits specific categories of content (only on that publisher's site), the publisher can track this and then offer the consumer ads for relevant content on other sections of the site. This is the very genesis of behavioral tracking and targeting.


As long as the activity being tracked (over multiple sessions) is clearly defined in the website's privacy policy and the consumer has made the decision to visit that page, there are certain technical design decisions for tracking that can be made that are both ethically and logically sound. There is a direct relationship between the consumer and the publisher, and there's a contract between them established by privacy policies, end user license agreements, and other policy documents. If the consumer never went back to that publisher's website, no other tracking would take place -- consumers could, again, "vote with their feet" and stop visiting that publisher.


Third-party data companies don't have this direct consumer relationship; they track consumer behavior across numerous properties and follow the consumer around on these properties in such a way that a consumer can only escape their notice by opting out. (At least, that's the case today.) Because these companies perform a service across the entire industry to help publishers sell their ad inventory for a higher price, as an industry we've tried to protect them from being regulated. But because they don't have a direct consumer relationship, this has been hard.

Proposal for how to fix the problem


Publishers and advertisers own the consumer relationship. Thus, they should be where the contact point for tracking permissions lives. Since we now have mechanisms for real-time sharing of inventory and data, I recommend that we use these to support the publisher and advertiser going forward. Third-party data providers should only interact with the consumer through the publisher or advertiser relationship. I'll explain how:


Publishers
When consumers visit a publisher's site for the first time, the browser would broadcast their status -- either that they have enabled all tracking or they have kept the default setting of "do not track." In general, this should be able to be ignored if the consumer has explicitly opted into tracking for that publisher.


If the publisher wishes to track and then target ads to that consumer, it can bring up a dialogue box (i.e., a message) for the consumers that tells them that in order to get access to the publisher's site, they need to do one of the following:



  1. Enable tracking and targeting of ads just while they are on this site

  2. Register (or log in) with the site and provide profile information that will not be shared or sold

  3. Opt into cross-site tracking and targeting across all websites

There are lots of variations on the above items that can be done, including giving consumers a few articles a month or week or day (depending on the scenario).


Publishers can, of course, sell using tracking data that they collected on their own site, but they should also begin packaging targeting data with the impressions they pass off to SSPs and ad exchanges so that those impressions can be purchased with as much targeting as possible. They should integrate any and every data provider out there directly with their sites. They should ensure that the data companies are dropping first-party cookies on behalf of that publisher, by mapping a sub domain against that publisher's primary domain (e.g., exelate.publishername.com) such that the cookie space is enabled as a first-party cookie.
 
When users opt into only that publisher's site, they should only be tracked for that site's activity. Third-party data companies should honor that request and not merge those data with data collected from other publishers with whom a user has authorized cross-site targeting -- unless the user authorizes this. Publishers can adjust the language in their dialogue boxes to solicit this, but they should try to keep this as simple and clear as possible.


Publishers should also find ways to incent users to register with them and to log in whenever they visit. They should also find ways to incent users to allow third-party tracking. For example, they could offer special content that is only available to people who either register or enable third-party tracking.


Advertisers
Note that I'm talking about the advertiser in this section. But we can agree, I think, that "agents" of that advertiser operating on their behalf (ad agencies specifically) should be considered part of this discussion.


First off, when a consumer visits an advertiser's website in response to an ad, the advertiser should be able to track all that activity. (This is not behavioral targeting; this is simply advertising activity.) If the advertiser wants to retarget those site visitors later, there's nothing tricky about that -- and it should be able to do that without any question related to online behavioral advertising.


If the advertiser wants to make use of a data management platform (DMP) or other vendor to manage its customer data, it should be able to do this as long as the consumer has directly connected to the advertiser and given it customer information (purchased a product or service, provided an email address, registered for their site, "liked" the company on Facebook, etc.)


DMPs have the ability to work with a neutral third party and match cookies between registered customers and publishers or data providers to find those customers among the ones who have agreed to be targeted on the publisher's website. This can be seen as a somewhat nefarious activity today -- but it shouldn't be if the consumer has opted into this as I described above in the publisher section. Through this mechanism, which is broadly done today, a strong signal between the advertiser's data and publisher's data can be used to ensure highest possible correlation of users -- especially for those users who have registered with the publisher.


Using the methods I describe above, I believe all the parties involved in behavioral and other types of online targeting have the means to not only survive the evolution of the market as we go forward, but to take it to another level. Targeted impressions will be much more correlated and authorized, and while there will be fewer of them, they will be more valuable.


One final note to third-party data companies: Moving in this direction makes your customer either the advertiser or the publisher. This is not a bad thing for you, as these are the two entities that have direct access to money (budget and revenue). This in no way is meant to disparage anyone who sits in the middle, but I've seen over and over that when a vendor can attach its revenue directly to the sale, or to the marketing budget, there is an opportunity to get better margins.


Eric Picard is CEO of Rare Crowds.


On Twitter? Follow Picard at @ericpicard. Follow iMedia Connection at @iMediaTweet.


"People selection" image via Shutterstock.

Eric Picard is Vice President, Strategic Partnerships, at MediaMath. He was previously the Founder and CEO of MediaMath-acquired Rare Crowds, an open source ad technology company that provides a completely open advertising technology stack for...

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