Category Archives: BusinessWeek

Spokeo.com: This will freak out the privacy advocates


Spokeo.com is a new service showing how far online tracking has gone, offering up phone numbers, home values, wealth estimates and even maps of houses for anyone you wish to track.

While a lovely user interface, Spokeo is really nothing new. Back in June 2008 Danny Dover posted a list of all the personal data elements Google could conceivably track about you — from every web site you’ve ever visited via Google search results pages to your stock portfolio, credit card, personal address, video preferences, friends and colleagues, even the time patterns on your calendars. If you’re a 100-year-old dwarf who likes to sleep late and then shop for shoes for your elf friends, Google likely knows it. Direct marketers have used similar mailing lists and PRIZM-segmentation schemes for decades to guess whether you will respond to Christmas catalogs with waxed-cotton hunting jackets.

For the record, most online targeting does not involve personally identifiable information — cookie snippets of code placed on your computer tag your device, and by proxy what type of person you are, but cannot ascertain your name, address, or other deeply personal data. (Google can do this because you’ve likely uploaded that data somehow in its vast ecosystem of search, YouTube videos, Gmail preferences, etc.) Yet in 2010, driven by a series of privacy faux pas such as Google’s Street View debacle, privacy advocates grew more anxious about such rising mountains of data. The FTC is backing a Do Not Track proposal that would allow consumers to opt-out, but we think that “fix” won’t work — primarily because it will only drive ad revenue to big publishers, make all ads less relevant, and hurt the little sites that many people like to read. Besides, marketers will find new ways around tracking such as “digital fingerprinting” that can divine individual computers and mobile phones without the use of cookies or consent.

We wrote in Bloomberg Businessweek over the holidays:

If Do Not Track moves forward, you’ll still see banner ads everywhere. They’ll be untargeted, with more off-kilter offers because no data about your preferences will be deployed to give you a golf ad, say, if you’ve been reading a lot of golfing articles. You’ll feel better about your privacy, despite the fact that website marketers could never track you individually, but rather could make wild approximations of the type of person you are. Thousands of small websites may disappear as dollars flow to consolidated publishing centers.

Is this too extreme? Surely, hobbyists will continue to write blogs and build sites out of love. But with $8 billion or more moving to the ivory towers of mainstream content, you’ll have fewer choices. There will be less innovation online. The Mashables and Huffington Posts of tomorrow may never get off the ground. Add video and soon the Web will be like turning on TV—perhaps with a few major networks, just like the 1960s.

The information is out there. Rather than fight it, consumers may just have to learn to manage it.

Ad prices fall to new equilibrium, not end of the world


Eerie skies loom over the ad industry. On Monday in BusinessWeek we comment on the latest trend: How improvements in online ad targeting will draw marketing dollars irretrievably away from the old, big online publishers — putting major web sites in the same profit pinch now facing newspapers. It’s a bit of a paradox, really: the better advertising gets at reaching the right prospects with relevant offers, the more the people who live on advertising get squeezed.

But hold on. Is it really as dark as that? Bob Garfield, Ad Age columnist and author of the forthcoming The Chaos Scenario, thinks so. He counts down to doomsday for the ad industry in a recent column: Newspaper circulations have slumped 20% in two decades; The Rocky Mountain News is gone and the Seattle Post-Intelligencer went web-only; ad pages in magazines are off 22% in one year; heck, Playgirl magazine shut down. Garfield concludes that in the modern world of micro-media, consumer control and abundant, free content, the old workhorse Advertising — once required to drag media to your house — must be put out to pasture.

That’s wrong, because booms don’t go to infinity and busts don’t fall to zero. Humans constantly draw forecasts based on recent trends, and we almost always shoot too high or low. Just as your brother-in-law was certain you should take out a home equity loan in 2007 to invest in speculative real estate because property values always go up (uh-huh), now today everyone is crying that the old advertising models are dying forever. Yes, we’re in a horrible recession and in a huge change in consumer modality. Yes, people are spending 70% of their time online creating or sharing content, not reading web sites or watching professional videos. Yes, tools such as DVRs are allowing some to skip TV ads, and new broadband feeds from the internet may pull eyeballs away from 30-second spots on CBS.

But what if we land at a media duality?

We think the shifts will continue but eventually reset, with an emergent human behavior that is a media duality — watching the big screen passively while also typing on an iPhone. Reading a magazine with ads while scanning news quickly on a web browser. Humans have always wanted to create (see: arrowheads) and at the same time watch theater (see: campfire). Consumers have always longed to get something for free, and the 5 hours and 9 minutes they spend daily with live television is still a free temptation, supported by third-party advertising.

