From the agenda: The perennial arguments over user privacy, online targeting and tracking, and regulation vaulted to a new level this year even as advanced applications instigated more debate over the invasive nature of digital technologies. The Federal Trade Commission weighed in with policy recommendations, but do they address consumer needs and the full breadth of online targeting practices? Are social networking, ISP-level data collection and Web-based applications introducing new layers of complexity to the privacy debates? Is privacy the third rail that could very well stop or seriously retard many of the models for personalization and targeting that we’ve been discussing throughout OMMA Behavioral itself? A team of legal and industry experts take a gut check. Moderator: Wendy Davis. Speakers: Colin O’Malley, TRUSTe; Mike Benedek, AlmondNet; Bennet Kelley, Internet Law Center; Eric Goldman, High Tech Law Institute; Alistair Goodman, Exponential; Lauren Gelman, Center for Internet and Society.

Colin: There are absolutely policy issues with BT; there was a time when cookies wasn’t something we were addressing at all. There was also a time when PII was the real focus of what we needed to cover. PII is certainly still important, but anonymized profiles can also contain a vast amount of data, especially with a unique identifier. Anonymous data is incredibly important to the sense of privacy and security of someone online.

Mike: I would agree — basically, I would distinguish between the ISP behavioral companies that have a full view of everything the consumer does online, similar to adware and distinguished from traditional ad companies that only have access on a site where they dropped a cookie. The principles of the NAI are geared toward ensuring full notice and consent so that anytime data is collected from a consumer on a site, a privacy policy with an opt-out notice must be displayed. It’s important that as an industry we keep the government apprised of what we’re doing.

Alistair: I agree with what Colin said, the potential for abuse is always there. However, in practice, we are a long way away from any of that. As members of the NAI, we operate a fully transparent network, we’re not interested in collecting PII and using it for behavioral purposes; we’re actually interested in increasing reach for advertisers. We’re not at all interested in targeting them, because quite frankly a segment of one isn’t all that interesting. In practice, the fear could be there, but the kinds of aggregate data that we’re using and applying isn’t even close to some of the things that are going on in the offline space. We did this years ago, and got to the point where it’s okay to make tax data with your name and address available? to marketers for free — and I think that’s way creepier.

Bennet: Starting point is to consider the creepiness factor and its relationship to the concerns being raised. We’re talking about technology, and with tech comes a certain amount of fear because it’s unknown.

Eric: My proposal as starting point #1 is to retire the word ‘privacy’ as part of this conversation. It’s so complicated and rolls up so many different concepts, that we might be talking about different things and talking past each other. I think one of the hardest parts is that so many of the harms are inchoate harms — the starting point of a harm that may never get there. I definitely agree with the point that because it’s on the Internet we get a lot more stressed about things that we’ve accepted either directly or indirectly offline. Why are we treating the Internet differently? What is it that should make us more concerned? Finally, relevancy trumps creepiness — if BT delivered relevant, just in time information, many people would get over their creepiness, but the problem is that I actually have yet to see that happen.

Lauren: I disagree with almost everything everybody said. (KC: Ha ha!) I believe you suffer a privacy harm even if your identity isn’t stolen. I don’t think privacy is only about whether I’m going to get a more relevant ad; I think society changes when they live under an umbrella that their actions are being watched, and each small step takes us further along that path where you don’t know where each bit of information is coming from. I did a lot of talks about blogging and that you have to be up front about who you are and why you’re saying what you’re saying. The point is that if you’re going out on the web looking to buy a car you have certain expectations about how your information is going to come to you, and when it comes in different ways, that’s what’s creepy.

You can do a baseline shift, and say we’re not as bad as what’s happening offline, or this isn’t personally identifiable, or this is the white hat and it’s really the black hat people you should be going after, but there are certain expectations about how the market leaders act and set the standards for what’s acceptable. This concept that it’ll all be anonymous or pseudonymous is fine in a room full of industry people, but it’s not the sort of thing you can set standards to.

Do you think there should be regulation that would require people to opt in to this sort of targeting?

Lauren: I don’t see why that would be bad. If I want to buy a car, I want to give people the opportunity to market a better or cheaper car to me. The fact that I red a newspaper ad about it or that I have a friend who bought a car should be relevant. Create business models around a much richer way of connecting people who want to buy something with people who want to sell something.

Bennet: But if you’re going to regulate, it has to be on an opt out model.

