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Online Ad Targeting: From 'Maximize' to 'Optimize'

By Mike Troiano
Nov 9, 2008 4:00 AM PT

When's the last time you heard an online retailer complain that their banner ads were too well targeted? How about an online publisher lamenting the torrent of accurate user data they were able to capture, or for that matter a user who just wanted more of the ads they were getting to be irrelevant to them?

Online Ad Targeting: From 'Maximize' to 'Optimize'

Based on what I expect are some pretty sparse data points on the above, it's easy to conclude that online ad targeting is a function maximized in the interests of all parties. We as an industry have proceeded on this unstated assumption for a while now, taking advantage of every new technology, data source, and algorithm in our efforts to maximize the targeting of online advertising.

Something changed recently, though, and it doesn't seem like we as an industry have come to terms with it just yet. It all started when it came to light that ISP-based tracking systems like Phorm and NebuAd had been selling users' browsing history to advertisers unbeknownst to those users. Even I find that a little creepy, and it turned out the Federal government did as well.

Targeting the Targeters

In August, The House Energy & Commerce Committee sent letters to 33 companies inquiring about their ad targeting practices. The committee also plans to introduce comprehensive privacy legislation, the Online Privacy Bill of Rights, in the upcoming congressional session, to provide oversight into how companies can track consumer information online.

Proponents say the bill will be a net positive for consumers even if it's a net negative for the businesses that make a living helping other businesses put the right message in front of the right person at the right time. In reflexive response, such businesses are already lining up to fight the legislation tooth and nail. Opponents of the bill -- many in our business -- are coming together to pledge industry self regulation and vowing to uphold user privacy, even proposing plans that call for users to "opt in" to all targeted ad tracking systems.

This is the other extreme. It makes the economics of targeted advertising essentially unworkable, hurting advertisers, publishers, and yes even consumers who say in survey after survey the advertising they hate the most if the stuff that's not relevant to them.

If "maximum" targeting is unacceptable to privacy advocates, and "minimum" targeting is too costly for the system as a whole, should we ALL focus on defining what the "optimum" level of online targeting is for all sides?

Setting an Ad Targeting Optimum

What might "Optimum Ad Targeting" look like? Here's a partial check list that online publishers and retailers should examine prior to employing a targeted advertising strategy, in the three areas central to defining a way forward: user control, transparency and trust.

  • User Control

    Users should own and control their personal information. Period. It sounds like a novel idea, but when people have control over their own personal information and can choose to share it or not share it with whomever they want, that will make them feel all warm and fuzzy inside.

    For instance, if I know that by sharing my music preferences with my favorite music retailer that I will get targeted recommendations for new songs that I will love -- I'm happy to do it. Or perhaps by sharing my gender, age and Zip code with my favorite clothing store I get a 20 percent off coupon -- done. The bottom line is that I choose when and where I reveal my personal information.

  • Transparency

    Offering an opt-out option is not enough. Any online entity that tracks or collects user data of any kind should be straightforward and alert users to its practices. It's not wrong to target ads, but it is wrong to collect users' personally identifiable information without their permission. If companies adhere to this level of transparency, the need for potentially stifling congressional control is significantly lessened.

  • Trust

    Who said that advertisements have to be annoying? Properly targeted ads which offer customers incentives can be a welcome addition to a users' online experience. The problem up until now has been that advertisers have either been deceitful about their targeting practices, or way off base with their recommendations.

    Offering users a high level of control over their information and requiring a high level of transparency from online publishers and retailers will result in mutual trust. Users will share certain information about themselves in return for something they want and companies will promise not to use their information in inappropriate ways. Building this kind of trust is not easy, but when achieved it will create a mutually beneficial relationship.

The Future

It's time for the online ad targeting industry -- and the publishers and advertisers it serves -- to abandon the pursuit of maximum ad targeting and focus its time, energy and technology on the definition and realization of optimum ad targeting.

Cynics might say such a shift has become a practical necessity in the face of legislation that could do significant damage to the very systems that drive primary consumer demand in this country, just at a time when we need it most. And they'd be right.

But beyond that, there is a more enlightened and no less genuine case for the industry to wise up to the interests of consumers -- which represent the fourth leg of the ad targeting stool, which now stands somewhat precariously on its provider, publisher and advertiser legs.

It's only through real focus on the privacy interests of users that this stool can stand stable over the long run. And in the end, that's a good thing for everyone.


Mike Troiano is CEO of Matchmine.


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