For a look at the future, observe teenagers watching TV. They use companion devices — cell phones, laptops, game systems — to comment or type or play while the larger images wash over them. Sometimes, this means the audience is tuning out. But often, they are engaged and sharing the experience more deeply with friends.

Advertising has always had problems. John Wanamaker commented in the 1800s that half of the money he spends — oh, you know the quote. A recent 2007 MRI study found that more than 50% of the time consumers aren’t paying attention to any ads at all. Yet advertising is still a good deal — a minor interruption for consumers in exchange for lots of free content, a careful investment for marketers in exchange for responses that build a business. The price of ads is falling. But not the sky, at least not yet.

Photo: Cenci Goepel and Jens Warnecke of the Lightmark Project.

Our conversation with Robert Scoble on pay-per-post


We had some fun today riffing in BusinessWeek on the moral perils of pay-per-post blogging — you know, where an advertiser pays a blogger to write about the advertiser’s own products. A lot of bloggers see no problem with this, although we think the conflict of interest is obvious.

Pay per post goes beyond advertorial to actually paying a writer to forge an opinion. Traditional journalists are forbidden from this practice; the restaurant reviewer for The New York Times pays for her own meal, and if she were ever caught taking money from a restaurant she would be fired. The tradition goes beyond journalism to most major corporations too, which prohibit gifts above certain sizes and are clear that senior executives must avoid even the appearance of conflicts of interest.

What does Scoble think?

While researching our BusinessWeek viewpoint, we were delighted to find that uber-blogger Robert Scoble feels the same way. Yes, Scoble takes money from a major hard drive manufacturer — but he considers that an advertising sponsorship clearly related to his technical expertise.

Here’s what he told us in a late-night phone interview:

“Let’s say a whole bunch of advertisers came in and started doing this and getting bloggers to do it. All of a sudden you’re seeing a lot of ads,” Scoble said. “Blogging started as a pushback against committee-based marketing. The danger is you’ll see a lot more ads on blogs, like listening to talk radio … but it’s also the selling of the opinion. What I really liked about blogs initially was I was getting unfettered opinion from people, and now I have to filter opinions. That adds a level of complexity to reading blogs that hasn’t been there before, and it will retard their popularity.”

Reputations are not just for journalists, people.

Why is all this so important? If you blog, you are not a journalist — so who cares, right? Because allowing even the perception that someone can influence your opinion is inefficient — for bloggers, journalists, corporations, and government (see: Illinois Senate seat opening). There is nothing wrong with taking money to run an ad. But if your intended reader or constituent or client thinks your mind is being bought, that recipient will think less of your opinions. In the long run this erodes trust in you, trust in the advertiser, and may limit future, larger business opportunities.

The fact that many bloggers see no problem with taking payments to forge opinions is frankly a sign of the immaturity of the blogging channel. As Dirk Singer at UK public-relations shop Cow told us, paid posts only create the perception that an advertiser is buying word of mouth — but the intent is transparent, and readers will see through it.

The larger risk is the entire communication channel of blogging may be sullied. There is a historical precedent for this: Telemarketing. Once upon a time marketers spent millions calling consumers over the phone trying to sell them products, in essence “monetizing” the phone networks. Consumers rebelled, signed up for Do Not Call lists, and today telemarketing is an almost dead channel with diminishing returns. What happens when every mind online has a for-sale sign, and pushes offers onto their readers?

Scoble said it best: “The brands that protect their credibility and authenticity go up and the ones that don’t go down. This world moves so fast, if you get caught selling out your readers you will get exposed and derided and you’ll be less for it.”

If group intelligence works, why do we get Rick Astley?

Spend any time on the internet and you may get Rickrolled, a little trick where you click on a link that you think will take you to something meaningful and instead get a cloying 1987 pop music video. This silliness is a form of internet meme, or an idea that spreads rapidly from person to person with no clear motive or source.

We began wondering how such group consciousness takes off after being Rickrolled on the consulting blog of Mark Pesce, a genius who has forecasted changes in human intelligence resulting from our internetworked behavior. (In a clever twist, above, Mark fakes with Rick Astley, then shows photos of ALL the people he is connected to online, including us!) Mark notes that 11 million years of evolution have given humans big brains, but the “software” that allows us to use our tools typically lags generations behind the “hardware.” For instance, we had the intellect to develop civilizations for thousands of generations … so why are roads and public water and printing presses such recent inventions?

Mark makes this point because today we are witnessing a new form of tools, a hyperconnectivity that puts cell phone networks in the hands of more than 3 billion people. Each day the business and tech press writes about “breakthroughs” in technology, marginal increases in tool use such as Facebook or the iPhone or Twitter, but the real innovation of our new networks is yet to be discovered — and may take generations.

