Chapell & Associates

Friday, November 25, 2005

How Google Tamed Ads on the Wild, Wild Web

New York Times - November 20, 2005
Five years ago, Web advertisers were engaged in an ever-escalating competition to grab our attention. Monkeys that asked to be punched, pop-ups that spawned still more pop-ups, strobe effects that imparted temporary blindness - these were legal forms of assault....Today, Web advertisers by and large have put down their weapons and sworn off violence. They use indoor voices now. This is a remarkable change. Thank you, Google.

The Chapell View
By focusing on the effect of text-ads, Randall Stross has put together a very interesting analysis of the changes to online advertising in the last five years. His argument that this change depended first and foremost on Google's entrance to the market is compelling: as he notes, there were those using text-ads before Google, but not in the way we've come to expect today.

One of the greatest parts of the change from "monkeys that asked to be punched" to the ubiquitous four-line ad next to search results is the benefit to the consumer. And with this has come a change in marketing perspectives. Stross quotes Brian McAndrews, the chief executive of the online ad agency Avenue A as saying in 2001, "Just because something is intrusive doesn't mean it's bad."

Strikingly, Mr. McAndrews, now heading up aQuantive, is of a different mind these days. "The key is no longer intrusiveness; today the mantra is relevance," he said recently, according to Stross.

There are, I expect, more reasons for the increased focus on relevance and consumer control than just Google. But whatever their role, we're all reaping the rewards today. Online ad spending hit record highs this year (and quarter), and consumers no longer have to deal with quite so many intrusive - or even malicious - forms of advertising. In giving consumers an actual value proposition, we've found ourselves a far more sustainable business model.
posted by Isaac on Friday, November 25, 2005 | |

Thursday, November 17, 2005

Consumers Still Don't Trust the Internet

iMedia Connection - November 14, 2005 A Chapell Article
It just keeps coming, doesn't it? Consumers are increasingly voicing their concerns about online commerce and marketing, and every month or two brings more data about how they are responding to security and privacy concerns. Now, a recent Consumer Reports WebWatch study presents mixed news about how willing consumers are to buy things online.(more).

posted by Isaac on Thursday, November 17, 2005 | |

Saturday, November 12, 2005

Enlisting Cellphone Signals to Fight Road Gridlock

New York Times - November 11, 2005
Some states prohibit drivers from talking on hand-held cellphones lest they become distracted, slow down traffic, or worse, cause an accident. Others are finding that cellphones and driving may not be so bad together. Several state transportation agencies, including those in Maryland and Virginia, are starting to test technology that allows them to monitor traffic by tracking cellphone signals and mapping them against road grids. The technology underlines how readily cellphones can become tracking devices for private companies, law enforcement and government agencies - a development that deeply troubles privacy advocates. These new traffic systems can monitor several hundred thousand cellphones at once. The phones need only be turned on, not necessarily be in use. And advanced software now makes it possible to discern whether a signal is coming from, say, a moving car or a pedestrian. State officials say that the systems will monitor large clusters of phones, not individual ones, and that the benefits could be substantial. By providing a constantly updated picture of traffic flow across thousands of miles of highways, they maintain, cellphone tracking can help transportation agencies spot congestion and divert drivers with radio alerts or updated electronic road signs.

The Chapell View
There's a part of me that doesn't want to worry about this - after all, the Government tends to be pretty inept when it comes to storing and gather large amounts of data. And it's not abundantly clear to me how the capture of this data is going to benefit citizens and aide traffic reports anymore than say "Dave in the News 12 Chopper" already helps.

And the only way for someone to opt-out of this system is to turn their cell phone off, which kind of defeats the purpose for having a cell phone.

I'd be curious if this program would survice a challenge based upon the Telecommunications Act.

I grew up watching some of the 80's Action/Sci Fi flicks, many of which contemplated a future where nobody would get off the public grid. It's amazing how prophetic these movies have been - even the cheesy Aaahnold Shwartzenegger flicks.

It's bad enough that NYC subway riders are at risk of having their bags searched upon entry. What's next - a speeding ticket that's billed right to your cell phone? Land of the Free - not so fast...
posted by Alan on Saturday, November 12, 2005 | |

Friday, November 11, 2005

Search Experts: Engines Face Prospect of Privacy Backlash

MediaPost - November 08, 2005
The major search engines are currently considering how to use the reams of demographic and psychographic data they're able to collect, but consumers might push back unless the search engines also address privacy concerns, search industry experts at Ad:Tech in New York said Monday.

The Chapell View
It's good that some have taken note of the search engines using what really boils down to behavioral targeting - using information about users and their past behaviors (in this case, the searches they've conducted) to determine ad placement in search results. In some cases, the search engines have done more than just consider such an idea - MSN, Yahoo! and AOL have all started using such marketing on a small scale recently.

