Recent blog entries for dmarti

Newspaper dollars, Facebook dimes

Hard to miss the Facebook earnings news this week.

Facebook earnings beat expectations as ad revenues soar

Facebook Beats In Q2 With $2.91 Billion In Revenue, 62% Of Ad Revenue From Mobile, 1.32B Users

Let's take a look at those numbers. (I'd like to fill in more and better data here, so any extra sources welcome.)

Mobile ads: 62% of ad revenues.

Total US ad revenue: $1.3 billion.

Which would make mobile US revenue about 800 million. (Other countries are heavier on mobile, so this might even be high.)

Americans spend 162 minutes on a mobile device per day of which 17% is Facebook. So figure about 28 minutes per day on average. (Average of all US "consumers", not just mobile or Facebook users.)

That's double the time spent reading the printed newspaper.

US users spend an average of 14 minutes/day on printed newspapers. (Average of newspaper readers and non-readers. Just print, not web or mobile.)

But how are newspapers doing with the ad revenue?

Even after a sharp decline, newspaper print ad revenue in the USA is at $17.3 billion/year. That's the 2013 number, so it's reasonable to expect it to continue to come down as newspaper-reading time continues to decline.

Let's say it comes down another 10 percent for this year (which is faster than trend) and take a quarter of that. That's $3.9 billion.

So the newspaper brings in more than four times as much ad money by being in front of users for half the time. The newspaper completely lacks all the advanced behavioral targeting stuff, and Facebook is full of it.

What's going on here? Why is Facebook—the most finely targeted ad medium ever built—an order of magnitude less valuable to advertisers than the second-oldest low-tech ad medium is?

Here's my best explanation so far for the "print dollars to digital dimes" problem.

Advertising is based on a two-way exchage of information. You, the reader, give advertising your attention. Advertising gives you some information about the advertiser's intentions. That's often not found in the content of the ad. The fact that it's running in a public place at all is what builds up your mental model of the product, or brand equity.

On the other hand, advertising that's targeted to you is like a cold call or an email spam. You might respond to it at the time, but it doesn't carry information about the advertiser's intentions. (For example, you might be the one sucker who they're trying to stick with the last obsolete unit in the warehouse, before an incompatible change.)

As Bob Hoffman, Ad Contrarian, wrote, Online advertising has thus far proven to be a lousy brand-building medium. Walk through your local supermarket or Target or Walmart and see if you can find any brands built by online advertising. So what is web advertising good for? Thus far, it has been effective at search and moderately effective at a certain type of direct response.

Without the signaling/brand building effect, those targeted Facebook ads don't pull their weight, and come in at less valuable than newspaper ads.

I'm not saying we should go back to dead trees, but clearly mobile is leaving money on the table here. What's the solution? Paradoxically, it's going to have to involve some privacy tech on the user's end—preventing some of the one-sided data flow towards advertisers in order to introduce signaling effect.

More: Targeted Advertising Considered Harmful

Syndicated 2014-07-26 14:43:05 from Don Marti

How to beat adtech fraud: REGISTER ALL HUMANS

Ted McConnell, on AdExchanger: Advertising Fraud: It’s Time For Asymmetrical Warfare.

When you have an enemy that’s shape-shifting, agile, belligerent, invisible, greedy, fast and brilliant, you have a problem. Welcome to what military strategy people call asymmetrical warfare. It looks like terrorism. They lie about their identity. They only have to be right once. There are no lines in the sand. You can’t tell them from the good guys. They adapt.

I's actually worse than that. The best fraud rings only have to be better than the worst ad networks. The fraud perpetrators get to pick which network to attack, while the network doesn't get to pick which fraud perpetrators it deals with. The feedback for fraud is relatively quick. It's cheap and easy to try it on a small scale by buying or generating a little bit of bad traffic and seeing what happens. It's easy to decouple the parts of fraud that you're good at from the parts that you need help on, because that's how adtech is networked to begin with. Finally, the expected consequences of failure are small.

Where this piece gets problematic is in suggested solutions for dealing with the adtech fraud problem while keeping the adtech system intact. (Adtech, privacy, and fraud control, you can only have two.) Of course, this means abandoning privacy.

For example, "Make a publicly provided 'white list' of humans, accessible as a service to all transactions," and "tighten up Internet access...make sure an antivirus is in place." So in order to beat adtech fraud, McConnell wants to have (1) a white list of all humans and (2) control over all client systems (to verify that antivirus). Even the DRM maximalists didn't get that much.