The trippiest idea may be that vast groups of people merge into a higher form of collective intelligence, a hive mind that can predict future outcomes. We riffed on this a bit today in BusinessWeek, and think it has applications for both human governance and — at a tactical level — predicting marketing outcomes. Companies such as Google and Yahoo have run prediction markets to ask employees to place bets on which new products will succeed. Microsoft has asked its employees to bet when software will be ready for testing, or even when bugs will be found and fixed.

Prediction markets work because groups of people, when they bet for personal gain, make tiny judgments that average out to clear foresight about the future. Ask 100 people how many marbles are in a jar, and the average of all guesses will be close to reality. Collective bets could predict future scenarios. Will the bailout bill fix the economy? Will your next marketing initiative succeed or fail? Rather than using focus groups or executive judgment, the best source may be to ask an entire marketplace. You’ll either get a new form of brilliant intelligence, or a link to a silly Rick Astley video.

Prediction markets do have a major logic flaw, as noted by our Twitter colleague Bud Gibson. If such markets really can predict the future, observers will note this … and then try to change the future itself. If McCain’s camp sees Obama’s odds of success are pulling ahead, does this mean McCain is more likely to make aggressive moves to try to regain his momentum? The most interesting thing about future predictions is that if we can really do it, we might not like the future we see.

If you are interested in prediction markets, here are a few worth exploring:

Hollywood Stock Exchange — which movies will succeed at the box office?
Iowa Electronic Markets — real-money futures on who will win the U.S. presidency. Don’t miss the latest McCain vs. Obama “winner take all” prediction graph or detailed price chart.
Intrade — predictions on elections, current events, science and technology.
The Popular Science Predictions Exchange — bets on when technology gadgets will do this or that.
The now-defunct Policy Analysis Market, an attempt by the U.S. government to use group market intelligence to predict when bad things might happen around the world. The concept was quashed following controversy over allowing people to bet on when terrorism might strike or world leaders would be assassinated.

Google to consumers: Please don’t shut the window

The sky isn’t falling on advertising. At least, not yet.

But as our piece today in BusinessWeek points out, there are serious challenges ahead for Google, internet advertisers, and anyone really who is trying to market in this world of changing media. The challenges come down to three:

1. Accelerated channel fragmentation.
A lot has been written about this, ever since Al Ries and Jack Trout mentioned in the 1981 book Positioning that someday there might be scores of TV channels. Every forecaster has gotten it wrong; the trend has constantly moved faster than expected until Chris Anderson simply called it the Long Tail — where millions of niche content-sharing nodes replace traditional mass media. And that makes reaching the masses with advertising very difficult.

2. Changing customer modality.
Teens and young adults are morphing from passive content recipients into active creators — writing blogs, texting on Twitter, uploading photos, socializing on Facebook. Every hour spent immersed in socialization and content sharing is time spent in a “new mode” that shuts advertisers out. This trend is important for marketers to watch, because people take their media habits with them as they age. Senior citizens are heavy TV viewers, because TV was the medium of choice in the 1960s and 1970s. The average age of video gamers is now in the low 30s, because this demo learned to love video games back in the late 1980s when they were teens. Today, 35% of all teen girls blog and 54% have posted photos online. As today’s emerging generation learns to create, and not just watch, media, advertisers will face continued difficulty in getting their attention.

3. A reduction in visual inventory.
Simply put, cell phone screens are smaller than PC screens — and consumer adoption of mobile technology is about to tip big in the United States. Because tiny screens greatly reduce the “visual inventory” of ad space, tightened supply will create lower response rates for anyone who advertises online. This threatens the very nature of advertising itself, since most media has made money on the implicit bargain that we’ll give you content for almost free in exchange for you putting up with interruptive ads. What happens to magazines, newspapers, TV, radio and even major web sites if the preferred mode of receiving text and video becomes sexy glass screens only 2 inches wide? What happens to Google if it can only fit 2 ads, and not 10, on a search results page? In the curving universe of supply and demand, shrinking ad space means the costs of marketing will go up.

That’s the doom and gloom. Stay tuned in coming posts for steps we think advertisers should take today to get out of tomorrow’s shrinking ad box.

Yahoo yanks the wheels off your web site


Yahoo may soon make your web site irrelevant.

The search giant is percolating a new system that would lift entire blocks of copy and content from your web site to post in Yahoo results. This makes a lot of sense from a user’s perspective — think, if you were searching for movie reviews, wouldn’t it be nice to see all the top reviews about one film on one page? And this has been coming for a while. Search engines already lift titles and snippets of text and photos. Entire sections of your site popping into Google or Yahoo was bound to happen.

But from a marketer’s perspective, this is a disaster. Entire business models hinge on pulling people to sites. If people no longer need to click through to your site to read your content, then all your precious lead forms, phone numbers, designer-nuanced layout, usability-consulted pathways, even the ads on your site — it all goes away.

