Thursday, November 29, 2007

Interactive Audience Research & The Quest for Truth

These were the opening remarks I gave a few moments ago at the Interactive Advertising Bureau's first-ever Audience Measurement Leadership Forum. That even is taking place right now at the Marriott New York Hotel in midtown Manhattan.

I have spoken and written about growing up as the son of a market and media researcher. What I have never said publicly is that my life has been framed by market and media research. Today, for the first time, I will tell that story.

My father entered Temple University in Philadelphia in 1948, to pursue a degree in marketing – a brand new major at the school, and one that combined his interests in business, radio and that new invention, television.

It was a good choice for a Jewish boy from Northeast Philly, for media research was one of the few areas in white collar business that had been open to Jews. That was true even in the advertising agency business, which today we recall for its friendliness to minorities. Other than in research departments, that had not been the case: One historian who reviewed the 1931 edition of Who’s Who in Advertising found only 92 identifiably Jewish names among the 5,000 people listed.

My father’s first post-college job was at the Benson & Benson research company in Princeton, N.J., which had been founded by Larry Benson, previously the managing director of the Gallup Poll. At that time, Princeton was the Silicon Valley of research. Startup companies dotted Witherspoon and Nassau Streets, most of them, like Benson & Benson, founded by refugees from Gallup.Later, when I was fortunate enough to attend the university located in that town, my Dad, referring to his walk from the train station to his office, liked to say he had “passed through Princeton.” It was a not-so-subtle acknowledgement that in the 1950’s, there were precious few real opportunities for kids of his background to have passed through Princeton.

Of course, by that time, he’d moved from Philadelphia with his family to the New York area. He’d been hired by NBC in 1957 to do research on the public’s potential reaction to another forthcoming invention, color television. His wife – my mother – had started up a small company that trained interviewers to go out into the field and conduct survey research. Their eldest child – that would be me – had made pocket money during high school by conducting hundreds of these interviews. Among my more pungent memories is lugging a 20-pound contraption called a “tachistocope” around the richest and hilliest sections of Ridgewood, N.J., trying to find scotch drinkers over 50 willing to let me into their mansions to show split-second flash images of different actors trying out for the title role in the Ambassador Scotch print advertising campaign.

Asking Questions

I learned that I liked asking questions for a living. I also learned that there is nothing more difficult than trying to find in a six block radius in Denville, N.J. a woman over 50 who is willing to test a vaginal deodorant. So I became a newspaper reporter, instead. Grilling Presidential candidates, I can attest, is much easier than filling the last gaps in a quota sample.

I mention this background because for much of the past 100 years, media and market researchers have been the business world’s most rugged, unflagging, and unfailing pioneers. Whether refugees from Germany, kids from the inner city, or emigrants from Asia, through the decades they have been driven by one goal: the quest for truth. What happened? What made it happen? What did they see? When? How did they react? Can we prove it? Can we repeat it? How are opinions shaped? Where do our preferences come from? Did it make a difference?

It is no exaggeration to say that these have been some of the most important questions asked – and provisionally answered – in public life during the past seven decades. Phrases that now are part of the fabric of everyday conversation originated in the classrooms and offices of researchers: “Personal influence…” “Public opinion…” “Opinion leader…” “Pollster…” “Survey said…"

It is also no exaggeration to say that the men and women behind such concepts were among the giants of American business and public life. Paul Lazarsfeld, Frank Stanton, Herta Herzog, Leo Bogart, Hadley Cantril, Art Nielsen, George Gallup, Elihu Katz – these were the people who pioneered audience research, invented media metering, forged modern politics, and shaped news and entertainment broadcasting. They even helped integrate the U.S. Armed Forces. Remarkable as it may seem, they walked the earth in our lifetimes.

Some of these pioneers still do walk this earth. And some of them are in this room. The technologies may change, but one thing remains constant: the researcher’s quest for truth.

Today, the opportunity to find truth in business and public life is greater than it ever has been. Interactive technologies are allowing us deeper and deeper access to peoples’ ideas, behaviors, and consumption patterns. We are able to combine sample-based research and census-based research to create a richer portrait of peoples’ lives than research scientists ever thought possible.

Research Startups

Entrepreneurs are taking advantage of these new opportunities. The research startups dotting the marketing and media landscape make the Witherspoon and Nassau Streets of Princeton in the 50’s look fallow indeed. comScore, Quantcast, Hitwise, Compete, M:Metrics, Omniture and scores of others have joined venerable firms like Nielsen to alter our understanding of social life.

Thanks to interactive technologies, media companies, too, have access to troves of information about the preferences, desires, and needs of their viewers, readers, and subscribers. They can deploy this information to make their news, entertainment, and advertising offerings more engaging and relevant to segments and sub-segments of their audience than ever before. Time Warner, Disney, Viacom, Conde Nast, Meredith are joining “newcomers” to the media business like Microsoft, and contributing to this deeper, richer, and more valuable picture of the why’s and what’s of consumer behavior.