And what happens while this perfect system of total control is being rolled out? Older clients, and humans who aren't on the white list of humans, will still be out there, so most of the fraud gets to continue. And by the time the system of control is in place, someone will subvert it for legit reasons.

If total Internet lockdown isn't going to happen, how do you beat fraud? A better answer is to turn the privacy up, not down: Adtech fraud: you can't cheat an honest man.

Bonus links:

Jon Udell: It’s time to engineer some filter failure

Atul: Does Privacy Matter?

Tim Peterson: Angry Birds Maker Rovio Points Finger at Ad Networks Over NSA Data Leak

Randall Rothenberg, president and CEO of the Interactive Advertising Bureau: IAB Head: 'The Digital Advertising Industry Must Stop Having Unprotected Sex' (via The Drift from Upstream)

David Rogers: Bad adbots and the vanishing CMO

Robin Hanson: Why Do Firms Buy Ads?

Ted Dhanik: We're All Responsible for Click Fraud and Here's How to Stop It

Doug Weaver: Dead internet ideas: The "right" to target

Syndicated 2014-07-22 12:20:02 from Don Marti

Surfacing, not hiding, the creepy?

Let's look at the scorecard for the surveillance marketing game. The mainstream coverage would choose up sides like so:

  • Advertisers (brand and direct reponse)
  • Adtech vendors
  • Ad-supported sites
  • Authors
  • Users
  • Platform vendors

vs.

  • Elitist Internet greybeards
  • Privacy hackers
  • Unaccountable Eurocrats
  • Fraud perpetrators

Not so good for the privacy side. But if you do some research, the scorecard probably actually looks like so:

  • Direct response advertisers
  • Low-value ad-supported sites
  • Adtech vendors
  • Fraud perpetrators
  • Dominant platform vendor

vs.

  • Brand advertisers
  • High-value ad-supported sites
  • Authors
  • Users
  • Elitist Internet greybeards
  • Privacy hackers
  • Unaccountable Eurocrats
  • Smaller/new platform vendors

Quite a difference. If you're a platform vendor using privacy as a selling point, how do you make the user aware of it? Most platforms try to conceal tracking. But if you're working with the creeped-out feeling instead of trying to soothe it, you need to give the user a little hint of, "Gosh, I'm glad I didn't step in that!" in the same way that a mail application shows you the count of messages in your spam folder. For example, users could get a notification when entering the range of a new wireless shopper tracker, then have the option to hush it up.

The dreaded "Do you want to accept this cookie?" dialog could even be simplified. Instead of presenting the cookie with no context, you could get...

Do you want to accept tracking by example.com? This site appears on the following lists:

  • Companies that Hate Freedom (Freedom Lovers of America)

  • Puppy Kickers List (International Puppy Lovers League)

Block this site / Block all sites covered by both of these lists / Accept tracking

The challenge is to add just enough "look how I'm protecting your privacy—aren't I a good little device?" to keep the user uneasy when he or she uses something else.

Syndicated 2014-07-19 14:07:47 from Don Marti

Opportunity in surveillance marketing consolidation?

In the surveillance marketing business, a bunch of companies that started off in different places have all ending up doing the same thing. A company that started as a 1980s dial-up online service is competing with a company that started as a 1990s web portal and both are competing with social networks and post-bro lean 21st-century whatevers. It's like sailors, merchants, and farmers all abandoning their original occupations and all headed out to pan for the same gold.

But is the surveillance marketing gold rush coming to its natural end? Are we entering the consolidation phase, at least on mobile devices? Derek Thompson: A Handful of Tech Companies Own the Vast Majority of Mobile Ads. Google, Facebook, Pandora, Twitter, and Apple have 75%, and a quarter of the pie is left for the rest.

So what happens to the losers?

As soon as you accept that your company is a loser in the surveillance marketing game, you get to stop repeating the same old Big Data jive and come up with something new. As far as I can tell, everyone on the whole Lumascape has the same Unique Selling Proposition. Which is not really the point as uniqueness goes.

Look, it's a basic marketing exercise. Lots of variants, but basically, you try to fill in something like this.

[Product] is the only [category] that [benefit] for [market] by [core competency].

Ready? Here goes.

[example.com] is the only [adtech intermediary] that [maximizes ROI] for [advertisers] by [creepy data collection and difficult math].

