Saul Hansell from The New York Times sat down with Representative Rick Boucher (D-VA) to discuss his priorities as the chairman of the house subcommittee on communications, technology, and the internet. When asked about privacy concerns with Google's behavioral ad targeting capabilities, Boucher stated, "That would clearly need an opt-in."
He isn't referring to deep-packet inspection; this is for common behavioral targeting that generally uses non personally identifiable information. As an industry we need to step up our education game to legislators. If you disagree or find yourself on the fence, allow me to present what the future of advertising (online and offline) might looking like should opt-in become the rule for behavioral targeting.
Online behavioral marketing disappears
Opt-in
for behavioral advertising is not a viable model -- it's an issue of
scale. The math behind, the market potential for, and the methods to
create a reasonable opt-in scenario don't exist. I don't believe anyone
has a firm grasp on how much of the market is behaviorally driven.
There are a few studies that attempt to quantify the revenue driven by
behavioral advertising, but no one knows how deep this form of
marketing penetrates ad networks, publishers, and search. If you also
factor in simple targeting features that rely on cookie data to
increase campaign performance, I wouldn't be surprised if 20-30 percent
of the $25 billion market would be eliminated off the top.
Prices drop
Behavioral targeting produces
targeted ads, which perform better than non-targeted ads. With greater
performance, comes greater value. Without targeting, advertisers will
pay less money for less effective ads, and publishers can expect CPM
erosion.
Punch the monkey!
As CPM drops on display
inventory, the amount of untargeted ads we see will substantially
increase. Dancing aliens and that damn monkey will reign supreme --
cheap, untargeted ads everywhere.
Aggressive interruption advertising
The
ecosystem will do what it can to increase ad performance. As innovation
stalls, expect run-of-network ads to return, and to be even more
aggressive than ever. Ads will have to be more interruptive, so screen
flyovers, page takeovers, interstitials, and other "must view" ads will
become the norm.
Publishers will seek new answers
Some will
invest in ad sales teams to increase revenues, as network ad volume
will continue to decrease. This will further fragment the ad buy for
advertisers, now buying directly from a few publishers here and some
networks there to get the reach they want. Some publishers will decide
it's not worth the effort and discontinue producing original content.
Search monopoly increases
Search will be the
only game in town that is targeted enough for all size advertisers,
while display will work only for the few advertisers at the top.
Advertisers interested in building awareness will buy ads on name brand
sites, and CPM's will increase on those sites. Everyone in the middle
to low end of the market that can't afford name-brand sites will turn
to search, and prices will increase. You think Google is a monster now?
Just wait.
Offline pressures
There's no other form of
marketing (at least that I'm aware of) that's Opt-In only. Email
marketing isn't. Information bought and sold by credit card companies
that then send you an offer isn't. If they can regulate similar forms
of marketing online, regulation may be coming to the offline market as
well.
What does this mean for consumers?
- Ads will still appear; however now less relevant and more aggressive.
- Valuable services will disappear, and the quality of free-content will decrease.
- Paid content/services will increase.
- Dancing aliens will rejoice and monkeys will once again fear the floating bull's-eye.
Based on Boucher's statements about the need for opt-in permission, our industry has to change our perspective -- and fast. It's not about if there will be legislation. It's about what will the legislation be. Remember the telemarketing industry? It was given similar warnings, and it chose to fight legislation. Maybe if it would have worked with legislators, the result could have been different. I believe the same for us.
Is legislation is going to solve anything? I don't believe so. But I do believe it's coming, and now is the time for us to educate, educate, educate. Opt-in isn't the solution for behavioral marketing. Let's help decide what is.
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Posted by: Volker from Germany | May 30, 2010 at 12:21 PM