Mapping Online Advertising: From Anxiety to Method Fernando Bermejo Fellow, Berkman Center for Internet & Society, Harvard University January 12th, 2010

From Anxiety… “Half the money I spend on advertising is …to Method “The time has come when advertising has in some hands reached the status of a science. It is based on fixed principles and is reasonably exact. The causes and effects have been analyzed until they are well understood. The correct methods of procedure have been proven and established”. Scientific Advertising (1923), Claude C. Hopkins Then wasted. The trouble is, I don’t know which half”. John Wanamaker ( )

From Anxiety… …to Method “In terms of efficiency, if not size, the advertising industry is only now starting to grow out of its century-long infancy, which might be called ‘the Wanamaker era’”. The Economist (07/06/2006) “47% of campaigns failed—how to make sure yours sticks. 83% of ad spending was seriously suboptimal—how do you get more impact without spending a dime more?” What Sticks: Why most advertising fails and how to guarantee yours succeeds (2006) Now

The source of anxiety Gift Economy/ Peer-Production Property / Pay Model Advertising… Media AudiencesAdvertisers

ADVERTISERS MEDIA: Ads + Content AUDIENCES / USERS PRODUCT & SERVICES

The Method Collecting information Collecting information Metrics Metrics Targeting Targeting Having the right context Having the right context Pricing Pricing Funneling Funneling

Collecting information Previous media: Audience and Market Research, Surveys and Panels. Previous media: Audience and Market Research, Surveys and Panels. Online: Every interaction can be automatically recorded. Every page viewed, every ad viewed, every song or video played, every search performed, every content created… Online: Every interaction can be automatically recorded. Every page viewed, every ad viewed, every song or video played, every search performed, every content created…

Collecting information Berkeley study on flash cookies (Soltani et al, 2009): –54 of top 100 sites use flash cookies (only 4 mention it in their privacy policy). –Even with a NAI opt-out cookie, flash cookies are employed. –31 had at least an overlap between a HTTP and a Flash cookie (90% of the overlaps from cookies served by ad networks) –Respawing of HTTP cookies occurred on several sites (Hulu.com, About.com) and took place accross domains (Clearspring: Aol.com and Mapquest.com). From discrete events to profiles: 1st-party cookies, 3rd-party cookies, web bugs, and flash cookies (100KB of information, no expiry date, stored in separate location, not controlled by the browsers…)

Collecting information “Our results show increasing aggregation of user- related data by a steadily decreasing number of entities” (Kryshnamurthy & Willis 2009) Extent of 10 Top Third-Party FamiliesGrowth of the Google family

Metrics Visits Pages Unique Users Hits Clicks Time Engagement Reach Views Users Unduplicated Unique Users Sessions

Targeting Demographics Demographics Content consumed Content consumed Content produced Content produced –Search Keywords Behavior Behavior From audiences, to segments, to increasingly granural criteria (individual profiles) Targeting segments

ADVERTISERS MEDIA: Ads + Content AUDIENCES / USERS PRODUCT & SERVICES Targeting

Having the right context In previous media: In previous media: –professionalism, organizational norms, self- control Online: Online: –Production of specific content directly for advertising purposes: e.g. Demand Media, etc. –Need to control user-generated content: e.g. the new Technorati, Youtube video demotion, etc. Both in terms of the general environment and in terms of specific content…

Pricing Previous media: Exposure in terms of CPM Previous media: Exposure in terms of CPM Online: Online: –CPM still 38% –Performance: 58%  Cost per Click (CPC)  Cost per Action: lead … purchase

ADVERTISERS MEDIA: Ads + Content AUDIENCES / USERS PRODUCT & SERVICES Pricing

Funneling The most uncontrolable part: Branding Branding Tracking and Retargeting Tracking and Retargeting Yahoo! UK: “We know where users have been and we can tell where they're going” AOL: “For example, LeadBack tracks users who have visited your website but have not made a purchase. When those same users visit other sites on our network, LeadBack delivers your ads to them, driving them back to your site and increasing the likelihood of a sale.” Placing more customer activities in controllable environments: The mobile internet Placing more customer activities in controllable environments: The mobile internet

Consequences Collecting Information: A requires increasing information from individuals. Collecting Information: A requires increasing information from individuals. Metrics: A is not comfortable with phenomena that cannot be easily controlled, measured and reduced to numbers. Metrics: A is not comfortable with phenomena that cannot be easily controlled, measured and reduced to numbers. Targeting: A tries to move to the form of a transaction between advertisers and individuals, leaving third parties as accesorial. Targeting: A tries to move to the form of a transaction between advertisers and individuals, leaving third parties as accesorial.

Consequences Generating the right context: A prefers certain environments and shapes content. Generating the right context: A prefers certain environments and shapes content. Pricing: A tries to reduce its risk by asking others to assume it. Pricing: A tries to reduce its risk by asking others to assume it. Funneling: A tries to be more intensive and more extended. Funneling: A tries to be more intensive and more extended.

Consequences Privacy: Playing cat and mouse (?) Content: De-intermediation (?) Structure: Advertising as steroids (?)

The online content layer… Gift Advertising Pay

Mapping Online Advertising: From Anxiety to Method Fernando Bermejo Fellow, Berkman Center for Internet & Society, Harvard University January 12th, 2010