The "only" looks funny there, doesn't it? That is exactly as differentiated as:

[Joe Bloggs] is the only [random guy panning for gold] who [finds the most gold] by [panning for gold in this spot right here].

Boring. It's a recipe for consolidation of an industry. So losing could be the best thing that ever happened to you.

What's the alternative? Well, Microsoft seems to have part of the answer. Violet Blue writes, Second, using Android phones, I'm Google's lab rat and fighting back a continual invasiveness from a company that's really starting to freak me out.

Now we're getting somewhere. Sounds like a point of actual differentiation to me.

What if a vendor used its marketing power to amplify user feelings of unease about surveillance marketing, instead of trying to soothe them? Work with the creeped-out feeling, not agagainst it? Let's do that USP exercise again.

[Microsoft] is the only [productivity platform vendor] that [protects mental and economic integrity] for [users] by [blocking attempts to collect information about you].

That's something to work with, but it's just the start. A message without anything to back it up is as useless as the Scroogled campaign. Pointless. But if you build a security and privacy story keeping the USP in mind, within a couple of releases you've got something.

Clearly nobody in the IT industry is ready to give up getting a piece of the surveillance marketing business yet. But for whoever does first, the opportunity is waiting.

Bonus links

BOB HOFFMAN: The Dumbest People On Earth?

Tim Fernholz: Does the advertising business that built Google actually work?

Alex Kantrowitz: Ad-Tech Companies Form Group to Standardize User ID

The Tech Block: The truth about Google and evil

John Gruber: Privacy as a Competitive Advantage for Apple

BOB HOFFMAN: Misintermediation

Ricardo Bilton: Publishers’ plug-in addiction can come back to haunt them

Christof Wittig: Why mobile advertising isn’t as huge as it’s hyped to be (yet)

eaon pritchard: does culture really eat strategy for breakfast?

datacoup: What the brokers have broken: Shifting the conversation from Privacy to Control

Sam Thielman: This Is How Your Financial Data Is Being Used to Serve You Ads

MediaPost | Metrics Insider: Why Offline Data Is Key To Online Data Segmentation

MediaPost | Mobile Insider: Get This Crap Off My Phone: We Are Screwing Up The Mobile Experience

Lee Hutchinson: Op-Ed: Microsoft layoff e-mail typifies inhuman corporate insensitivity

Syndicated 2014-07-18 11:21:48 from Don Marti

You know what they put on their database marketing companies in Europe?

You know what they put on their database marketing companies in Europe?

What?

Regulation.

Goddamn.

I've seen 'em do it, man. They ------ drown 'em in that ----.

photo of conversation

Massive culture shock alert for this paper by Frederik Zuiderveen Borgesius: Consent to Behavioural Targeting in European Law: What Are the Policy Implications of Insights from Behavioural Economics? (PDF) Yes, in Europe, addressing privacy problems with government regulation is actually a thing. I guess that they have a different approach to Internet regulation in general (how's that right to be forgotten thing working?).

It's different here. In the USA, it's impossible to put the words "privacy" and "regulation" in the same sentence with a straight face. You know that some Lester at the Direct Marketing Association is going to make sure that any privacy regulations turn out to be more like anti-privacy regulations. (Remember how CAN-SPAM turned out?)

Here, instead of hoping for benevolent pro-privacy Eurocrats to protect us from surveillance marketing, we have to take a private sector approach to the problem. Fortunately, the privacy interests of end users coincide with the interests of other parties.

For example, legit publishers might choose to address the audience snatching problem by putting some interesting content behind a reverse tracking wall. (Tune in with privacy tech enabled and get an interview or concert; use an out-of-the-box targeting-enabled browser, and get a privacy tutorial instead.) (This may already be the plan at the New York Times—anyone else noticed a lot of first-party ads there? If Disconnect and Privacy Badger adoption went up, the NYT would be in a good position to handle it.)

The other problem is where regulation can be actively harmful. The more complex the adtech stack between advertiser and audience, the more fraud. Some fraud is inherent in highly intermediated adtech. The win for fraud rings is that adtech fraud isn't even illegal. It's against the terms of service of the ad networks, but that's it.

If we get "tough" anti-fraud laws here, it could result in artificially low costs for adtech intermediaries, along with privacy risks for users subject to anti-fraud tracking. The good news here is that the interests of Big Copyright and Surveillance Marketing are in conflict. Making the world safe from adtech fraud makes it safe for "brand-supported piracy."