Colin: There are real privacy issues, and I do think? the industry in the past has been able to hide behind a couple of fronts (like not collecting PII). You can be very creepy and seriously impact customer expectations without any PII. With ISP-level targeting as an example, we’re talking about the kind of behavioral targeting done by a third party that people know, and I don’t think that there’s a conceptual leap between what had been done in the past and what’s being done now. Really, most people have no idea that there are companies they’ve never heard of that are tracking what they do and selling that information to advertisers, and even the folks in D.C. don’t draw those distinctions either.

Mike: How much information the ISP-level targeting has on the consumer vs traditional BT companies. To agree here with Bennett, one important thing is to make that distinction. When ISP companies are integrated with a cable company, they see everything — EVERYTHING — that a consumer does when they’re online. A traditional targeting company only has access on the page where they dropped the cookie and on the page where we serve an ad, and, if they’re an NAI member, they’ll inform the consumer of what’s happening and give an opt out link. We don’t collect PII; we use non-persistent session cookies that expire after 60 days; as a matter of practice we don’t target after 30 page; we have a privacy officer who reviews every site that we work with? and I can’t tell you the number of deals we’ve walked away from because of inadequate privacy policy.

There are more companies out there that cleanse your computer of spyware than there are spyware companies (KC: I don’t know if that’s true, but it’s very repeatable). I’m a Canadian citizen, I can’t even vote in the US, but all I get are Barack Obama ads.

Lauren: Facebook is the most horrible privacy example; you cannot download any application from Facebook without granting access to that developer to all of your content. On Facebook if you check the box that says don’t share my cookies, you don’t get the app. When is the right place? Would you prefer that advertising 1.0 be regulated now while we wait? With apologies to TRUSTe, the policy model has been a disaster; who reads privacy policies? That’s why I think regulation is necessary. The beginning of something new is a time when the industry leaders who understand what the downstream privacy issues are can work with regulators to come up with standards with some teeth.

Bennet: It’s evolving — you’re seeing a new generation of privacy policy. The first approach was too much like lawyers. The second approach should be more like marketers. There was that story that a company put in their privacy policy that the first so many people? to respond would get $100, and it took six months to give the money away.

Eric: Offline, either consumers don’t care or they’ve found out and have been powerless to go about making a change. Either we have to regulate completely because consumers are blissfully ignorant, or we could take their ignorance to mean that talk is cheap.

Lauren: My students are the type of people who might have something online from college and now may have concerns about their Supreme Court clerkship.

Eric: This is a Lost Generation, and there’s always a Lost Generation — in the 70s it was marijuana. This generation put stuff online before we realized the power of publishing this sort of content. If a machine knows my idiosyncrasies and that’s the end of it, has there been a harm? Some privacy advocates would say yes, but I say who cares? If there’s harm, it comes from something after that fact — some adverse consequence where somebody thinks differently about me. So we might choose to focus our regulation on the next step, the action that generates the harm.

But what if a third party takes that data? Or what if that company is subpoenaed?

Bennet: When Oppenheimer first tested the atom bomb, there was a very real possibility that they could have blown up the atmosphere, but fortunately it was a small risk. Let’s deal with the actual issue rather than the hypothetical.

Alistair: We are dealing with a new industry; it’s only been 14 years since the first ad has been served. Let’s focus on the positive. This is the industry that enables all this content to be free, and if we go right to the end of the spectrum and say everything has to be opt-in, we begin to stifle creativity and access. I read 7 newspapers a day and I would never be able to do that if I had to pay for all seven. Swinging all the way to the other extreme seems Draconian.

Eric: If we treat ads as the price for things people want, that’s a lose-lose proposition for this industry. If ads are the cost, they become the pain, the thing to be avoided.

Alistair: It’s about taking relevancy further and finding out when it’s valuable rather than intrusive and annoying.

Colin: When we look at these decisions and say it needs to be opt-in or opt-out, it’s oversimplifying the issue. What we need to do is set standards for minimum behavior. Also, privacy statements are necessary. Even if only 4% or 2% or 1% are reading them, the people who are watching the industry are judging companies by their privacy statements and how well the companies adhere to them. We’re also seeing that consumers really dislike irrelevant ads. Relevancy is not just a marketer’s pitch; consumers want it, yet at the same time they’re really uncomfortable with targeting. There’s a disconnect between the high level of concern about targeting and the high level of desire for relevancy. There hasn’t been good enough dialogue between industry and consumers. “These are the corporate entities, this is why we’re targeting you, this is the potential upside, this is what’s going on…” It’s not enough to say there is an opt-out somewhere if you discover it; we have to talk to people, and right now is a fairly narrow window of time for us to control that messaging.

