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Is Google giving you an instruction manual to ruin their entire business?

Posted January 26th, 2011 by Andrew Goodman

Lately, consumers have become dimly aware of behavioral tracking online, to the point where government authorities have begun floating the idea of Do Not Track legislation. Intuitively, it seems to make sense, until you examine all sides of the issue.

Balanced out against other forms of advertising, and assuming a certain degree of common sense about privacy policies, consumer concern is unfounded. Would you rather live in a world of even more untargeted advertising? How about a world where a central government agency decides what the private sector is allowed to say to people?

‘Hidden persuaders’ mumbo-jumbo

There is still a lingering, superstitious belief that advertising is magically subliminal and can make people bend to its will. That also explains do-gooders gravitating from the sensible “don’t advertise smokes to minors” to the much more controversial “don’t tie happiness (toys) to high calorie meals aimed at children.”

Ultimately, there is a line we all draw, and ideally, in a free society we collectively arrive at a balance on such issues.

In the online world we have moved a long way from the outmoded belief that advertising is sinister, insidious, and akin to mind control. The reason is mainly data. Data that provides better fits with willing and interested customers.

Like all forms of advertising online, the current market equilibriums support better targeting and less annoyance. Advertisers who are both more relevant and who are willing to bid more will find better fits with more people who actually want to hear from them. That’s the lesser of many evils.

Another reason that online targeting is good, though, is permission. It’s annoying to see laxative ads on TV, so you’d rather mute them, or pay for a way to make them go away. It’s annoying to keep getting seed catalogs when you no longer want them, yet it’s a pain to cancel them.

Online, ideally there would be a way to opt out of certain kinds of ads — like those that target you based on previous behavior or personalized qualities you’ve exhibited while surfing the web — that you simply dislike for some reason.

You can’t easily opt out of all advertising online, for the same reason that it’s free to use the Google Search engine, Gmail, and to read all that free content. With no ad revenues, much of what you get online would disappear. Jimmy Wales’ megaproject uses a combination of volunteer labor and a tin cup donations approach, for those who prefer that route.

Anyway — getting ahead of potential Do Not Track legislation was Google’s goal when they recently announced an enhanced form of opt-out management that comes in the form of Chrome browser settings, with other browsers being included in future releases.

But what exactly does Do Not Track mean? Is it going to go farther than this? Well, hopefully not, in Google’s opinion. And in the opinion of 99.9% of Google advertisers.

Is DoubleClick’s cookie spyware?

The idea here is that you can opt out of “behavioral” forms of display advertising. How these work (with my adjective added) is essentially based on an “aggressive cookie” that maintains a file of websites that a user has visited that also contain that network’s cookie. For large networks like DoubleClick, the information about your behavior becomes that much more complete.

While there is no official definition of spyware, there is something of a groundswell of consumer distaste for these kinds of cookies. Some experts do not hesitate to call DoubleClick’s cookie spyware.

For some regulators and consumers, the concept of Do Not Track could conceivably become much more far-reaching, based on how little they understand the issues and tradeoffs.

By providing consumers with instructions for opting out of “tracking,” Has Google quietly left the door open for savvy consumers to undermine their whole business?

Nope.

What would undermine Google’s whole business is if consumers were able to opt out of the AdWords and Google Analytics (and other) forms of highly accurate ad tracking that allows advertisers to measure goals.

Google’s founders and top executives have long trotted out the Google AdWords system (and similar technologies) as the answer to the longtime advertising dilemma of “I know half my advertising isn’t working, I just don’t know which half.” Google is performance marketing.

If Google isn’t providing advertisers with performance marketing of a certain type, then it goes from a hugely profitable company to one that incurs staggering losses every year. Little wonder that it has hedged its bets aggressively, not only branching into local listings but touting less measurable forms of reach-based display advertising strategies.

I asked Google to clarify what their current opt-0ut management encompasses. Essentially, this type of tracking opt-out only refers to display ad networks and other forms of behavioral advertising and retargeting.

What has made the recent announcement worthy of mention is that Google is “enhancing” the opt-out decision so it won’t be lost anytime you clear cookies, change browser settings, etc. You’d use a plug-in to “hold” your opt-out preferences permanently.

This does not extend to all Google advertising cookies

Importantly, according to Google, this does not extend to all Google advertising cookies. Google replied: “No, for Google, it applies only to the Google DoubleClick cookie. But just to clarify, Google is not the only ad network that this affects. It also affects all members of the NAI who have opt-outs (which is to say, all of them). You’d have to check with each company if you wanted to know which of their cookies it applies to.”

Minor revenue impact

Combining the fact that behavioral advertising in the DoubleClick network makes up only a proportion of those ad revenues, with the fact that Google’s overall AdWords (and other) ad revenue streams currently dwarf DoubleClick’s, the fact that in these scenarios only 5-10% of users ever bother tinkering with their browser settings, and finally, the fact that such opt-outs don’t preclude revenue-generating ads from being served anyway (just likely lowers the average value to publishers of some of the ads), and the “instruction manual” Google has given to tracking-shy consumers amounts to a very minor revenue impact on the company.

Doomsday scenario

And yet the specter looms, as ever, that mass action by consumers or hard-line regulation could virtually wipe away large swaths of the digital advertising world. To simplify the argument somewhat, measuring online behavior and the performance of ads becomes extremely difficult without cookies. To date, the data loss faced by advertisers based on technical or cookie-blocking issues runs to around 10-15% of users — higher if you factor in many other forms of latency, collective buying decisions in the family, using multiple computers and devices, etc. If 99% of users were cookie-free, other solutions would have to be found, and those, too, could (conceivably) be banned. Here’s Google’s simple explanation of how to block cookies by default, etc.

Google, and the industry as a whole, have been fairly responsible about posting the type of information that would set online advertising back to the Stone Age. For the most part, the benefits of giving up some privacy have outweighed the drawbacks in consumers’ minds. But the slightly scary part for companies like Google — and most heavy online advertisers — is that a large part of the indifference has come from consumers simply not making a conscious choice about their privacy settings.

How likely is that to happen? It will happen if enough people get up on enough high horses to determine whether not just behavioral advertising, but all forms of online ad tracking, are as harmful as tobacco; or by contrast, a pro-and-con tug-of-war like we see with gas-guzzling high-emissions vehicles, junk food, and other “social harms.” Almost certainly, the legislation will be more draconian in Europe than in North America.



2 Responses to “Is Google giving you an instruction manual to ruin their entire business?”

  1. Dean says:

    It’s why I have always wondered why several of the giants are not more worried about the privacy issues we read about daily. They seem to almost feed it at times. Privacy issues are a threat to their business model because as you say, that 10% can turn into 50%, and that 50% can push the people in power to start looking at everything that makes online advertising tick.

    It should be a bigger part of their online PR and persona, in my opinion.

    Dean

  2. And I suppose the rampant “get rich quick!” copy is supposed to be subliminal as well.


 


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