It's the first trial of what some hope will become the online ad industry's long-promised self-policing system designed to stave off the growing forces for regulation in Washington, as well as give consumers more control over how they are targeted by advertisers.

The system, deployed by a start-up called Better Advertising, will place an icon in the upper right-hand corner of the ads that looks like a cross between an eye and power button called the "power eye." Consumers who mouse over the icon will get a view of all the data that was used to target the ad, as well as the option to opt-out of future targeting by those companies. The system is one of several competing to get the endorsement of a coalition of organizations representing the ad industry, as well as the Council of Better Business Bureaus, which has been tasked by the industry and regulators to come up with a system of disclosure for consumers. Several online ad vendors also have proposals before the organization, but executives close to the process say Better Advertising, founded by former About.com chief Scott Meyer, is close to winning the deal. Better Advertising's system has been endorsed by units of all the major ad holding companies, WPP, Havas, Publicis Groupe, Omnicom Group and Interpublic Group of Cos. Those rolling out the system this week include Interpublic's audience-buying platform Cadreon, Publicis' Vivaki and WPP's MEC Interaction. "Ultimately the data belongs to the consumer -- we are being allowed to use it," said John Montgomery, chief operating officer of Group M Interaction, the digital-buying unit of ad giant WPP. "If the consumer is uncomfortable, then they will not allow it to be used that way."

Opting out
Many of the largest web publishers such as Yahoo and Google, data providers like BlueKai, and ad networks like Audience Science currently allow consumers to opt out of targeting. But those require consumers to continually opt out on many sites and the industry has been seeking a solution to allow consumers to opt out of the ad itself, wherever they happen to encounter it on the web. "This is the first to provide consumer notice and a compliance service that is independent and works across platform," Mr. Meyer said. Part of that is a subtle PR effort for online advertisers: the term "behavioral targeting," in use since late last decade, is getting a makeover as the softer, gentler "interest-based" advertising, terminology they hope will sound less sinister. The system will also provide advertises with a new kind of feedback mechanism from consumers. While today they measure effectiveness of ads by the rate at which people click or interact with them, soon they will also get data on how many people found the ad objectionable enough that they decided to opt out of the targeting behind it. Consumers won't be able to opt out of the ads, mind you, just the targeting. But the opt-out will give marketers a new view into how their ads -- and their brands -- are perceived. The prevailing hypothesis is that greater transparency will lead to greater trust among consumers. But even the most enthusiastic supporters of the project also see risk. "If people start to opt out it makes our targeting less effective and it becomes more challenging to sell to people," said Steve Governale, executive director-digital marketing at AT&T. "But, long-term, transparency can only do us good."

Behavioral data
Mr. Governale said the icon would apply to AT&T's ads selling products such as mobile phones, where third-party behavioral data is used. AT&T's brand ads -- "more bars in more places," for example -- don't generally use behavioral data. The self-regulatory system will only apply to ads that use data from third parties; a brand ad aimed generally at readers of a website won't apply, nor will it apply to publishers using their own data. About 12% to 15% of online-display dollars go to ads that employ third-party targeting data, according to Kantar Media, and a recent Ponemon Institute survey of 90 marketers said they're spending 75% less than they would on targeted ads due to privacy concerns. Execs say the brands themselves have been the silent hand pushing the issue, part out of fear of regulation and in part to forge more authentic connections with consumers. "It's definitely something that will differentiate us from the folks not doing it," said Brendan Moorcroft, CEO of Cadreon. Backed into a corner, the online ad industry doesn't have much of a choice. A privacy bill from Rep. Rick Boucher (D-VA) is likely to be introduced later this year, and the Federal Trade Commission has made it plain that the online ad business has a narrow window to show it can pull this off.  

7500+ campaigns for 1000+ referential clients since 2000. 1B+ monthly impressions on 3000+ sites. 35+ partnerships with major international networks. 60+ online media specialists. 10 offices in CEE, Germany and US. In other words, Httpool, a business started in Slovenia in 2000.

Audience targeting is under fire from consumers, advocacy groups and legislators. Advertisers are spending bigger bucks on targeted campaigns, but brands remain wary of rousing consumers’ ire and growth is limited because of uncertainty about rules and regulations that could be passed soon.

The benefits of targeting are clear, according to an online study of 500 agencies, publishers and advertisers by AudienceScience and DM2PRO. More than 60% of agencies were able to boost client display ad budgets because targeted ads are more effective, justifying greater dollars.

Publishers benefit, too, from higher ad prices, the ability to deliver better ROI for advertisers and selling more inventory.

And advertisers, in return for those higher CPMs, get ads delivered to the right audience at the right time.

