Consider these visions of the future of advertising.
First, here is an extract from a recent speech by Google chief executive Eric Schmidt. Conjuring up a vision where every individual has the world's information at their fingertips, he talked about Google's role:
'We know where you are, we know all the things you like, and all of a sudden we can suggest "Well, there's an amazing play here, there's a great concert around the corner that you didn't know about ... ". We will know and help you figure out what to pay attention to right now.'
And here's a TechCrunch expert telling us why Goldman Sachs' recent $50bn (£31bn) valuation of Facebook is reasonable:
'How (Facebook) moves forward is similar to the way Google makes money, by putting adverts next to the things we are looking for. But Facebook does it differently, in that it learns about what we like and brings these ads to us without us realising it. In the future, a lot of these things will be coming towards us rather like someone becoming your personal concierge or butler. They already know what you want before you even ask for it.'
How much credence should we give to such predictions? Do they really paint a picture for the future of advertising, or are they pipe dreams? Huge investments, both in technology stocks and marketing strategies, hang on the answer.
Here's one perspective: there are clearly big opportunities in new areas such as location-based information services, but the vision also has potentially disastrous pitfalls - and the brouhaha surrounding it could obscure more fruitful ways forward.
The opportunity is clear. New sources of customer data - about where we are, who we are talking to, and about what - plus real-time ad-serving technologies, are creating ways of delivering more relevant advertising. The pitfalls appear when we inspect the assumptions behind many of these new services.
In the past, marketers' approach to customer data was to gather information about the customer, usually without their explicit knowledge or permission, process it in a back room somewhere and use the results to serve up a marketing action. The customer was oblivious to the link between initial data-gathering and the resulting action, but there were safeguards, rules and limits in place to make it acceptable, if sometimes irritating.
Today, technologies are breaking these boundaries. People are crossing all sorts of lines, often without realising it or even being clear what these lines are. The result is confusion and uncertainty, misunderstandings and many potential conflicts, particularly in three crucial areas: privacy, relationship and value.
Take privacy. Will consumers be happy with a future of ubiquitous, pervasive surveillance and stalking, where every place they go and every online conversation they have is monitored and fed to back-room real-time ad servers? Opinion polls say 'No' (research last month by the UK's Information Commissioner reported that 80% of people are concerned about how organisations collect and hold their personal information online). Regulators in the US and Europe are crawling all over the issue.
The real issue in this debate, however, is not the details of 'the rules' but the nature of the process. It is becoming clear that, ultimately, privacy is a personal setting. The information you feel comfortable sharing depends entirely on the context, what you are trying to achieve and your relationship with the other party.
That means workable privacy isn't possible without an input - the active involvement of the individual. Privacy is not just a technical data issue. It is a relationship issue. Any process that simply uses information 'about' the individual behind the individual's back, risks breaching privacy.
This is highlighted in the TechCrunch expert's talk of ad-serving as a concierge service delivering what you want without you even realising it. A concierge is employed by an individual to do that individual's bidding. TechCrunch's 'concierge' is a spy paid by someone else to do someone else's bidding. TechCrunch has flipped the relationship. Whether the resulting message is 'relevant' or not, the process undermines trust. (CRM visionaries were touting the same concierge idea 20 years ago. Consumers opted out on a massive scale as soon as they were given the choice.)
The really big question, however, is whether this touted future of consumer surveillance and stalking will actually deliver hoped-for relevance, response rates and marketing efficiencies. The answer is almost certainly no. This is a zombie idea: it's been killed many times before, but it just keeps on coming back, in a new context. It's the search for a magic bullet of proxy data that will deliver the perfectly relevant marketing communication.
Know the unknowable
Martin Hayward, former director of strategy and futures at dunnhumby, highlights this quest in a new Royal Mail white paper.* It's been going on for decades, he points out. First, geo-demographic data (what you earn, your age and sex, where you live) was going to do the trick. Then 'psychographics'. Then transaction and interaction histories. Behavioural targeting is no different. Why?
Because only one entity can ever know what the perfectly relevant ad looks like - and that is the customer. Only the customer knows his current context and purposes. Only the customer knows what his plans and intentions are. Clever as today's tracking technologies are, they can't track these, because they still live inside the customer's head.
Data about where the individual happens to be, or a snippet of a conversation, is just another proxy, the only real contribution of which is to reduce the errors and waste of guesswork. The dream may be to deliver concierge-style relevance, but the reality will probably look more like intrusion without value.
It doesn't have to be this way. Technology faces both ways. Mozilla, for example, is beta-testing 'do not track' technology for its Firefox browser. Steve Case, co-founder of AOL, has invested in a venture called Personal, which has a mission to 'help users prevent companies tracking, compiling and selling digital information without the consumer's consent'. Jeremie Miller, who wrote the code for most of the world's instant messaging services, has launched an open-source service designed to empower internet users to track their own activities and put this information 'firmly in their possession' - including apps that help them use this data for their own purposes.
In other words, while new technologies are making previously unimaginable levels of surveillance and stalking possible, they are also making it possible for individuals to specify what privacy looks like to them, and to volunteer information about what they really want, when they want it. But they won't do this if they don't trust the person receiving this information, and if they fail to benefit from the exchange.
Right now, there's a Silicon Valley bandwagon pushing a vision of marketing's future in terms of real-time ad-serving driven by customer surveillance - but it's more to do with hyping stock prices than reinventing marketing. Real-time comms-serving is definitely a part of the future, but the surveillance paradigm with which it is associated is a quagmire, and the bandwagon is leading brands away from the trust-based, information-sharing relationships they should be building with customers.
Brands have a choice. They can inhale Silicon Valley's exhaust fumes and gain a few response-rate uplifts, or they can do what successful brands always do: focus on building consumer trust and value. Which vision is the more compelling?
Alan Mitchell is a respected author and a founder of Ctrl-Shift and Mydex.
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