That’s it for today! Thanks for joining me at OMMA Behavioral And, of course, your comments are always welcome!

From the agenda: The first stage of Behavioral Targeting was pretty simple: clickstream analysis, cookies and pixel-tracking. BT 2.0, as some call it, is much more complex. In this stage marketers are using their ISP and search-level data that tracks all consumer behavior, from clickstream, search to purchases to hypothesize what advertising might be relevant to the consumer. How can marketers stay ahead of the issue and how can they utilize these companies and their technologies to meet their client’s marketing objectives? Moderator: Cory Treffiletti, Catalyst: SF. Speakers: Eric Wheeler, 33Across; Bennett Zucker, aCerno; Christian Arens, Draft FCB; Frost Prioleau, Personifi; Derek Maxson, FrontPorch.

We talked about how the first version of BT is clickstream data. What is the second layer? What kind of datapoints are we looking at?

Frost: From our perspective two things: 1 is really looking at behavioral clickstream data in a detailed way. Instead of looking at a page and saying it’s about sports, understanding the data in a semantic way — it’s about tennis. The second thing is that it’s about hypertargeting and bundling in as many attributes as possible.

Eric: In the first stage of behavioral it was ‘not a page, a person.’ In the second stage, it’s that person and their network — that person’s social graph and their active engagement.

Bennett: At aCerno we look at the time honored direct response principle: what a person shops for and buys is the best indicator of what they’re likely to buy next. By collecting data from ecommerce sites we’re able to use clickstream data — cookies — to create more accurate segments.

Derek: One of the problems is that there are so many different kinds of data that people can bring to the table: demographic, purchase, social media, clickstreams, etc. I think that what BT 2.0 can be best summarized with is the concept that any kind of data that’s out there is being explored right now, because no one really knows what the payoff is going to be for one kind of data vs. another.

Christian: I would echo that. Depending on the advertiser you’re working with, one of these approaches is going to be the right one, but I want access to all of them.

Are all these definitions too big for people to work with yet?

Frost: A lot of media planners have a good idea of who their clients are and what they’re looking for.

Bennett: Compared with the early days of BT 1.0, which I experienced at Tacoda, there’s a great willingness to hear about new ways of doing this. The buying public is willing to give a good hearing to any effort designed specifically to help them target their audiences better.

Christian: You can go in there and say you have all the technology and we’re the best and you should use us, but where you add value is what you can provide to them which they can then take back to the client.

Eric: Going to the tactile nature of media planning — we’re going so much further in being able to show the media planner what we’re talking about. Here’s the user, here’s the social graph of this user, here’s how influence flows through the network. These are the early days — this is emergent data.

All the data we have — what do you really think the goal of this information is? Is it to resonate with the consumer in the longer term, or to drive a more immediate action they would have taken in the longer term?

Derek: It really begins with what the advertiser’s desire is, if their desire is to push a brand campaign. One of the things is the ability to purchase specific impressions. One of the things that’s incumbent on this industry is to provide an open model and that they can leverage the different values that are being offered by companies in our spaces.

Frost: One of the biggest uses right now is reach extensions (extending the reach of advertisers) — we’re trying to reach people who are interested in golf, maybe they’re not all on the golf pages — where else do you find them?

Bennett: We’ve got about 140 million US online shopper profiles over 90 days; using analytics, we’re able to know that 30 million of those are in market for something at any given moment. We know that today somebody may be in the market to buy a bigscreen TV but tomorrow they’re not. It’s a question of having the right data and then having the right tools to manipulate that data.

Eric: We’re moving from marketing to people to conversations with people, and that not only takes new tools to better understand that, but also answering questions like where does an app start and an ad end. The kind of things you can pull out of this environment are incredible — you can understand did they join a social group / did they start a social group / did they tag a page… are they actively engaged in that topic.

We work with a lot of social media companies, publishers, etc.; we’re building profiles across the graph, so we can actually see that people behave differently in different environments.

Frost: We encourage people to create their own database so that they can target those users on their own campaigns, but very few companies are doing that as yet.

Eric: Media agencies are just now getting smarter about empowering the clients to use that data to their advantage.

Christian: I’m struggling with this because if they’re pushing it off to the marketers and agencies to build this database then why are you sitting here? Sure, empower me with that, but then realize that you’ve just placed yourself out of what I’m going to do in the future. Sooner or later I’m going to reach these people who are int he mindset of I’m going to buy Pampers tomorrow. There is a lack of knowledge of what my campaign is doing and why, standard things like clickthrough rates, why one site did better than another, and it’s not just better content — is it better segmented or what? Communication goes beyond a media buy all the way to how I’m communicating in banners or anywhere.