Yikes.

Stephen Baker over at BusinessWeek broke the story on March 13, after interviewing Prabhakar Raghavan, chief of research at Yahoo. Apparently Yahoo is cooking up new search results pages that will show blocks of information lifted from your web site, so that users can find what they want without having to click through to you.

Chris Brogan comments that while this may be beneficial to users — say, who could read all the car reviews they want on one single web page — it undercuts the entire web industry based on getting traffic. And even worse, it demolishes the third-party advertisers who buy space on all those web sites. Who in the world will want to buy into a Tremor Media or Advertising.com ad network of thousands of web sites, if users begin to ignore them to read everything on Yahoo?

Some may think this would undermine search engines’ overall utility to advertisers as well — but play it out all the way. If Yahoo makes organic clicks from its search results pages less likely, the only way to get traffic to your site from Yahoo will be to pay for PPC ads. And if the big advertisers who today are hot on vast ad networks find the long tail of hundreds of sites no longer performs, they’ll look to a portal — say, Yahoo — as the place to put ads. Now, only a cynic would suggest that Yahoo might consider diminishing organic clicks to other sites to build demand for its own ad inventory. Luckily, we are not that cynical.

It’s really just one more step in the evolution of users, not marketers, controlling content. RSS feeds already allow you to pull from blogs or news feeds you find interesting. Soon, you’ll get an instant RSS feed on any topic from a search engine.

Brogan notes that the only way for advertisers and companies to respond is to make their content portable, so that it can be passed easily along the web, perhaps with a few bread crumb trails leading back. Maybe the trick will be [click here for more information] to find [click here for lead form] ways to insert your real strategy [click here last chance!] into the message. We’ll see.

Why widgets are a bit like Frisbees


Tom Giles, technology editor over at BusinessWeek.com, has put together an intriguing debate on whether widgets are the future of online advertising. Widgets, as you know by now, are little online applications where web users can play around with graphics and data, and potentially pass them on to thousands of their friends. If a web banner ad and video game had offspring, it would look like a widget. Marketers are pretty excited about this stuff because all those young users inside MySpace and Facebook have been ignoring traditional banner ads, and widgets offer another way to grab their attention.

Some widgets, like the iLike music app, take off — but most do not. So, to play maverick, we gave BusinessWeek a column saying widgets are vastly overrated. Sure, it’s nice that your ad can now wiggle on a computer screen, but we caution, marketers don’t buy advertising — they buy customers. And the only way to acquire a customer is to reach someone when they are paying attention.

The trouble with widgets is they are a bit like a Frisbee being tossed around by young women at a park. You could put a corporate message on top of the plastic disk, but will those users really remember it? And if those women tossed you the Frisbee, would you pay attention to the Frisbee’s logo — or to the new friends you just made in the park? Consumers have different modes, and if you reach them when they are not receptive to a marketing message, you’ve just wasted an impression.

Widgets can work, but only if they meet four criteria. Check out our point of view in BusinessWeek.

The Hidden Persuaders 2.0


So BusinessWeek and The Economist write exactly the same cover headline a few months apart slamming Google for privacy concerns. Seems Google may have too much data on YOU.

Coincidence?

We find it intriguing that WSJ now reports Microsoft is using surreptitious PR to undercut Google’s proposed $3.1 billion acquisition of online ad giant DoubleClick. Apparently Microsoft used PR giant Burson-Marsteller to send emails to business writers in the U.S. and Europe asking them to focus on the privacy risks of Google’s expanding online ad models. We don’t know if BusinessWeek or The Economist got the pitch, but both ran the headline “Who’s Afraid of Google?”. Both articles raised the ghostly spectre of Google abusing YOUR personal data, and painted Google as an emerging dark monopoly of online advertising.

Sounds very similar to WSJ’s investigation of Microsoft’s PR:

In recent months, public-relations firm Burson-Marsteller pitched media outlets and Internet companies on what it said were the dangers of the deal, which would bolster Google’s already strong presence in online advertising. In the written pitches reviewed by The Wall Street Journal, Burson cites the deal as part of a larger discussion of “fair and free competition” in Internet-search and privacy rights of consumers…

Adrian Webb, head of corporate communications at (U.K.) Esure, said he was miffed when he received the email since he sensed a Google competitor was behind the pitch. ‘Burson-Marsteller acts for Microsoft — this has not been stated anywhere,’ in the email, Mr. Webb said.

Well, if true, bully for Microsoft. All is fair in love and war. Exactly 50 years ago Vance Packard first wrote about the psychology of getting people to want what they don’t want in his landmark book The Hidden Persuaders. With bloggers now picking up the Google risk story, it’s nice to see the hidden persuaders of PR are still in business.