Still, agencies, advertisers and publishers alike are concerned about the possibility of legislation in the area. Most are not in favor of government action; the majority of advertisers and publishers and about one-half of agencies believe the most effective way to protect consumer privacy is through industry self-regulation. Fewer than one-third of respondents thought Federal Trade Commission regulations would be better, and under 10% were impressed with the idea of congressional legislation. But respondents seem to be paying lip service to the idea of industry self-regulation. The plurality of agencies, publishers and advertisers were unfamiliar with the major Interactive Advertising Bureau’s “Data Usage and Control Primer” initiative, and many who did know about it were indifferent. What’s more, most said they did not have any plans to implement the IAB/NAI information icon designed for targeted campaigns. More than 70% of agencies said they would not implement it, either because they were unaware of the icon or disapproved of it, along with 65% of advertisers and 62% of publishers. As the online privacy bill of Rep. Rick Boucher (D-Va.) looms large, and critics in the advertising industry complain that it would stifle spending, many of the players are still not ready to take the plunge and self-regulate effectively.

I'm a big proponent of marketing measurement and careful analysis, but it's worth a cautionary tale as sometimes measurements can lead one astray. The more finely tuned your messages are to the interests of the buyers, the more they can cause analysis confusion if not approached correctly. The core of great B2B marketing communications is relevance. If your message is relevant to the audience you are communicating with, it will resonate, if not, no matter how well written it is, it will not resonate. However, the key to relevance is understanding the interests of each prospect so that a marketing message can be delivered accordingly.

Within your universe of prospects, there may be only a small percentage of them at any one time who are the precise buyer role and executive level, at the particular stage of the buying process that your marketing message ideally targets. However, many marketers fall into the temptation to broaden out their messaging to a larger universe in order to get an overall increased effect. Whereas this may seem like a good idea, as it increases the overall campaign results, it can have the unintended effect of alienating a large segment of your audience as we discussed recently in looking at the idea of neutral results in a marketing campaign.

Equally importantly, however, is the fact that a poorly targeted message can lead to highly inaccurate marketing measurements due to the overall effect of a larger population. For example, let’s look at two marketing messages, for comparison. Message one was highly relevant to VPs of Marketing at the Solution Discovery phase of their buying process (2% of your database), and achieved a stellar 30% response rate in that segment. Message two was relevant to Managers of IT at the Awareness and Education phase (10% of your database), but only achieved a 8% response rate in that segment.

For the sake of this example, let’s assume that the general population of your database, outside of the segment to which each message was relevant, responded equally poorly with a 1% response rate.

If this campaign was targeted to the entire database, you can see quickly how the results can show a counter-intuitive message. Message one, would show a 30% response rate in 2% of your database, and a 1% response rate in 98% of your database, for an overall response rate of just 1.58%.

Message two would show an 8% response rate in 10% of your database and a 1% response rate in 90% of your database for an overall response rate of 1.7%. If you look simply at the raw numbers, without diving deeper into the analysis, you can see how the final results will be misleading and will show the reverse of what is true. Clearly, it is the definition of the list, rather than the message success itself, that is causing these results to appear as they do.

Only by first looking at the targeting of your list, including both the fit of the individual, and the stage they are in their buying process, can you successfully show analytics that correctly reflect how effective each message was within that target psychographic or demographic segment. The results might be surprising.

“The rulebook of how display media is bought and sold here in Europe is slowly being ripped up. Automated channels are not only empowering publishers to better monetise non-premium invenotry but also helping to augment their reach. It’s the latter which is of real interest to progressive sell-side agents at present. The ability to access a mass of inventory can help publishers build out their current advertising options, and get access to new media buying spend.

I think niche publishers are in the best position to really take advantage of these new buying opportunites. Let’s take the example of the FT. They arguably have the best data on any financial audience in the UK – better than any agency, ad network or publisher. Let’s say that a direct advetiser or agency is planning a pan-euoprean camapaign aimed at a specific busines audience. The FT could easily meet the UK campaign objectives, but the agency or advertiser would have to look at buying inventory on European sites (quite an arduous task I’ve been told). Now if the FT had a dedicated exchange trading operation, its sales team could win more budget for the campaign. By buying inventory across the European exchanges the FT could augment its reach. It could theoretically target that European inventory against its own data or cookies bought from Exelate or BlueKai (although I hear that both don’t have any really qulaity data sets for Europe).

Augmenting reach might not be the only motivating factor for hiring specilaist exchange traders. Access to exchange inventory and third party data can help a publisher fill blind spots in its advertising offering. Let’s look at a publisher who might not have a strong offeirng in the highly lucrative auto vertical. They could conceivably buy media on auto-related sites throught the automated channels (Adx, RightMedia, Admeld, etc) and data from third parties. That publisher now has a new offering for advertisers (especially for free spending auto brands like Kia). Granted some of this invnetory wouldn’t be great for brand advertising. But with access to the same inventory/data as the DSPs and ad nets there’s no reason why publsihers can’t send out their sales guys to win new business in verticals they’ve not been particularly strong in.

The lesson here for publsihers is to get to grips with the exchanges and ignore the traditional demarcation of display media buying. Soon everyone will be a seller and buyer anyway.