Frost: Content does matter in many cases, depending on what the back-end metric is. Users are more likely to click or convert on ads that are on certain types of content than on others. We build the database and offer full and transparent access to it so our clients can see where their money is going.

Derek: Part of the difficulty is how many systems does an agency need to know how to run? That’s the biggest issue that encumbers us, and speaking as one of the many companies that aren’t names Google, Microsoft or Yahoo, it’s incumbent on us to create a model in which the agencies want to do business with us and we aren’t going to get squeezed out. It’s just so complicated today to be an agency.

Christian: One of the things we’re doing differently at Draft is that each person is responsible for all media, not just online. You’re exactly right, in some ways us agency folk are lazy, and we need the technology providers to come in and show us how to do things better. If I’m doing 20 things on a daily basis and you’re marking off one of them, then I’m going to be grateful for your help. I need to be able to play with all of you in the same realm but understand that what FrontPorch is telling me is the same as what Acerno is telling me. It needs to be standardized in some way. We’ve now taken the group that’s typically been in charge of target audiences and melded that with media planning.

Eric: What the budgets are, what kind of data they have, what’s interesting for them, and how they want to learn — if I’m showing somebody data they’ve never seen before, it’s people that are actually interested in getting past the 1.0 display/click rate conversation.

Frost: Our folks have a very flexible audience management system to respond to the need of the client, then they can say, “Here’s the segment you said you wanted; is it working?” Being able to slice and dice that audience.

Bennett: It’s important to spend time with the Head of Research — those are people that we have conversations with where we can get a better picture of what kinds of datapoints our clients are looking for and we can present something more meaningful.

Christian: Much like search, behavioral targeting should have an evergreen campaign, where we are continually optimizing and learning. Most of you have mentioned the RFP process, but Google has already gotten past the RFP process. How do you get to that point? How do you help us to get to a point where this isn’t a project-by-project campaign, but rather a thing that you do?

Eric: As you get to a larger network, where is the bulk of media sales happening? It’s in the RFP, so you need to be able to intercept that.

(KC: I’m really missing a lot of what these guys are saying. They’re sentence structures are like German, where they go for a while before you know what the verb is, and sometimes they mumble the verb so I miss the whole sentence!)

Bennett: We respond to RFPs all the time, and the first thing we do is call and make sure the RFP is applicable to us as a network. In the old days it was a similar situation where they weren’t selling BT and the advertisers weren’t buying, and it took a while before 5-10-15% of the buy was allocated to behavior. I don’t see behavioral targeting or any specific form of targeting being a line item the way search is.

From the Agenda: As consumers become more sophisticated about the value of their online behaviors, as their own social media profiles become clear targets for marketers, users will lok to take ownership of their own data. ‘Data portability’ as it is called, promotes open standards for social profiles and personal preferences so they can be moved by users across sites and applications. This panel will explore how this model can affect and benefit the marketing ecosystem. Moderator: J. Trent Adams, Matchmine. Speakers: Joe Andriew, VRM; Alex Blum, KickApps; David Cooperstein, Burst Media; Paul Trevithick, Parity.

Are data portability and data accessibility the same thing??

Alex: I think that’s an interesting question — maybe it’s an accessibility issue; there’s some cloud out there that’s storing that information, what’s the trusted cloud? There are some big providers who are looking to be that cloud — Google, MySpace, Facebook, etc — want to become the de facto standard and store that data on everyone’s behalf and serve it up for their purposes. That’s where people start to get nervous, and what we’ve found is that publishers and audiences aren’t comfortable with that idea — so what we’re working on is a publisher-friendly approach that respects users’ rights.

Paul: Google is the monolith. Some of the people I talk to are quite concerned about the limits of Google being Big Brother, and they’re looking for somewhere else to put their data. Facebook says it should be them, but their ToS say data goes in and never comes out. Individuals should be able to control what happens with their data. Context is everything, and the only reason these megagraphs have aggregated because it’s difficult to get data from one social graphs to another - winner-takes-all ecosystem.

Is it helpful or hurtful to have one repository for your information?

Joe: We think of it as a personal datastore — the user owns it but it could live out there in the cloud. It doesn’t even have to be a single store — you might have one for your addresses, one for your blog, etc. My blog has an open architecture, through RSS etc., and so it doesn’t matter that I’m not on Weblogs Inc or AOL.

Paul: We need to distinguish between the location of the data and the control. I think what people want is the ability to simply and clearly control their data, no matter where it is.

