The Online Ad Industry has Its Head Up Its Cash

Online Ad Industry is Missing the Point

The ad industry is squealing like pigs being led to slaughter over Microsoft’s announcement that “Do Not Track” will be the default setting on IE10.

A quick guide for the layperson. Do not track will send out a signal from your browser to websites that you visit letting them know that you do not want your online behavior tracked when you visit their site.

This option is currently available on Safari and Firefox, but not on Google’s Chrome (No surprise as Google makes gobs of money via behavioral targeting.) The difference is on Safari and Firefox the option is there, but turned off by default. On Internet Explorer it will be turned on.

The knee-jerk reaction from the online ad industry has been one of anger and contempt. From opinion pieces like “Since when did Microsoft become my nanny?” to the IAB releasing a message to its members condemning Microsoft’s decision. Beyond reflecting abject panic these reactions have revealed how out of touch the online industry is with the current consumer market. It also reveals that the online Ad industry is built around the wrong metrics forcing it down a path that ignores consumer sentiment.

To the first point of how out of touch the ad industry is – The most common recant is “The consumer is better served by us knowing their behavior. More information on the browser = more relevant ads = happier consumer.” In fact I recently had one agency executive tell me that: “People want their advertising to be more relevant.” I had to chuckle at these remarks. If people want relevant ads won’t they just turn off “Do Not Track” as soon as they download IE10? Of course if this is the case why all the consternation? The simple fact is most consumers could care less about the ads they see. They want free content and whether they see an ad for American Express or one for Netflix is really irrelevant. Need proof? The average click-through rate for an internet banner ad is .10%… that isn’t 1% it is POINT-ONE-ZERO percent. Take 10% divide it by 100 and you are there. (Maybe when we talk about the 99% we should be talking about people who don’t click on ads?) Need more proof? A couple of years ago Google gave their users the option of filling out a questionnaire which would help Google serve them up more relevant advertising. Their engagement rate? .5% which, granted is 5x more than their average click-through but still an overall paltry number.

OK so maybe consumers don’t care about ad relevance. But, still what is the big deal? Isn’t that just the price of being on the internet? Maybe, but consider the following: When a company runs a behavioral campaign they peer into my computer, look at where I have been and develop a “profile” of me which they lock in their database. The big deal here? It is simple… that machine they are looking into is mine. What gives any third party the right to look into my browser history? The argument from the ad industry is one of “implied consent” which amounts to, “If they want to block us they can.” But where else does this idea of implied consent with personal property exist? If I leave my house unlocked I don’t expect a Kraft executive to come strolling in, rummage through my refrigerator and cabinets to determine what I like to eat, put it on a notepad and then stroll out, now ready to send me nifty direct mail pieces based upon what I have in the kitchen. Certainly Kraft does have a profile on me. But, they built that profile off of my frequent buyer card, one where I signed-up and opted in to their system. Furthermore, that card only gathers data when a. I am in the supermarket (on someone elses property) and b. I chose to swipe my card. Therefore, any correlation of implied consent in the online space goes out the window as my 3^rd party behaviorally targeted ad friends ignore both of the tenants.

Well the argument goes. “Kill the cookie and you kill the online ad industry.” To this I reply “Really?!?” Marketing in it’s modern form has existed for hundreds of years, from the first newspapers, to the famed Sears Catalog to the advent of radio and television. Even better news – the ad industry has thrived without the use of personal individual data! You see for years the industry was simple. The buyer looked at 1) Context, 2) Location (Primarily geographic) and 3) Creative. The great news is that all of these are available online. Even better traditional metrics are ultimately more favorable to publishers than current online metrics. Can you imagine if Newspapers and Magazines in the ‘70’s had been paid on the “Cut Out Rate” (I bet it would be worse than .10%) of their ads? Could you imagine if Newspaper companies only got paid when a customer walked in the door with an ad cut out from the Sunday Times? Yet these are exactly the same absurd metrics that online marketers have been trained to chase. The net result is a cookie based online world that ignores the quality of the audience in exchange for pursuing “clickers” which is to say people who (based on previous behavior) like to click on ads or lack a steady hand and accidentally click on them, with frequency. With audiences spending more time than ever online one could make an argument that the cookie is standing in the way of even more meaningful monetization, rather than accentuating it.

Conclusion. It is time to look beyond the third party cookie. The internet industry needs to understand that there is momentum to protect privacy and rather than ignoring this fact and kicking and screaming, it is time to do what we do best, start innovating. Let’s look for ways to make creative more relevant. Let’s push brand marketing and move away from the performance based advertising in display. Let’s figure out ways to reach the right consumer without peering into his or her computer. Let’s start looking forward and stop shedding tears for the things in the rearview mirror.