These media and research companies, together with advertising agency and marketer research departments, are transforming the way the marketing and media ecosystem operates. Thanks to them, our portrait of society – a rendering that used to be painted with broad brushes – is now a pointillist painting.

Of course, with new technologies and the opportunities they unleash come new complexities. Last March, the Interactive Advertising Bureau hosted a Summit Meeting on Audience Measurement. Executives from comScore and Nielsen joined representatives from major advertising agencies, marketers, media companies, and media-marketing-and-advertising trade associations to chart the journey forward.

It was a significant gathering, because we all realized that we seek the same thing: to use the new emerging interactive technologies to bring us closer and closer to the truth about consumer behaviors.

IAB's Role

This conference is a direct result of that gathering. The IAB agreed then to take on a vital role: To demystify the metrics of interactive marketing. To help educate the marketplace about what works, why, when, and under what circumstances. To showcase the advances in audience research made by research firms, media companies, ad agencies, and marketing departments. To make this pointillist painting of human behavior even more refined.

This is a new role for the IAB. We join venerable groups in the marketing world, like the Advertising Research Foundation, the American Association of Advertising Agencies, the Magazine Publishers of America, and the Newspaper Association of America, in this activity – and happily so. Few matters in business today can be more important than shedding light on – and reaching agreement on – how we measure consumer behavior.

The people you will hear from today would make Frank Stanton and Paul Lazarsfeld proud. These contemporary research pioneers will describe for you the new ways they are looking at peoples’ media journeys. They will explain how they are bringing together methodologies to measure activities in different media. They will give you a sense of what’s coming next.

On behalf of the 450 members of the IAB, I thank all these pioneers for joining with us in advancing the science of audience research. I want to thank the IAB’s Research Council for helping to plan such a rich and provocative day. I want to thank all of you for taking time during a busy holiday season to pursue this quest for truth.

Saturday, November 17, 2007

Clompilers Unite! You Have Nothing to Lose Except Maybe Everything... or Vice Versa, Depending On How Good a Partner You Are (or Aren't)

Rob Norman -- CEO, Brit, renaissance marketeer... and now locutionist. At the IAB's Agency Summit last week, he loosed on the world a new, and in our world necessary, noun: clompiler.

Why necessary? Because there's nary a conversation in the marketing-media landscape these days that doesn't touch on the issue of co-opetition -- the increasing tendency in decentralizing industries for competitors in one arena to become collaborators in another. Yet there doesn't seem to be a good term for those that engage in co-opetition. "Co-opetitors" never did seem to cut it.

Enter Mr. Norman and his word: "clomplier." The Chief Executive of Group M Interaction defines it on his blog thusly: "A company which in its various guises is a client (cl), competitor (omp), and supplier (lier) to another company." For an example, I'd be remiss if I didn't refer you to Rob's site.

Mr. Norman describes himself as the only Brit capable of explaining the infield fly rule to his mother. I believe it.

Tuesday, November 13, 2007

Why Do-Not-Track Will Not Work

I love this Op-Ed piece in Business Week on the fatal flaws of the "do-not-track" proposal for interactive advertising and marketing. "Do-not-track" was proposed by a group self-styled "consumer advocates," and was much-discussed at the Federal Trade Commission's "Town Hall" on behavioral marketing two weeks ago. The proposal was riddled with ironies, not least of which was the group's recommendation that the Government start keeping lists of people -- by name -- who don't want anonymous surfing data utilized to improve the utility of online communications.

Christopher Wolf,
a litigation partner in the Washington office of the Proskauer Rose law firm and the chair of its Privacy & Data Security Practice Group, recognizes the irony -- and also the extremist nature of the proposal. Here's what he wrote in Business Week:

"This would take privacy law to a new level, where protection is given not only to private data (names, addresses, account numbers, etc.) but also to anonymous data (e.g., data collected through cookie technology), which would be legally regulated. The complexity and enforcement problems with a 'do not track' law are enormous. Advocates liken it to the 'do not call' rules that pertain to telemarketers, but only the names are similar. Compiling and applying a list of those who do not want tailored advertising will be a technological nightmare. Compliance, to the extent it can occur at all, will be costly. Ultimately, consumers will suffer through increased costs passed on to them, and opportunities for more useful consumer information will be diminished."

You have to hand it to the extremist groups. By co-opting the tenor and feel of the telemarketing "do not call" concept, they have made a complex, radical idea -- one that would dramatically curtail marketers' and media's current ability to engage in advertising, marketing research, and information and entertainment delivery -- seem simple and benign. Fortunately, the FTC seemed to recognize this at the Town Hall: Commissioners repeatedly queried the anti-consumerist advocates, "Where's the harm?," and were met not with current information, but hypotheses about the future.