So it’s a distributed model. From an advertising network standpoint, how do you foresee ad networks approaching the ability to do or support behavioral targeting in a user-controlled model?

David: Turning the control over to the consumer to say I’ll accept advertising. Allow them to use their profile to make changes to the network. From a network profile, we need to figure out how to approach those consumers and get their permission to receive offers from us.

Alex: It’s an interesting concept, but it’s missing the publisher. If you’ve got the audience making these decisions but it doesn’t deliver a return to the publisher, I don’t see how it’s going to work.

David: Good point, but the value to the publisher is that they have a loyal audience. If they are able to get higher revenue share because they’re delivering a specific consumer, then the CPMs for that site which have gone down tremendously actually start to grow again because you’ve got a good audience, a valuable audience, an audience that wants the information.

Joe: If a user is editing what they want to receive, when you visit a website, the real estate that is being used for web ads could be optimized based on a personal datastore. You’re automatically able to shift this new user you’ve never seen before into a highly relevant and targeted user.

Some of the key questions are: we want this user to have power, control and impulse toward what they’re being targeted with, so the context is to give users a way to say ‘this is what I’m looking for as a search’ — not just keywords and queries but behaviors, starting to build a very complete profile that is confirmed by the user. Statement of search intent that the user has control over,and that can be sent out to anyone the user wants.

Alex: You may remember back in the day when forms were supposed to be filled out, but nobody filled out the forms. Social networks were the first killer app that drove users tovoluntarily provide all this information about themselves. Aim is to get users willing to provide all this information to inform TV ads or whatever.

David: There has to be a value proposition regarding who’s willing to fill this out. On Facebook people saw there was more wilingness to put information on there because the more you added the more you got back ffrom your friends. Of course, that came to a head with Beacon.

Paul: One way you can gather data is behaviorally. If you’ve got a user agent, or something that’s close to the user, it’s got the opportunity to make frequent observations on the user’s behalf. Filling in forms is not what we’re talking about — why do we keep having to tell people our first name? In the Internet of the future, we state our name once and the user agent can provide that automatically.

The systems want to know that it’s you versus someone else in your household versus someone who stole your laptop. Once we know that, we can release information in a verified way that doesn’t reveal PII, and the system on the other side can believe you.

Joe: Not just how do we send that data out there, but how do we wrap that data in a policy so that the user knows what’s being done and how. It’s data policy and data rights. For example, you might want your questions about retirement planning to go to Schwab so you can get information, but you probably don’t want Schwab pestering you about investments afterwards.

Do you guys see new markets emerging, for advertising, for publishers?

David: Publishers are going to be much more competitive for the individual audience.

Joe: I think there’s going to be a shifting in where the market happens, you’re also going to know about user intent, possibly before products hit the market.

Alex: I think there’s a market for providing publishers the tools to manage their audience in a rights-friendly way.

Paul: I think publishers need to get a lot more sophisticated tools to play the role that’s expected, else they’ll lose their audience.

Joe: Users don’t want to control their data, they just don’t want to be controlled by it. The trick is how to do that seamlessly so that it’s delightfully surprising when something cool happens.

From the agenda: The classic ‘black box’ of BT tags and tracks user content consumption across the Web to target them later with relevant messages. But, how can marketers realize similar targeting efficiencies outside of the typical online ad network, in RSS feeds, email, mobile and widgets? As your content and marketing becomes more portable and customizable by the user, what targeting techniques are available now and on the way? Moderator: Roman Bukary, Truviso. Speakers: Bill Flitter, Pheedo; Eddie Smith, SocialMedia Networks; Dorion Carroll, Technorati; Elgin Kim, Nokia Interactive; Dave Martin, Ignited Media.

Elgin: Nokia is moving away from being a handset company and towards a software and services company.

Dave: Ignited does all interactive planning & buying for Universal Pictures — difficult b/c trying to get people to make offline purchases, and that’s difficult to track.

Q: Have heard the term BT — what are the realities of BT in your application? How are you using it and where has the promise of BT fallen short?

Dorion: Promise has depended on having sufficient reach and we’re just starting to create that mass. In terms of Technorati, being able to understand that blogs are converting different types of users. How does behavioral targeting start to layer in as an added value?

Bill: We’re at the beginning stages as well. What is the level of engagement? How much content is the user consuming and once they have that content, what are they doing with it? (sharing, forwarding, bookmarking, etc.) Looking at another dataset of BT.

