Targeted advertising
Advertising has always been used as a way to offset the true cost of many services and provide a profitable business model. This has unquestionably benefited the consumer, and that's arguably truer today than ever before, given the increasing demand (and expectation) for 'free' or low-cost content, information and services.
As is the case with the recent announcement that Sprint Nextel is starting to sell advertising embedded in the mobile ‘deck’, we sometimes see advertising spring up where it wasn’t before. Downward pressure on pricing usually means that companies need to find alternate revenue streams – and advertising has always been the stream of choice. In the U.S., and many other geographies, there is far-greater competition amongst mobile carriers than there is in Canada. Our less-competitive market means we haven’t seen the same degree of downward pressure on pricing, but the evolution of mobile devices into much more than just telephones will drive significant increase in data traffic, and, correspondingly, in consumer demand for cheaper data plans. The increase in traffic drives up operator’s costs – and advertising-based subsidization of services is a logical route for them to pursue to maintain profit margins. So, as is the case with Sprint Nextel, we may see our carriers turn to advertising sales to continue to provide consumers with what they want at an affordable price point. And, today, effective advertising is targeted advertising.
A wealth of data can be (or is) collected about computer-based users of the Internet, television viewers, or those using mobile devices to access the Internet or other mobile services. This data enables much more accurate targeting of advertising than was ever before possible. More and more, we will see a shift away from broad demographic profiling of consumers toward much more specific consumer profiles that dynamically evolve to reflect their individual actions (for example, searching the Internet for car dealers could cause automobile advertising to be prominent in the ad content they receive from sources unrelated to the actual search activity that they performed. They might see a car ad the next time they go to a newspaper website).
Naturally, advertisers love this as it greatly increases the likelihood that their messages reach a relevant audience. Consumers, too, should appreciate this – if they are to be presented with advertising content, isn't it better for everyone if that content is of interest to them? However, this does, as always, raise privacy concerns.
The issue of consent is important. Privacy policies are a common feature of Internet sites today and they usually tell you what will be done with information provided by the consumer (active disclosure), and, sometimes, what will be done with other passive data that is collected. Carriers (ISPs and mobile operators), too, should provide similar disclosure with respect to how they will use data that they collect. So, too, should search engines, portals, etc. In all cases, an informed consumer has the option of participating in this collection – or taking their business elsewhere. But consent is only meaningful if it is informed consent entered into by an adult or, on behalf of a minor, by a responsible parent or guardian – and that's a challenge. More often than not, in the electronic world, the granting of consent is a passive action. While privacy policies may be available, it is incumbent upon the consumer to look for these to investigate what will be done with information they actively or passively provide – and few consumers read these. As well, it is difficult, and sometimes impossible, to know with certainty that the person giving consent is of legal age to do so.
The advertising ecosystem in the new media world is still nascent and is only beginning to test the true potential of targeted advertising. At times, this may be taken too far and, when that happens, consumer push-back will help in finding an acceptable balance between the use of profiling and the need for privacy. In the interim and at times going forward, advertisers will test consumer tolerance to specifically targeted advertising.
What are the acceptable limits? Well, of course, that will vary from consumer to consumer and will, in part, be a factor of what he or she is willing to give up in relation to what he or she gets in return. If a consumer’s mobile carrier is part of the same conglomerate that delivers their Internet connection and their television, is it acceptable to use the information collected on one service to affect advertising content delivered to the consumer on another service? Perhaps. Is it acceptable is I’ve consented to that being done in return for a 5% discount on all of the inter-twined services? Absolutely.
In Canada, the three main mobile carriers are all part of enterprises that offer Internet connection services, television services and voice services. This tends not to be the case in the United States or elsewhere, so our Canadian operators have some unique opportunities that may lead to some innovative ways to address the consumer relationship holistically, from an advertising subsidization point of view. Will they pursue these opportunities in the long term? Perhaps. Perhaps not. On the television side, there are still some technical limitations to be worked out. And the television world is highly-regulated – and policy change would be needed. But, long term, it will depend in large part on how receptive the consumer is to this. But it would not be surprising to see or media empires dip a toe in the water to see what the temperature – and appetite – is for this kind of incentive. Personally, I’d welcome such experimentation and let the consumer decide.