The real harm, as Mr. Wolf shows, will be if access to information is shut down. Prices will rise, and consumer choice will diminish.

Sunday, November 11, 2007

Facebook's Grandfathers (& Myspace's, Too)

I like this piece in The Economist on Facebook's audacious new advertising plan -- and not just because it quotes me. Rather, the writer took seriously one of my long "there's nothing new under the sun" disquisitions that most of my friends and colleagues ignore. In this case, it's that today's social-networking and -marketing phenomenon is not at all novel. Rather, it derives from research done by two of the 20th Century's leading media theorists: Paul Lazarsfeld and Elihu Katz.

Lazarsfeld (pictured at right) was a famed emigre sociologist from Germany and Katz his student at Columbia University when they did the work that led to their pioneering 1955 book, Personal Influence. The book challenged a reigning theory of media influence: that mass media "work" directly, by injecting ideas into the minds of relatively isolated people. That notion was -- and still is -- almost reflexively accepted by anyone who has worked in or around media, marketing, and advertising. "Our programs and ads," we believe, "forge peoples' opinions." It is a tenet deeply-held by copywriters and anchormen alike.

Lazarsfeld and Katz showed that this "Magic Bullet Theory" was inaccurate. An earlier Lazarsfeld study had shown that only some 5 percent of Presidential voters had their opinions shaped directly by media messages. Together, the two scholars showed that media work more indirectly, through social influence. They identified a "two-step flow," by which media messages reinforced what people heard from others in one or another of their communities. These social influencers are, in the Lazarsfeld and Katz formulation, "opinion leaders."

Many of the assumptions that still drive modern marketing mavens were overturned 50 years ago by the two professors. Receiving a message does not imply responding to it, they showed. Moreover, top-down influence generally is fairly benign. People belong to numerous communities, and are influenced in different things by different opinion leaders. But just try telling that to a high-priced creative with a killer reel. It seems the world rediscovers personal influence every few years or so -- in the form of "word of mouth marketing," "brand advocacy," "guerrilla marketing," and "brand zealotry" -- only to forget it the next time a fabulous, award-winning ad campaign or a depressing, mud-slinging political campaign comes slamming down the airwaves.

The Facebook notion of defining the world's "social graph" -- "the network of connections and relationships between people on the service," in Facebook founder Mark Zuckerberg's phrase -- and deploying it in the service of marketers is the latest marketing spin around the half-century-old work of Lazarsfeld and Katz. (That's Katz at left.) What's changed, of course, is that when Lazarsfeld and Katz were writing, the only scalable communications tools available were mass media, notably the new phenomenon of television. Today, social networking sites of enormous reach -- larger than television's, because they have instantaneous global scope -- allow opinion leaders to shape attitudes in communities far and wide... and near and narrow. That's the promise underlying Facebook's notion to "marry an ad message to a user-initiated endorsement of a product or service," as Ad Age put it.

But Lazarsfeld and Katz bear re-reading, and not just for Silicon Alley cocktail party one-upsmanship. The importance of personal mediation means that television, radio, and print communications have always been filtered in ways their creators could not necessarily predict. The old saw that "nothing will kill a bad product faster than a great ad" is an example of this, although few practitioners recognize it. Today, with the Internet allowing all manner of influencers to wield their opinions in any way they choose, the relationship between the constructed campaign and its eventual effects is even more unpredictable.

In fact, it will take a supremely clever ad agencies and consumer marketers with strong stomachs to test themselves against the backlashes that seem all but inevitable. For if there's anything that might unravel your personal social graph, it'll be too many personal ads and endorsements tearing through it. The results might look like a book written by Dale Carnegie's evil twin: How to Lose Friends and Not Influence People.

Ecosystem 2.0

A day before the always-stimulating Google Zeitgeist conference at the search-engine giant's Mountain View campus a few weeks ago, I had the privilege of participating in a day devoted to advertising agencies and marketing inventiveness. My role was simple: I was to moderate to panel on innovation, featuring five pioneering interactive companies, all of them, in their own ways, direct or indirect competitors. The panelists were Tim Armstrong of Google, Randy Falco of AOL, Brian McAndrews of Microsoft, Mike Murphy of Facebook, and Michael Barrett of MySpace.

But as we prepared for our two-hour session, I was worried. As much as our hosts wanted to talk about innovation, there was, I knew, an elephant in the room: industry consolidation. Microsoft's acquisition of aQuantive (of which Mr. McAndrews had been the CEO), Google's pending purchase of DoubleClick, the rise of social networking, the mainstreaming of digital video, to name just a few trends, were generating apprehension across the marketing-media value chain. The concern was captured in the now-famous term the WPP Group's Chief Executive, Sir Martin Sorrell, applied to Google at the Zeitgeist conference just one year before: "frenemy."