Eddie: MySpace and Facebook are notorious for poorly performing metrics. In social media it’s not about the targeting per se, but about the types of ads you’re showing — getting away from large, loud, intrusive ads and how to become part of the conversation, incorporating the social graph into the ad — part of the poking, part of the fun, part of the conversation, etc.

Dave: I don’t try to guess what’s good creative and what’s bad, I look at the balance. My guess is that engagement drives action, brand awareness and intent, but I don’t necessarily know that. BT has fallen short in finding those behaviors that can actually be correlated to the behaviors I’m trying to drive, as opposed to low-hanging fruit of obvious correlation. Find those behaviors that you wouldn’t necessarily correlate with those offline behaviors and target those behaviors.

Elgin: One of the strengths of mobile is that your handset has proximity awareness, which is one thing that the PC doesn’t have. In the context of movie watching, if I’m in San Fran at the corner of X and Y, the handset can identify places I can go for movies or restaurants or what have you.

Bill: BT falls short in discovery. Something that is maybe slightly to the left or to the right of what I believe in or what I read — if we get too narrow, how do we find new themes? You might find that I like action movies, but I have a 5-year-old daughter, so how can you target movies she would like to me?

Dorion: With mobile, there is a very personally identifiable attribute — typically one person using a device. Creates serious privacy concerns on the one side, but tremendous opportunity on the other side, particularly in terms of discovery.

Elgin: As much as the carriers are a big challenge for us, at the same time they keep things honest — carriers are very protective of their customer base and are very reluctant to share data. When we struck a deal with a carrier, we had mountains of legal documents ensuring that we couldn’t share data with anyone.

Targeting vs. Creepiness

Eddie: Ask for recommendations from friends. Allow people to opt out right from the ad itself.

Dave: Things are only going to get creepier. Every moment of our lives we’re opting in or opting out, and as digital media goes from PC or handset to living room to mall to car, the opportunity to serve targeted ads to people is going to explode. Minority Report is not too far from a potential reality. As marketers we need to be responsible enough to back out when someone says no, but if a consumer is willing to be reached, it’s our job to reach them.

Elgin: You will not experience a bunch of text messages prompting as you walk by a store; it’s more user-focused, pull marketing.

Bill: Push model was magazine model and we took that and put it on a website. We ask people if they want to opt in, and you’d be surprised at how well they respond to that. With RSS feeds, we already have permission — you actually have to take action to subscribe, now it’s my job to make the content relevant to the user.

Eddie: I think it’s also a function of understanding what the user’s expectations are for privacy. Facebook info shouldn’t be used outside of walled garden because of consumer expectations. Understanding and acknowledging and abiding by users’ expectations.

Dorion: Want to turn the interactive marketing medium into a great user experience, so it’s something they want. If they don’t feel like participating or engaging, they don’t have to. What you’re trying to do is give them something of value to them, of value to you, and of value to the publisher. Give people a chance to participate; the moment they’re starting to engage, they’re leaving a little of their own behavior behind. Build clusters of really compelling content at the right time. Really powerful if done in the right way, and the whole concept of creepy goes away.

For me right now the biggest concern is where everything is going form a privacy point of view. As a company that deals with users from over 50 countries, and a marketing set of directives to deliver into those particlar areas, I have no control over whether that content is acceptable or not. How much do I want to invest in this as the only way to go forward. We sit on huge volumes of data about UGC, how bloggers link to each other; I want to deliver experience that makes bloggers want to participate based on the engagement, not on whether they’ve got a 5-year-old daughter.

Elgin: We’re seeing conversion rates on the low end of 40% and on the high end of 70%. In mobile, we’re content-focused, so based on the targeting and the reach it’s good validation that something’s working.

Eddie: Media buyers — we did one for BMW that had X clicks, 100,000 installs, but there was all this activity that users did, interaction with the app (joyride app, so inviting friends to go on a ride, etc.).

Bill: The challenge we have is the data; it’s the information. I was sitting with an agency the other day and I asked how we’ll measure, and they said CTR and conversions. I said here’s all this other data, and there was just blank stares. It was really rich data, but they don’t know what to do with it. There’s more engagement data that can be tracked that should be considered when determining whether or not a campaign succeeded.

Dave: Isn’t it your job to tell an ROI story? If you’re bringing new metrics to my media planning and buying, shouldn’t you be able to tell me why they’re better? I have to explain what’s really driving box office. We can look at two campaigns that look identical, and the results are totally different at the box office.

Eddie: I can tell you how many people watched the video, but the really hard part is connecting the dots to the actual conversion — did they purchase the ticket?

