Mapping Online Mapping Online Advertising:Advertising: From From Anxiety to MethodAnxiety to Method

Fernando BermejoFernando BermejoFellow, Berkman Center for Internet & Fellow, Berkman Center for Internet &

Society, Harvard UniversitySociety, Harvard University

January 12th, 2010January 12th, 2010

From Anxiety…From Anxiety…““Half the money I spend on advertising isHalf the money I spend on advertising is

……to Methodto Method““The time has come when advertising has in some The time has come when advertising has in some hands reached the status of a science. It is based hands reached the status of a science. It is based on fixed principles and is reasonably exact. The on fixed principles and is reasonably exact. The causes and effects have been analyzed until they causes and effects have been analyzed until they are well understood. The correct methods of are well understood. The correct methods of procedure have been proven and established”. procedure have been proven and established”. Scientific Advertising Scientific Advertising (1923), Claude C. Hopkins(1923), Claude C. Hopkins

The

nwasted. The trouble is, I don’t know which wasted. The trouble is, I don’t know which half”. half”. John Wanamaker (1838-1922)John Wanamaker (1838-1922)

From Anxiety…From Anxiety…

……to Methodto Method““In terms of efficiency, if not size, the In terms of efficiency, if not size, the advertising industry is only now starting to advertising industry is only now starting to grow out of its century-long infancy, which grow out of its century-long infancy, which might be called ‘the Wanamaker era’”.might be called ‘the Wanamaker era’”. The The Economist (07/06/2006)Economist (07/06/2006)

““47% of campaigns failed—how to make 47% of campaigns failed—how to make sure yours sticks. 83% of ad spending was sure yours sticks. 83% of ad spending was seriously suboptimal—how do you get more seriously suboptimal—how do you get more impact without spending a dime more?”impact without spending a dime more?” What Sticks: Why most advertising fails and how to What Sticks: Why most advertising fails and how to guarantee yours succeeds guarantee yours succeeds (2006) (2006)

Now

The source of anxietyThe source of anxiety

Gift Economy/Gift Economy/

Peer-Production Peer-Production

Property / Pay ModelProperty / Pay Model

Advertising…Advertising…

Media

Audiences

Advertisers

ADVERTISERS

MEDIA: Ads + Content

AUDIENCES /

USERS

PRODUCT & SERVICES

The MethodThe Method

Collecting informationCollecting information MetricsMetrics TargetingTargeting Having the right contextHaving the right context PricingPricing FunnelingFunneling

Collecting informationCollecting information

Previous media: Audience and Market Previous media: Audience and Market Research, Surveys and Panels.Research, Surveys and Panels.

Online: Every interaction can be automatically recorded. Every Online: Every interaction can be automatically recorded. Every page viewed, every ad viewed, every song or video played, page viewed, every ad viewed, every song or video played, every search performed, every content created… every search performed, every content created…

Collecting informationCollecting information

Berkeley study on flash cookies (Soltani et al, 2009):Berkeley study on flash cookies (Soltani et al, 2009):– 54 of top 100 sites use flash cookies (only 4 mention it in their 54 of top 100 sites use flash cookies (only 4 mention it in their

privacy policy).privacy policy).– Even with a NAI opt-out cookie, flash cookies are employed.Even with a NAI opt-out cookie, flash cookies are employed.– 31 had at least an overlap between a HTTP and a Flash cookie 31 had at least an overlap between a HTTP and a Flash cookie

(90% of the overlaps from cookies served by ad networks)(90% of the overlaps from cookies served by ad networks)– Respawing of HTTP cookies occurred on several sites (Hulu.com, Respawing of HTTP cookies occurred on several sites (Hulu.com,

About.com) and took place accross domains (Clearspring: About.com) and took place accross domains (Clearspring: Aol.com and Mapquest.com).Aol.com and Mapquest.com).