For the most part, these moves have been somewhat under the radar, and there haven't been any major concerns raised over privacy issues. I think that's probably right: my inclination is to see the moves towards behavioral targeting in the search space as both unsurprising and largely benign. There seems little reason to take umbrage over the use of BT - which can be (and often is) good for both marketers and consumers.

That being said, I'm glad the issue of privacy is being discussed in the context of online profiling and search. Search guru John Battelle is quoted as saying "To get to the point where people are giving up this kind of information...we need to be able to see this information" and he's right. One of the concepts we talk about as privacy professionals is the "right of Access" to one's information. While it would no doubt take resources for search engines (and any type of DB marketer, for that matter) to provide individual users with some access to the info that's being collected on them, it might make certain users more willing to allow the search engines to collect that information.

Also, let's keep in mind that there's a cottage industry of what I will refer to as "anti-marketing technologies" which are being developed. "Anti-marketing technology" is probably a poor choice of words, but I am referring to things like spam-blockers, pop-up blockers, and anti-spyware (Adware) software programs. What most of these technologies have in common are their ability to provide the user with control over the operation of certain marketing channels. As this industry grows, so will their ability to determine which marketing technologies and processes are being used on a user's computer. If you were running a search engine, would you want a third party telling your user what you're doing with user search terms, or would you rather do it yourself?
posted by Alan on Friday, November 11, 2005 | |

Thursday, November 10, 2005

Survey Shows Traditional Marketing Methods Win Out Over Newer Techniques

PR Newswire - November 10, 2005
A new national survey of the general public, Fortune 1000 business executives and congressional staffers, developed jointly by Harris InteractiveR and the Public Relations Society of America (PRSA) Foundation, gauges these groups' attitudes and opinions toward some current marketing practices....Majorities of respondents within each group think traditional methods such as paid advertising (74% to 93%), corporate sponsorships (70% to 89%) and paid spokespersons (64% to 87%) are acceptable practices. Newer methods such as paying private citizens to promote products (45% to 57%), Internet pop-up ads (16% to 30%) and text messaging (17% to 23%) are seen as acceptable marketing practices by fewer respondents.

The Chapell View
It's been pretty well-established by now that consumers dislike pop-ups, and this survey certainly supports that. What we found to be of particular interest are the results pertaining to "paying private citizens to promote products", which presumably refer to the word of mouth marketing concept utilized by some organizations. We believe there are potential concerns about word of mouth marketing and are encouraged that word of mouth marketers have begun to establish a set of best practices and guidelines.

By and large, the survey shows consumers overwhelmingly accepting "paid advertising" as acceptable, but does this include all types of internet ads? I would have been interested in seeing how contextual, banner and behaviorally targeted ads fit into the picture. By focusing on generally disliked (pop-ups) or really nascent (text message based) forms of advertising, I think we're missing out on part of the picture here.

For example, the study reports that 30 % of business executives see pop-ups as acceptable forms of advertising, while only 16 % of consumers feel the same. I'd look forward to seeing if the gulf in perceptions between business leaders and consumers extends to other forms of online advertising as well.
posted by Isaac on Thursday, November 10, 2005 | |

Friday, November 04, 2005

Parties Split on Data-Protection Bill

Washington Post - November 4, 2005
House Democrats and Republicans split sharply yesterday over how to best protect consumers' personal data, as legislation to curb the persistent scourge of identity theft and fraud began to move on a fast track on Capitol Hill. In a 13 to 8 vote along party lines, a subcommittee of the House Energy and Commerce Committee approved a bill that would require information brokers to submit plans for safeguarding private data to the Federal Trade Commission for monitoring and review.

The Chapell View
Right now, we often hear about data breaches because of California's SB 1386, which requires all companies that do business the in state to disclose -- at least to residents of California -- when stored consumer information has been potentially compromised.
The California law uses a pretty broad determination for when notification is required. Companies need to disclose the data breach whether or not there is any demonstrated harm to consumers. The breach itself is enough to warrant disclosure. And this is good: when companies are required to declare data breaches, then they have incentive not to allow them to happen - so the California law, at least in theory, should be preventative (as companies won't want to be shamed by a data breach) as well as helpful to consumers.

It probably makes sense to enact federal legislation, since the California law doesn't cover all companies. But the proposed legislation in the house isn't exactly ideal.

It does, to its credit, require companies to alert consumers when their data has been compromised. But only when it's truly compromised, or when there's a "significant risk" of this having happened. We can probably expect this to be only when a company knows that a specific consumer has, in fact, had their sensitive information breached.

One of the positive aspects of the California law is that it requires companies to inform the public in general when a specific breach occurs. The proposed Federal bill would seem to require disclosure only when there's "significant risk" of identity theft or fraud. I'm not convinced that this standard is in the best interests of consumers.
posted by Isaac on Friday, November 04, 2005 | |

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