Dorion: For the metrics, what’s the purpose of the campaign? You can’t measure all campaigns equally. What data do you have and what are you trying to conclude? For us right now, a lot of what is compelling is ‘Where are the influencers? Who has that type of blog that is attracting audiences that are engaged?’

Elgin: Some of the problems that we’ve experienced are that the advertiser will run a campaign and we’ll direct them to a call center. They can do a great job of getting the user to go to the call center, but the call center might not do its part — am I to blame for not fulfilling the ROI that some of these advertisers expected?

Dave: I definitely think we’re going to be seeing BT on television — that’s the next big frontier. Starting with low-hanging fruit and data that’s easiest to collect, but I see a time that you run out of toilet paper and the next ad you see is one for Charmin.

Eddie: We play in the social media space — Facebook has done a fantastic job of creating a platform for apps to proliferate. From our perspective what we see is a blurring of the apps and the ads themselves — messages from advertisers and embedding them into the app.

Bill: Media is very fragmented and only getting more so. It’ll be our job to pull all that information — not about the website anymore, but more about the distribution of that content.

Dorion: Watched movie with Walt Mossberg, who was saying 15 years from now people won’t be talking about the Internet — likened it to the electric grid — don’t ‘connect your shaver to the electric grid so you can shave’. If it works well, gets to a place where I’m in a lot more control regardless of whether it’s my fridge, my mobile device, etc. It should get to where I’m in control of what I get, how I get it, where I get it, without limiting discovery…

Lunchtime!

The Chair of OMMA Behavioral got up and said a few words. $775 million spent on online behavioral targeted advertising this year, $1.1 billion next year, over $4 billion in 2012. Since last OMMA Behavioral, privacy has become issue Number One. Introduced Dave Morgan:

The former chair of TACODA, head of AOL Global Ad Sales, and the field’s most visible evangelist, Dave Morgan offers his vision for the future of behavioral targeting. And it may not be what you think, as Dave pursues the contrarian’s view of marketer adoption, public policy and likely market leadership. Also currently the Chair of The Tennis Company (which owns Tennis and Smash magazines).

(Whoops — the first two talks weren’t ‘keynotes’; they were ‘workshops’. I don’t really understand the difference — I didn’t do any more work than I’m going to do for this one.)

Dave used to be a lawyer — but he’s well-recovered now! He’s not a tchnologist but he’s always tried to understand computer technology. More Silicon Alley approach rather than Sillicon Valley — business implications of technology rather than technology itself.

He’s really excited about the substantial market being created in behavioral, that it’s a market that people understand, that there’s a lot of investment and a lot of opportunity, but it’s not new — it’s been around for 30-35 years. This was always one of the critical promises of the information superhighway: addressable, measurable advertising. A lot of early vendors employed these technologies right in the beginning.

He remembers very early in Real Media doing a presentation? to Progressive Networks (now Real Networks) — recognized that you could put cookies and get information, and that Progressive Networks was exposed (you could see everyone in their network), so they made banners with people’s names on them (”Sarah, we’ve been expecting you.”) — this side of it isn’t new.

What is new is the market opportunity.

About people, not just pages, delivering those ads according to historic, actual inferred behavior.

First: most of the ad inventory on the Internet today is dramatically underutilized. How many times do you go to a web page and say, “Wow! That’s a great ad!” (Never.) The only time that happens is in search. This means we’re doing a lousy job, but it also means there’s a lot of opportunity.

There’s no question that when you serve an ad not just based on context but on behavior as well, if you do it right, you can dramatically improve results. In many cases doing behavioral well means you’re going to suppress clickthrough rates (more targeted audience) and conversions are going to go up.

Average yield of behavioral pages went from 30 cents to $4.25 (which pages? I missed it)

Because yield of social media pages is so low right now (7 or 8 cents), being able to yield 11 cents would dramatically change the economic landscape of social media.

One of the macro issues and one of the big drivers for him personally was the emergence of the big screen (TV) on IP networks. We can now see in the mid- and short-term IP-enabled advertising on tv screens in the majority of American homes certainly within 5 years and likely within 3.

Scientific Atlanta is now owned by Cisco (world’s largest Internet router). We have Comcast moving a lot of their own set-top boxes. IP-enabled DVRs. At least this will mean the capacity to measure advertising on a home-by-home basis, as well as the ability to deliver addressable advertising.

Not just looking at what is the opportunity for behavioral on the PC, but also on the TV, which is a much more compelling format. Also mobile, although he’s not sure how much of a role it’s going to play — not a great data format, great data capture, highly regulated industry.

We are looking at a business that is in the multiple billions of dollars very quickly without even leaving the US. The idea that it will be a $10 billion market in 4-5 years isn’t crazy.

