Where Are the Limits of Privacy in Ad Data?

Advertising data is a huge boon to advertisers, particularly those working online.

The more closely an advertiser can tailor their ad to a specific demographic, the more likely they are to make the sale or get the click. While it seems merely useful for advertisers – and in some cases, indispensible – many users are starting to become seriously uncomfortable with the idea that their movements, on and offline, are being observed and recorded.

A surprising amount of offline data is currently referenced to online activity, meaning that public records can be mixed up with a browsing history to create a spot-on diagnostic for the type of person who is currently using the computer.

Advertising research has compiled data that includes everything from birth and bridal registries to warranties to licenses – all with the aim of providing appropriate advertising to that person. However, when targeted advertising becomes almost eerily spot-on, consumers begin to wonder whether the advertisers’ interests are really so benign.

One of the primary focuses of the complaints about privacy is Acxiom, which cross-references a plethora of information to find the exact consumers their advertising interests are looking for. For example, an advertiser might ask them to find the names and addresses of single mothers above a certain income bracket, whose children would soon be going to high school and who did not currently own a car.

That’s very specific. But it’s not an uncommon level of specificity. So far, privacy online is not regulated, and advertising industries argue that no such regulation is necessary. Consumers are increasingly unsure – and unhappy.

Online News Sites Reveal a Boost in Advertising

The Internet has definitely made it easier for advertisers to reach a mass audience.

An advertiser’s dream. If you were creating an advertising campaign for a new product or service and wanted to reach the most prospects, this could be accomplished by advertising online more quickly than any other media outlet.

Online up, newspapers down. Online news sources are the newest medium used to reach the most American consumers. A recent Harris poll revealed that an estimated 80 percent of Americans read the news online. Those who regularly read online news reportedly do so seven times a week for an average 30 minutes daily.

One reason for the shift to online news is the drastic reduction in daily newspaper subscriptions. The Harris poll also showed that 47 percent of Americans who read news online have decreased the time spent reading newspapers.

More accurate, better updated. Many consumers believe they can receive more accurate, up-to-the-minute news online. This is another reason behind decreasing newspaper subscriptions — online news websites attract a wide audience.

What is everyone doing online? 

  • Baby Boomers spend the majority of their time online checking e-mail and reading online news.
  • Generation X consumers are also drawn to online news, regardless of the fact that they did not grow up using computers. The Internet is an integral part of this group’s daily life.
  • Generation Y is the most technically savvy of the three groups. They have literally grown up working, learning, playing and exploring on computers.

TiVo and Time Warner Join Forces

TiVo Inc.’s recent partnership with Time Warner Inc. will position the media giant (the latter) to stand apart from the DVRs currently offered by cable and satellite companies.

TiVo bounces back. The terms of the deal are being kept private, but it’s easy to see that the impact of this merger could definitely resurrect interest in TiVo. Despite all of TiVo’s features, DVRs have grown increasingly popular. 

Entertainment Weekly, part of Time Warner, will offer TiVo users the opportunity to automatically record the shows suggested by the magazine. Currently it is estimated that around 60 percent of the magazine’ audience use DVRs.

According to Scott Donaton, EW’s publisher, the magazine will provide readers with weekly recommendations for TiVo subscribers and help them “make the most of [their] entertainment time.”

More media choices for TiVo subscribers. Tom Rogers, TiVo’s CEO, explained that the company is turning to authoritative sources like EW to make it easier for subscribers to record their favorite programs.

Viewers and readers can even find helpful television and media suggestions for recording kid-friendly programming from the nonprofit organization Common Sense Media.

Infomercials: An Effective Advertising Strategy

Infomercials are becoming one of the fastest growing direct response marketing techniques for many mainstream businesses of all sizes.

Those popular 30-minute infomercials are a big reason for this growth. If you took time to surf through the various TV channels, you would be amazed at how many different 30-second TV advertisements (also known as a “short form”) and typical 30-minute infomercials (“long form”) are currently on the air marketing their products.

On all the time…These infomercials are on TV at any given time of the day, constantly giving out their 800 numbers or website address for ordering purposes. Because so many companies are using infomercials as their number-one television marketing tool, viewers are seeing more high quality ads coming from mainstream companies like Ditech.com, Vonage and Geico. This prevalence is making any distinction between DRTV infomercials and “regular” (in the consumer’s mind) commercials virtually non-existent to many viewers.

It’s a fact. The fact that advertisers of these infomercials are pulling in countless leads simply by using DRTV as the platform for their product or service is no coincidence. The fact of the matter is that this format and means of advertising works.

