A response to an interview on NPR
Written by: Mathew Sweezey
Edited by: Alberta Deacon
I was listening to an NPR interview with a lady talking about the hyper-personalization of the Internet and the opposite effects it is having on self-discovery of content. The conversation was about how the use of dynamic technology is changing the Internet experience into a hyper-personal one which is tailored only to you, so that each person experiences the Internet in a different way. She was mentioning her fear that this would lead us into a “hall of mirrors” and would take away from the Internet’s true value of self-discovery. When I heard this, I said “Genius. This lady is on to something. “As I’ve thought about it over the past months, I’ve come to realize she is missing a few key points which will ensure the Internet will always be a place of self-discovery and not just a commercial reflection of your past activities.
Self-discovery is the backbone of the Internet. Consider the three largest websites: Google, Facebook, and Twitter. All are discovery tools, tools used by consumers to get a large amount of value from their online experience while advertisers are able to derive some value by being a part of the experience as well. The term “hall of mirrors” is referencing the converse scenario whereby advertisers are gaining more value from the consumer than the consumer is able to gain from their digital experience. For you to fully understand how this could play out, the following must be understood.
1) Cookie Based Technology
2) Programmatic Buying
Programmatic buying is a way for an advertiser to buy a digital ad in real time. Currently, we are seeing somewhere between 45%-65% of all online adverting being served up by programmatic technology because, with this technology, companies can buy one ad one time. This allows companies to get more value out of their ad because it is specifically targeted and requires less advertising to reach their core consumers. Because the technology allows for more value for the advertiser, it also cost more than it would to buy one which is not so hyper-targeted. A programmatic ad is more expensive than a traditional digital ad. How these ads are bought in real time is a bit complicated, but it is something you need to know to understand the concern of creating a “hall of mirrors.”
3)Real Time Bidding
This is a newer technology and sometimes is referred to as programmatic buying. The website you visit has an ad inventory on the webpage you are visiting. In the milliseconds before the page actually loads, it asks for bids on those ad placements. The website passes along some information about you such as your IP address, some affinity information, and other data to help the advertiser make better decisions as to whether they should bid on it or not. Then the advertisers bid on this in real time; the highest bidder’s advertisement is then shown to the person. This technology allows for things such as “re-targeting”. So the next time you wonder how Zappos can show you the last pair of shoes you looked at on every website for the next 3 days, this is the reason why. These pieces of technology are being used in just about everything online you can imagine, which has created the fear by some that with this amount of hyper-personalization, we will lose the ability for self discovery and only be able to see reflections of our past self. Just like a mirror.
The Impending Result
If this was to happen all the time, the Internet would become a commercial vehicle for businesses and no longer serve the needs of its users. Advertisers are aware of this being a possible outcome, which is why there are many measures being taken to ensure this doesn’t happen. For instance, there is the IAB. The Internet Advertising Board sets rules and regulations around these technologies and dictates what is allowed to happen with online advertising. Earlier when I talked about personal information about you dynamically driving the bidding process, the IAB limits what information can be shared. There is no PII (Personally Identifiable Information) allowed to be given in the bidding process for advertisements. This means your name, personal address, or any other information about you, which could be considered a breach of privacy, is not allowed to be shared. Yes, this term “Breach of Privacy” may mean different things to different people, but the point here is there is a governing body in place already to protect consumers.
Next take a look at self-regulation by the companies who have the most to lose should Internet adverting lose its value. Google has rolled out private browsing to ensure its users can get the experience they want online and protect themselves from the “hall of mirrors” should they choose to. You can right now opt into this if you would like; just go to “preferences“ on Google and turn it on. Every major Internet browser has added this feature into his or her functionality. Google also turned off the ability for companies to see your key word searches when you are logged into Google. This really sucks for marketers, because we no longer can see the search term you searched for before you landed on our website. Advertisers were using this search history to craft content to ensure Google would index it correctly, which lead to many companies producing horrible content. Google made this change to force companies to place more emphasis on the quality of the content that a website creates rather than just the key words people use to find it.
These two significant changes from Google are important to focus on. Why would a company that makes over $42 billion on Internet advertising each year put in place measures to make it harder for companies to advertise to their prospects? It’s simple: to prevent governmental regulation. Don’t forget we have a government run by people who often try to regulate communication channels to protect the consumers. The US government regulates the airwaves and Internet bandwidth; it regulated the telephone industry up to the 80’s, and still regulates the mail. Google understands if we fail to self regulate, the government will do it for us.
So if the system is regulating itself, why are crappy ads being servedwhich we don’t want to see? That’s simple. As my father says, “Not all doctor’s made A’s in school.” There are many marketers who have no clue they are actually damaging their reputation by misusing the advertising abilities they have though cookie based targeting and real time bidding. In a recent study I conducted, I found that out of 400 B2B buyers, 71% of them had been disappointed by the content they engaged with from a company. This is likely because the company focused on the conversion, rather than crafting a good experience for their consumer. The surprising part of the study was that 25% of them said they would never read content from that company again, and 64% said they are only slightly likely to ever read content from the company again. So it is easier to advertise to a specific consumer now, but also much easier to create negative experiences which adversely affect your marketing goals. This puts the focus back on companies to craft better experiences for consumers, and also emphasizes that the consumer is still in control.
Remember, online advertising is a combination of many things, only one of which is the targeting of the advertisement. The content being delivered via these vehicles is much more important than how and when the ad is served. The companies who know how to correctly use these tracking and real-time bidding technologies will be better able to serve up helpful and authentic content and provide a valuable service to their consumers. Those who fail to realize what their consumers want will create a “hall of mirrors” and eventually find themselves out of touch with their consumers. And out of business.
For the full “hall of mirrors” scenario to exist, one would have to assume there is a limited set of advertisers and experiences which you would be exposed to. The technologies we are talking about are open bid systems with very low barriers to entry. That means there are potentially thousands of advertisers in real time bidding on a single ad. The idea that the advertising options will be limited to a select few, creating a complete ”hall of mirrors,” is not true. As programmatic advertising becomes more prevalent, more companies will be using it, hence you are likely to see more varied content, not less. It is not correct to think that when companies are in direct competition for mindshare they will spend more money on the ad without being able to provide value on their spend. For them to generate value, they will have to ensure they are giving the consumer want they want so they will engage.
Really, it all boils down to the basic economics of marketplaces and producing value. If you look at it, you will see that providing a “hall of mirrors” to a consumer will not be profitable for companies or advertisers. In this situation, both businesses and consumers play a role. As the scope of the Internet grows, more places for a consumer to self-discover will exist. If consumers prefer to be in a “hall of mirrors,” they can choose to do so by the choices they make. If they desire a true self-discovery experience, companies will exist to provide this option as well. It will come down to which one can provide both the consumers and the businesses adverting on their site with most value.
So will we end up in a digital “hall of mirrors?” For a short time we may, but I do not expect it to last because it will not serve the consumers needs for self-discovery effectively or provide businesses with a high enough return on what is a more expensive adverting option. What I do expect to happen is the technology will be used by businesses to provide the highest value for their efforts, and this mean companies use it to accelerate self-discovery for consumers. Time will tell, but companies will have to find the correct equilibrium to satisfy both the consumers’ need for self-discovery, while maximizing their returns on advertising. It is more likely these technologies will provide a richer Internet experience for consumers in the long run than create a negative online experience.