As is the case with the recent announcement that Sprint Nextel is starting to sell advertising embedded in the mobile ‘deck’, we sometimes see advertising spring up where it wasn’t before. Downward pressure on pricing usually means that companies need to find alternate revenue streams – and advertising has always been the stream of choice. In the U.S., and many other geographies, there is far-greater competition amongst mobile carriers than there is in Canada. Our less-competitive market means we haven’t seen the same degree of downward pressure on pricing, but the evolution of mobile devices into much more than just telephones will drive significant increase in data traffic, and, correspondingly, in consumer demand for cheaper data plans. The increase in traffic drives up operator’s costs – and advertising-based subsidization of services is a logical route for them to pursue to maintain profit margins. So, as is the case with Sprint Nextel, we may see our carriers turn to advertising sales to continue to provide consumers with what they want at an affordable price point. And, today, effective advertising is targeted advertising.
A wealth of data can be (or is) collected about computer-based users of the Internet, television viewers, or those using mobile devices to access the Internet or other mobile services. This data enables much more accurate targeting of advertising than was ever before possible. More and more, we will see a shift away from broad demographic profiling of consumers toward much more specific consumer profiles that dynamically evolve to reflect their individual actions (for example, searching the Internet for car dealers could cause automobile advertising to be prominent in the ad content they receive from sources unrelated to the actual search activity that they performed. They might see a car ad the next time they go to a newspaper website).
Naturally, advertisers love this as it greatly increases the likelihood that their messages reach a relevant audience. Consumers, too, should appreciate this – if they are to be presented with advertising content, isn't it better for everyone if that content is of interest to them? However, this does, as always, raise privacy concerns.
The issue of consent is important. Privacy policies are a common feature of Internet sites today and they usually tell you what will be done with information provided by the consumer (active disclosure), and, sometimes, what will be done with other passive data that is collected. Carriers (ISPs and mobile operators), too, should provide similar disclosure with respect to how they will use data that they collect. So, too, should search engines, portals, etc. In all cases, an informed consumer has the option of participating in this collection – or taking their business elsewhere. But consent is only meaningful if it is informed consent entered into by an adult or, on behalf of a minor, by a responsible parent or guardian – and that's a challenge. More often than not, in the electronic world, the granting of consent is a passive action. While privacy policies may be available, it is incumbent upon the consumer to look for these to investigate what will be done with information they actively or passively provide – and few consumers read these. As well, it is difficult, and sometimes impossible, to know with certainty that the person giving consent is of legal age to do so.
The advertising ecosystem in the new media world is still nascent and is only beginning to test the true potential of targeted advertising. At times, this may be taken too far and, when that happens, consumer push-back will help in finding an acceptable balance between the use of profiling and the need for privacy. In the interim and at times going forward, advertisers will test consumer tolerance to specifically targeted advertising.
What are the acceptable limits? Well, of course, that will vary from consumer to consumer and will, in part, be a factor of what he or she is willing to give up in relation to what he or she gets in return. If a consumer’s mobile carrier is part of the same conglomerate that delivers their Internet connection and their television, is it acceptable to use the information collected on one service to affect advertising content delivered to the consumer on another service? Perhaps. Is it acceptable is I’ve consented to that being done in return for a 5% discount on all of the inter-twined services? Absolutely.
In Canada, the three main mobile carriers are all part of enterprises that offer Internet connection services, television services and voice services. This tends not to be the case in the United States or elsewhere, so our Canadian operators have some unique opportunities that may lead to some innovative ways to address the consumer relationship holistically, from an advertising subsidization point of view. Will they pursue these opportunities in the long term? Perhaps. Perhaps not. On the television side, there are still some technical limitations to be worked out. And the television world is highly-regulated – and policy change would be needed. But, long term, it will depend in large part on how receptive the consumer is to this. But it would not be surprising to see or media empires dip a toe in the water to see what the temperature – and appetite – is for this kind of incentive. Personally, I’d welcome such experimentation and let the consumer decide.
posted by Alan Sawyer at
1:28 PM
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