Every day you hear that Google is testing something that makes it more about the person and less about the data. DoubleClick purchase fantastic — massive database of behaviors.

He thinks there are a number of challenges that we have to deal with in order to make this industry develop and mature to its potential.

The first is that he lived through the first big development of the Web market and the bubble and the crash. Without question, he hears and sees elements of ‘99 and 2000 today. It’s not because there aren’t great fundamentals, it’s because people are taking their eye off the ball and not solving the basic problems of blocking and tackling. We have to talk less and less about the techniques and more about the problems we’re solving and the solutions we’re offering. He says until it becomes relevant to our parents and the people we know in Peoria, the market will be limited.

We know how to optimize inventory, maximize yield, increase effectiveness… If we don’t have a value proposition to consumers, we’re going to have a big problem. We can offer a system that has a 10x yield, but if there’s no value proposition to the consumer, we have nothing.

We also have to start looking outside of the PC and towards the TV — it’s a more compelling presentation, certainly for advertising.

It’s great to see people in the supply chain (Omniture and creative and analytics) using these tools because one of the biggest challenges to growth is bottlenecks on the consumption side. We can deliver targeting on a massive scale, but if we don’t have creative to deliver to them it isn’t going to be very useful. Understanding how to take out bottlenecks in the ecosystem is going to be critical.

Public policy: without question public policy is a huge issue for us. All we need to do is get a little perspective on what’s happened with people who have come before. Tech companies need liberal arts people to think about issues. He’s spent a lot of time in Washington and the biggest issue is that you get lumped into the spyware box.

Seven senators said spyware polls in the top three of constituent issues and sometimes number one. They need to get rid of spyware and they believe that whatever damage is done to the behavioral advertising industry is acceptable collateral damage. A lot of work to be done to overcome this situation — email randy (AT) iab (DOT) net and contribute to IAB PAC to make sure we’re being heard in Washington.

Great presentation.

Matt Boyd is the SVP of US Media from ValueCick. They just launched Precision BT: predictive behavioral targeting.

They handed out laser pointers and the guy put up multiple choice questions, then asked us to point at the answer — what a great way to engage people at the start!

How should our industry best handle the privacy issue? (most people said education)

Increasing spend on behavioral targeting is attracting far more vendors

Joshua? Koran somebody came up — obviously the more tech guy — to talk about the behavioral targeting landscape

Behavioral targeting enables marketers to match creative to visitors, based on their prior activities

In the shifting landscape, as we begin to use this data for more activities, we’ll begin to shift the name as well. As behavioral data becomes more mainstream, we’l need to change the name because we don’t just use it for targeting

Why is BT growing faster than contextual? Contextual doesn’t discriminate between the drive-by browsers and the enthusiasts who are not in-market

Behavioral targeting identifies the most qualified customers, based on frequency and recency of observed behavior

Ad Server identifies best context to reach each consumer — requires extensive reach to deliver BT with scale

When you’re writing an email to a friend, you’re unlikely to click away from the email even for a highly relevant ad

Behavioral targeting approaches:

• How many events?
  • Retargeting (single events)
  • Inferred interests (multiple events) — have to have an incredible investment in collecting, processing, etc
• What do you do with them?
  • Vendors differ in inputs, categorization, process and outputs, scale and how they deal with PII
• Cluster (Tacoda)
  • Visitors are assigned to a single cluster at any given time
  • Finite number of available clusters
  • Problem is that people have more than one interest
• Business Rules (RevenueScience)
  • Marketer defines segments in a manual process
  • Requires ongoing testing and monitoring
• Predictive (ValueClick Media)
  • Groups visitors based on predicted future activities
  • Multiple interest attributes per visitor
  • Continually adapts to changing behavior

Transforming experiences into profiles

Their BT technology assigns visitors to segments based on their likelihood to click or convert in hundreds of categories:

• Predictive (based on likely future performance)
• Granular (goal-driven algorithm assigns visitors to multiple segments in real-time, providing more timely and accurate predictions)
• Adaptive

Precision BT uses predictive technology to help you reach the right consumers, while their ad server optimization reaches them at the right place and time

Cricket Wireless phones case study from Red Door Interactive. Goal for Cricket is always to increase online purchases of phones and calling plans. Solution: ValueClick Media recommended a geo-targeted run of network campaign with optimization and precision retargeting, and Precision Profiles mobile segment. Overall conversions outperformed other media partners 11 to 1.

Pretty impressive. I’ll be talking to Matt Boyd later this morning.