Users, brand advertisers, and content creators all have an interest in creating a non-targetable medium, one that works more like magazine ads than like spam or direct mail. Adtech intermediaries and fraud rings are the only winners from the targeting-driven race to the bottom. So it should be possible to beat them without relying on the public sector. After all, regulators, even in Europe, are likely to have more and more difficulty promising strong privacy protections, because they'll be negotiated away in secret "trade" talks with the USA.

Syndicated 2014-07-12 14:28:00 from Don Marti

Paying for privacy

Here's a survey on online privacy that addresses the question of If users value privacy so much, why won't they pay for it?

Beliefs and Behaviors: Internet Users’ Understanding of Behavioral Advertising (PDF) by Aleecia M. McDonald and Lorrie Faith Cranor. (via Frederik Borgesius)

A majority of users surveyed agree with...

Privacy is a right and it is wrong to be asked to pay to keep companies from invading my privacy

and

Companies asking me to pay for them not to collect data is extortion

It's an oversimplification to say that if users won't pay for something, they don't want it.

One might expect that participants who highly value privacy would disagree, and would think it is worth paying for privacy even if they also believe they should not have to do so, but only 5% did. Distrust of the advertising industry, or perhaps of actors on the Internet as a whole, is another reason people may not be willing to pay for online privacy with just over a majority agreeing or strongly agreeing that data will be collected even if they pay companies not to collect data.

If one side sees some action as a good in a market, but the other side sees it as just complying with a norm, then no sale. A non-Internet example was telemarketing in the USA. Before the launch of the Do Not Call registry, sales of anti-telemarketer products were low. But at launch, Do Not call got ten million phone numbers in four days.

More: Conventional wisdom on privacy

Syndicated 2014-07-09 11:42:08 from Don Marti

Optimal privacy protection?

Good paper from Henk Kox, Bas Straathof, and Gijsbert Zwart at the CPB in the Netherlands: Targeted advertising, platform competition and privacy (via Frederik Borgesius)

We find that more targeting increases competition and reduces the websites' profits, but yet in equilibrium websites choose maximum targeting as they cannot credibly commit to low targeting. [emphasis added] A privacy protection policy can be beneficial for both consumers and websites.

Read the whole thing. Good explanation of why high-value content sites are participating in ad targeting systems.

If websites could coordinate on targeting, proposition 1 suggests that they might want to agree to keep targeting to a minimum. However, we next show that individually, websites win by increasing the accuracy of targeting over that of their competitors, so that in the non- cooperative equilibrium, maximal targeting results.

But I don't buy the conclusion that web sites are forced to get creepier and creepier, and less and less profitable, in the absence of certain privacy regulations.

The missing piece here—and I know it makes the model much more complicated—is that on the real web, the "consumers" are actually people who can switch browsers or install privacy tools to adjust the level at which they are targeted.

And the web sites have more options than just "target more" or "target less". For example, another move that's available to a site is to encourage the use of anti-tracking technology. As a webmaster, you could identify the users of privacy tools and offer them some kind of bonus content, such as single-page views of long paginated articles, full interview transcripts, or a forum for submitting questions to ask in upcoming interviews. You don't have to wait for regulators to pull you out of the death spiral of creepy.

Syndicated 2014-07-07 13:34:04 from Don Marti

The Internet is Temptation Island.

I'm still trying to unpack and interpret some of the "privacy is dead" claims.

Remember the TV show "Temptation Island"? It's all about inducing people to violate a norm.

On the Internet, you're always on the island. Behavioral marketing people, gamifiers, and growth hackers are inducing you to violate your civility, thrift, diligence, and privacy norms everywhere, all the time.

"Privacy is dead," in many cases, is short for, "Marketing can circumvent the norms-enforcing, long-term-thinking side of the user's brain, to reach the mindless-clicking, short-term-gratification-seeking side of the user's brain."

Betsy Haibel writes, in The Fantasy and Abuse of the Manipulable User,

“Banner blindness” - the phenomenon in which users become subtly accustomed to the visual noise of web ads, and begin to tune them out - is a semiconscious filtering mechanism which reduces but does not eliminate the cognitive load of sorting signal from noise. Deceptive linking practices are intended to combat banner-blindness and increase exposures to advertising material. In doing so, they sharply increase the cognitive effort required to navigate and extract information from websites.