From discrete events to profiles: From discrete events to profiles: 1st-party 1st-party cookies, 3rd-party cookies, web bugs, and cookies, 3rd-party cookies, web bugs, and flash flash cookiescookies (100KB of information, no expiry date, stored in separate (100KB of information, no expiry date, stored in separate location, not controlled by the browsers…)location, not controlled by the browsers…)

Collecting informationCollecting information

““Our results show increasing aggregation of user-Our results show increasing aggregation of user-related data by a steadily decreasing number related data by a steadily decreasing number of entities” (Kryshnamurthy & Willis 2009)of entities” (Kryshnamurthy & Willis 2009)

Extent of 10 Top Third-Party Families

Growth of the Google family

MetricsMetrics

Visits

Pages

Unique Users

Hits

Clicks Time

Engagement

Reach

ViewsUsers

Unduplicated Unique Users

Sessions

TargetingTargeting

DemographicsDemographics Content consumedContent consumed Content produced Content produced

– Search KeywordsSearch Keywords BehaviorBehavior

From audiences, to segments, to increasingly granural criteria (individual profiles)

Targeting segments

ADVERTISERS

MEDIA: Ads + Content

AUDIENCES /

USERS

PRODUCT & SERVICES

TargetingTargeting

Having the right contextHaving the right context

In previous media: In previous media: – professionalism, organizational norms, professionalism, organizational norms,

self-controlself-control Online:Online:

– Production of specific content directly Production of specific content directly for advertising purposes: e.g. Demand for advertising purposes: e.g. Demand Media, etc.Media, etc.

– Need to control user-generated content: Need to control user-generated content: e.g. the new Technorati, Youtube video e.g. the new Technorati, Youtube video demotion, etc.demotion, etc.

Both in terms of the general environment and in terms of specific content…

PricingPricing

Previous media: Exposure in terms of Previous media: Exposure in terms of CPMCPM

Online: Online: – CPM still 38%CPM still 38%– Performance: 58%Performance: 58%

Cost per Click (CPC)Cost per Click (CPC) Cost per Action: lead … purchaseCost per Action: lead … purchase

ADVERTISERS

MEDIA: Ads + Content

AUDIENCES /

USERS

PRODUCT & SERVICES

PricingPricing

FunnelingFunnelingThe most uncontrolable part:The most uncontrolable part: BrandingBranding Tracking and RetargetingTracking and RetargetingYahoo! UK: “We know where users have been and Yahoo! UK: “We know where users have been and

we can tell where they're going” we can tell where they're going”

AOL: “For example, LeadBack tracks users who have AOL: “For example, LeadBack tracks users who have visited your website but have not made a visited your website but have not made a purchase. When those same users visit other sites purchase. When those same users visit other sites on our network, LeadBack delivers your ads to on our network, LeadBack delivers your ads to them, driving them back to your site and them, driving them back to your site and increasing the likelihood of a sale.”increasing the likelihood of a sale.”

Placing more customer activities in Placing more customer activities in controllable environmentscontrollable environments: The : The mobile internetmobile internet

ConsequencesConsequences Collecting InformationCollecting Information: A requires : A requires

increasing information from increasing information from individuals. individuals.

MetricsMetrics: A is not comfortable with : A is not comfortable with phenomena that cannot be easily phenomena that cannot be easily controlled, measured and reduced to controlled, measured and reduced to numbers. numbers.

TargetingTargeting: A tries to move to the form : A tries to move to the form of a transaction between advertisers of a transaction between advertisers and individuals, leaving third parties and individuals, leaving third parties as accesorial. as accesorial.

ConsequencesConsequences Generating the right context:Generating the right context: A A

prefers certain environments and prefers certain environments and shapes content.shapes content.

Pricing:Pricing: A tries to reduce its risk by A tries to reduce its risk by asking others to assume it. asking others to assume it.

Funneling:Funneling: A tries to be more A tries to be more intensive and more extended. intensive and more extended.

ConsequencesConsequences

Privacy: Playing cat and mouse (?)

Content: De-intermediation (?)

Structure: Advertising as steroids (?)

The online content layer…The online content layer…

Gift

Advertising

Pay

Mapping Online Mapping Online Advertising:Advertising: From From Anxiety to MethodAnxiety to Method

Fernando BermejoFernando BermejoFellow, Berkman Center for Internet & Fellow, Berkman Center for Internet &

Society, Harvard UniversitySociety, Harvard University

January 12th, 2010January 12th, 2010