Banner Ads vs. Pay Per Click (Part 2 of 2)

Often referred to as cost per click advertising, PPC advertising is used to boost a website’s ranking status among search engine results.

Advertisers pay a predetermined price every time someone clicks on a keyword located somewhere on the Internet. When the user clicks the highlighted keyword, he or she is directed to the advertiser’s website. Additionally, the advertiser is charged for the click.

PPC advertising is beneficial to advertisers seeking a way to increase traffic to their website almost instantly. One of the challenges PPC users face, however, is how quickly the campaign cost can increase as the websites popularity grows.

Therefore, the PPC campaign should be monitored closely to prevent a budget blowout. [Natural or organic rankings, often achieved by good SEO (search engine optimization) and keyword use is the second means for gaining good search engine rankings.]

PPC and banner advertising both present separate yet relative marketing strategies. The strategy that will work best for any given company depends mainly upon the goals and needs of the organization.

Either way, an experienced online media buyer can assist with the purchase of an ad campaign, and go a long way in maximizing the company’s ROI.

Banner Ads vs. Pay Per Click (Part 1 of 2)

Two popular ways to effectively market a business online are banner advertising and pay per click (PPC) marketing. Many companies utilize both techniques to effectively advertise their infomercial products and services through an organized Internet marketing effort. 

For all intents and purposes, banner advertising is used to raise and maintain a business’ brand and image. Banner advertisements are found on pre-selected websites, generally at the top of the page. When an Internet browser clicks the advertisement, they are redirected to the advertiser’s website. 

Banner ads are popular because they link potential customers to the advertiser’s website with a simple click. A banner ad campaign, like a DRTV campaign, is also ideal because it is easy to track the results and overall effectiveness of the online advertising campaign.

Not only can the advertiser see how many times an advertisement has been viewed, but he or she can also note the amount of customers who opted to click through to the website.   

Media Survey Reveals Consumer TV Habits

According to a research media survey released in January, three fourths (75%) of consumers talk or channel surf during television advertising.

The Simultaneous Media Survey reports on the input of more than 15,000 people. The survey also concluded for consumers to keep up with the overflow of media options, they have no choice but to multitask with other media.

“Technology is creating new media options faster than most people can assimilate and is causing more multitasking,” Gary Drenik, President of BIGresearch, said. “Unfortunately for marketers faced with the challenges of an uncertain economy and the need to increase marketing ROI, new media options are impacting how consumers use traditional media. 

“Specifically, TV’s influence on consumers to purchase products declined, whereas new media options such as web radio, satellite radio, instant messaging and blogging all increased,” he added. “Consumers seem to be seeking information from digital platforms while TV has traditionally been viewed as a brand building medium, which isn’t providing the requisite information.”

Despite the results, Bigresearch maintains that television advertising (including DRTV), infomercials and other traditional forms of media have not lost their overall influence. It may go without saying, but it remains more critical than ever that the advertising, no matter what the medium, is both timely and of value to the consumer.

Google Looks for Growth from Mobile Advertising

Google will be leading an effort to develop software that will make cellphones more like mobile computers with improved Internet access. Google is looking to transform the mobile industry in the same manner that the PC changed the world of computing in the 1980’s, according to the NY Times (11/6/07). In order to accomplish this goal, Google will provide outside software developers with access to their phone’s functions. They hope this will encourage software developers to create PC like programs and services for cellphones.
 
The Internet is Going Mobile
 
Google recognizes that the Internet is going mobile and they have aligned themselves with leading telecommunications and technology companies to make and market their phones. A group called the Open Handset Alliance expects to sell the Google powered phones in the second half of 2008, according to the NY Times. Critics point out that other companies have tried to form similar types of alliances and failed and that Google will face stiff competition from established players such as Microsoft, Nokia, Palm and Research in Motion (NY Times). In addition, the two largest cellular carriers in the U.S., AT&T and Verizon Wireless are not part of the alliance.
 
Increasing the Reach of Google’s Advertising
 
Google is looking to become the dominant player in mobile advertising, just like they have been the leader in online advertising. Google hopes that making it easier for consumers to access the web from their cellphones and making the experience more like that of a personal computer will increase the reach of their advertising. Google said it will likely share ad revenue with the wireless carriers, according to the Wall Street Journal (11/6/07).
 