If it's just one brain versus the collective manipulation power of the entire Internet industry, we're doomed. But our species has been fighting off temptations for a long time. We have those exhausting mental filters, sure, and if we work on it we can build temptation-resisting habits. But in the long run we build other tools.

In effect, we learn how to stay off the island in the first place. On the Internet, the biggest example of how to help our brains is email spam filters, but web ad blockers are catching up. The interesting trend is that the old-school general blockers are being joined by Disconnect and Privacy Badger—tools that specifically address targeting, not just ads in general. If we stay off "social" sites as much as possible, the available protection from manipulation that follows us across sites is looking pretty good.

The biggest problem with targeted ads, of course, is that they don't pay their way in exchange of information. An ad that's targeted to the user is no better than a cold call at carrying information to me, so it's not in my interest to spend time on it. But for targeted advertising, it's dammed if you do, dammed if you don't. If it fails, it's a waste of time. If it works, it's worse, a violation of the Internet/brain barrier. Haibel again:

“Growth hacking” - traditional marketing’s aggressive, automated, and masculinely-coded baby brother - will continue to expand as a field and will continue to be cavalier-at-best with user boundaries.

But boundary-testing is not news. The boundary between self and not-self has been under attack for thousands of years. Sometimes we lose, but we survive because we can win often enough. If the brain can beat habit-forming substances and cults of personality, it can beat surveillance marketing, too.

The four lines of defense as I see them are:

  • Willpower

  • Habit power

  • Technology

  • Regulation

Listed from fastest-acting, most responsive, to slowest-acting, least responsive. When we get weary of using one, we fall back on the next one.

Oh, and how did that TV show come out? Three couples split up, one couple stuck together.. Better get your Privacy Badger on, people.

Syndicated 2014-06-29 15:47:43 from Don Marti

We marched on Google 12 years ago.

In 2002, The Mountain View, California Xenu Study Group did a small-scale Google protest. There was some issue with bogus DMCA takedowns against Scientology results in Google searches, so we organized a small group...

photo: "everybody look numerous"

We got some media coverage: Google Restores Church Links

...and Matt Cutts invited us in for a meeeting.

Eventually Google started sharing DMCA takedowns with Chilling Effects Clearinghouse to help expose that kind of thing.

Most importantly, the company protected the Google brand. They can stick with "Google’s mission is to organize the world’s information and make it universally accessible and useful." and not get stuck with "Google's mission is to organize the world’s information unless the Church of Scientology squawks about it, in which case we'll drop it like a hot rock." The company has taken a similar approach to other censorship issues too.

It wasn't the solution we wanted as protestors, but it was in the company's interest.

So that was Google in 2002. What about the Google of today?

At the Google I/O conference this week, the topic of security came up a few times. I got a flyer for a protest about lousy pay and benefits for security guards and also went to a talk on "Security at Scale at Google" by Stephan Somogyi. Looks like the video of the talk is up. Worth watching.

Today, the threat to the Google brand is that first, the company wants you to trust Google with your personal information, while at the same time the physical security of the place, well, based on how the contract firm handles it, it doesn't seem to be a priority. It's not an issue of loyalty or diligence. The problem is the cognitive load of dealing with poverty. You don't make people carry bricks and memorize random numbers while doing their jobs, because that interferes with decision making. Same with the whole extra job of "just getting by."

Google will always do two things: protect its brand and do something "googley" instead of whatever the prognosticators on the outside come up with. But I'm going to make a guess anyway. Instead of either beating down the protests (which beats down "the cloud" as collateral damage) or supporting SEIU, they're going to bring the security guards in-house.

Costs don't have to go up too much, since the company will be able to cut out the middleman, offer security guards Android development and SEO training as benefits to help with recruiting (it's all about the "learn to code" now, right?), plus put the security guards on (the thing that Google is going to do to disrupt health insurance) and charge it to R&D. SEIU will hate it, the contract security firm will hate it, but Google will come out ahead.

Again.

Syndicated 2014-06-28 15:00:07 from Don Marti

Evil

It would be good to see a little bit more "I choose to do this Evil thing" and a little bit less "this Evil thing is inevitable because of TECHNOLOGY." If you're going to Hell anyway, better to stride in as a badass than mope in like a nerd.

That's all.

Syndicated 2014-06-26 00:29:49 from Don Marti

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