Fear and Loathing in Ad Tech

In 1998, Chip Bayer wrote a story in Wired called The Promise of One to One (A Love Story). It described one-to-one as the “holy grail of commercial marketing.” Heady stuff at a time when marketers were still trying to figure out how to make money on the Web.

Sixteen years later, rather than acknowledging that the Web may not actually be the perfect one-to-one marketing platform, online advertisers have ignored lackluster results and growing privacy concerns and doubled-down. Working from an insistence that more data will make everything turn out right, advertisers, publishers and data brokers are pushing the limits of privacy. One of the consequences of the industry’s growing data addiction has been increased scrutiny by the public, regulators, elected officials and privacy advocates.

To date, the industry’s response to criticism has been a combination of hyperbolic indignation, hand wringing, and promises of greater self-regulation. So far this approach is playing well on Madison Avenue and in Silicon Valley; but on Main Street people (and their elected representatives) aren’t so sure. Let’s parse things out in real world terms:

• It isn’t a problem when banks, retailers or others use their own first-party data to connect with customers more effectively.
• It is a problem when organizations “de-identify” and broker their customer data in ways that can be easily re-identified and matched with individuals.
• It isn’t a problem when customers have a clear choice regarding what data is being collected and how it will be used.
• It is a problem when customer data in brokered, resold and used in unknown or unexpected ways.
• It isn’t a problem when Census data and predictive analytics are used for demographic or psychographic online targeting.
• It is a problem when that data is linked to an ID and used to track individuals.

Questionable business practices can’t be covered by the fig leaf of innovation, job creation or economic growth. As an industry, we can’t continue to act as if there’s no option but to stay the course while we indiscriminately collect, analyze and broker any and all information at a faster-and-faster pace. There are some red lines that should not be crossed.

First of all, and I know this is going to sound like heresy to some, but behavioral targeting has its shortcomings. Cookies don’t actually perform that well when you’re trying to reach unique users at scale. For most local retailers, grocery stores, home improvement centers or politicians, who are dependent on local territory coverage cookies are never going to provide the scale or ROI that other, less intrusive, approaches deliver everyday.

There are also regulatory precedents that demonstrate data can be collected and used in responsible and effective ways. The Fair Credit Report Act (FCRA), for example, says credit information can only be used for the purpose of offering consumer credit. Marketers have used summarized data - averaged at a neighborhood level - successfully for years and without any controversy. This same tactic is possible today without cookies.

With these thoughts in mind, here are three things we as an industry should do to stay on the right side of the privacy line:

• First, we need to recognize the rights of consumers in first-party data collection. It’s time to stop dancing around with opt-in and opt-out and “de-identification.” The onboarding and redistribution of first-party consumer information should be prohibited. Every customer should have a clear understanding of what is being collected, how it can be used and who is allowed to use it.
• Second, only aggregate third party data should be licensed, sold, modeled or traded online. This is NOT de-identified data but true aggregate information that represents a group rather than thinly veiled individuals who can be easily re-identified.
• Finally, we need to rethink the cookie. If advertisers insist on keeping cookies (or their various descendants), their use should be limited to their more efficient role in retargeting. And further, in order to avoid Do Not Track issues, cookies use in retargeting should only persist during a single session on a specific device.

Data collection, first-party, third-party, de-identification and tracking are terms that get confused and conflated in the world of online advertising. Yes, marketers will collect and trade and sell all manners of consumer information; but that doesn’t mean that they should.

Sensible regulations are in place in other industries that have not hampered how marketers operate. In fact, in many ways they have improved their results by focusing on growing their client base at scale rather than depending on one-to-one as their sole tactic.

It’s time we acknowledged that there are privacy red lines around issues like one-to-one tracking, first-party data collection and redistribution that should not be crossed. This is something we can and should do for our industry, our clients and the public.

Wired article: http://insights.wired.com/profiles/blogs/fear-and-loathing-in-ad-tech#axzz38nVPrxbg