Energizing the Mobile Industry
 
“Just like the iPhone energized the industry, this is a different way to energize the industry,” stated Sanjay Jha, COO of Qualcomm (NY Times). Mr. Jha also said Google’s efforts will bring more Internet features to moderately priced phones. By allowing outside software developers access to their Android software platform, Google also hopes they will create new types of devices that have both cellphone and wireless Internet capabilities. “As a result of the platform, you’ll be able to do amazing things on your phones that you’ve never been able to do before,” says Google CEO Eric Schmidt. (USA TODAY 11/6/07)
 
Diversifying their Revenue Base
 
Google is going up against some strong competitors, but they certainly have the clout and resources to gain a significant foothold in the mobile marketplace. Google’s surging stock price clearly indicates that Wall Street and investors anticipate that Google will be able to diversify their revenue base from new businesses outside of online advertising. In my opinion, mobile advertising has the potential to be as big as online advertising for Google. It will be interesting to see how Google’s venture into mobile plays out over the next few years, since it has the potential to transform the industry.

Baby Boomers – A Profit Boom?

Once you effectively target the Baby Boomer demographic, your sales will increase. The key is to understand what this group wants and how they use and view the different advertising mediums.

Boomers were the first generation to grow up with TV, so it makes sense that they still prefer this medium as they age. In fact, on average, Boomers watch 22 minutes more TV per day than younger people, according to Nielsen Media Research. And since TV viewership increases with age, as the Boomers mature, their infomercial TV viewing time will continue to rise. 

The big misconception in online marketing and media buying is that you can’t reach Boomers via the Internet. In fact, Baby Boomers make up one-third of the 195 million web users in the United States, according to JupiterResearch. Additionally, ad buyers targeted Boomers with close to 5 billion dollars in ads in 2004, out of 13 billion spent in web advertising. So don’t think that Boomers aren’t online and that they reject technology. Nothing could be further from the truth.
 
According to the Pew Internet & American Life Project, over half (54%) of 60-69 year-olds go online, and 72% of 51-59 year-olds surf the net. Further, studies show that Boomers spend more money online that the average web user, yet they’re still the most underserved audience on the net. 

So take a look at your current TV and online campaigns and make sure they address the needs and concerns of the Boomer market. Revamp your marketing messages and placements as needed so you can cash in on the nearly trillion dollars of spending power this group has. When you do, you’ll have tapped into a large and profitable niche that can quickly boost your company’s profits to new levels of success.

Why a College Drop Out Turned Down $1 Billion for Facebook

Facebook is a social networking website started in 2003 by Mark Zuckerberg, a 19 year old Harvard college drop out. Facebook users post information about themselves on the site, such as photos and events they plan to attend. They link their web pages with the web pages of other users that are “friends” and thereby create a social network.
 
Facebook has 35 million active users, it has added 100,000 new registrations per day in 2007, it has an incredible 3% weekly growth rate, it has 6 million active user groups and close to 31 million visitors in July. Facebook is on track to reach $30 million in profit this year, according to the Wall Street Journal 8/23/07. The founder was supposedly offered $1 billion for the site and turned it down, according to an article in NEWSWEEK on 8/27/07. Investors in the site hope to take the site public at a valuation of $10 billion. In order to achieve this type of valuation, people familiar with Facebook say they are looking to do something similar to what Google did with AdWords, which generated $10.6 billion in revenue last year, according to the WSJ.
 
Facebook is not just for college students any more. More than half of Facebook’s 35 million users aren’t in college. In 2005, it added high schools and in 2006 it added, “work networks.” Facebook is also expanding internationally and already is the top Web site in Canada and London is the geographic network with the most Facebookers. Facebook has also been encouraging developers to create applications that allow them to make money by running ads or selling products on Facebook. Facebook could use these applications to grab a share of eBay’s or iTunes’ businesses with a Facebook version of those sites. (NEWSWEEK).
 
So how can marketers take advantage of the social phenomenon Facebook has created? Currently, advertisers can target people on the site by age, gender and location of the user. Facebook is now developing a new, automated advertising system that will allow marketers to target users based on a much more extensive database of personal information that users report on the site. In 2008, Facebook will attempt to determine how receptive a person might be to an ad based on the activities and interests of a user and its friends and target ads based on that information, according to the WSJ.
 
It remains to be seen whether the addition of targeted advertising and an older universe of users will affect the appeal of Facebook or whether Facebook will be able to grow to the size of Google. However, based on the rapid growth of social networking sites such as Facebook and MySpace and the promise of being able to target offers more precisely to consumers, marketers should consider testing out advertising on these sites to tap into the potentially immense purchasing power of their members.
Peter Koeppel is Founder and President of Koeppel Direct, a leader in DRTV direct response television, online, print and radio media buying, marketing and campaign management. With a Wharton MBA and over 25 years of marketing and advertising experience, Peter has helped Fortune 500 companies, small businesses and entrepreneurs develop direct marketing campaigns to increase profits.

Peter started Koeppel Direct in 1995 and has built it into one of the leading direct response infomercial media buying firms in the U.S.