“We must show a willingness to address consolidation, disintermediation, reintermediation, ‘frenemization,’ and all manner of these Latinate concerns,” I suggested to my fellow panelists, “else we'll be accused of ducking.” All readily agreed.

Came the panel. Finished with introductions, I turned to the table of 10 advertising-agency executives -- an assembly of the most accomplished men and women in the business, gathered from creative agencies, media agencies, diversified services agencies, regional agencies, and global agencies -- and put the matter to them. We will address everything that interests and concerns you, I said, but what would you rather take up first: innovation or consolidation?

The immediate reply: “Innovation.”

And no matter how many times I tried to bait the agency executives, no matter how many times I tried to get them to start a “frenemy” discussion, they just would not rise to it.

"You must understand," said one, "that we understand what's happening to the landscape, and while there are obvious concerns, we really need to know more about the opportunities. What we want to know most is how you can help us build value for our clients."

“Teach Me” Moment

We are in what I call a "teach-me moment." Everywhere I turn, the apprehensions of a year ago are, if not banished, significantly diminished. In their place, across the value chain, is a desire to learn, to improve, to acquire new capabilities, and to collaborate in unfamiliar ways to build customer relationships and new business opportunities.

I call this revised view of marketing-media coopetition “Ecosystem 2.0.” I suspect it will dominate our waking hours for the foreseeable future. And I know that we at the IAB will be paying close attention to it – for we intend to make it a centerpiece of our association’s 2008 strategy.

I’ve talked in previous posts about how and why the new complexities and opportunities of marketing require unfamiliar forms of collaboration across the value chain. It was clear the message resonated: IAB’s MIXX Conference & Expo, which was themed around the new collaborative landscape, sold out for the first time in its history.

But there’s increasing evidence that this evangelical message is winning converts, even in more orthodox precincts – including marketing departments. In “Marketing-Media Ecosystem 2010,” the study done by the global management consulting firm Booz Allen Hamilton for the IAB, the Association of National Advertisers, and the American Association of Advertising Agencies, one of the key findings was the degree to which marketing executives are seeking new types of relationships to buttress their own capabilities.

For example, more than half of the most digitally savvy marketers believe that having direct relationships with media companies – “publishers,” in the surprisingly jejune industry parlance – is more important than going through an agency. More than 40 percent of these digital leaders believe the marketer-media relationship will increasingly resemble the relationship between retail giants like Walmart and their main consumer-product suppliers – that is, major media companies are likely to have consultative teams embedded at marketing companies to aid with insights development, program creation, and cross-platform utilization. Indeed, almost three-fourths of digitally savvy marketers are adding positions to help them optimize publisher relationships.

Hence Booz Allen’s conclusion that in the transforming marketing-media ecosystem, “media is the new creative.”

Agencies Want Guidance

Agencies increasingly are aware that they have to rise to this challenge, and gain capabilities that will enhance their value to their clients. The AAAA has placed emphasis on the development of “consultative selling” capabilities at agencies. And more and more, I see agencies turning to interactive media companies for guidance, even capability-building help.

Publishers must learn how to respond. "We need you [interactive companies] to come to us in a different way,” one agency president said at the Google roundtable I moderated. “Instead of just sending your salespeople to talk to our media planners, we need you to send your savviest technology people to talk to our creatives. We need to get your analytics experts to talk to our account planners." His fellow agency executives agreed.

The agencies, though, need to match wishes with actions. As much as their leaders profess deep interest in learning more about applying interactive platforms, applications, brands and opportunities to their client work, their troops aren't necessarily following. Many IAB members say that when they try to set up broader meetings at agencies, the right people too often do not come to the table. At the media agencies, in particular, discussions still center predominately on price, not value.

Agencies need to bring senior team leaders into the room. They must strive to break down the walls that not only have kept publishers, too frequently, in their traditional place -- as “dumb” conduits for the agencies’ ads – but have kept agency functions siloed from each other. Cross-functional collaboration must begin at home, else it will never take root between and among companies.

Media companies are similarly challenged. For years, “branded publishers” have maintained a wary distance from “the portals.” They have worried that these eyeball-aggregators are using their “front door” status as well as search engines, free email and other services to legally tap into the publishers’ content to amass audiences and sell advertising that otherwise would go to the content sites. Now that the portals are evolving into platforms, the apprehension, in some quarters, is growing.

I believe it’s wiser – certainly, it’s more realistic – for publishers and agencies alike to determine how and where they can play with the platforms to enhance their own capabilities, and thus their value to clients.

The Platform Environment

Platform, admittedly, is a vague word – “a swirling vortex of confusion,” Netscape founder and Ning chief Marc Andreessen says. But Mr. Andreessen offers a simple explanation. “A ‘platform,’” he writes, “is a system that can be programmed and therefore customized by outside developers – users – and in that way adapted to countless needs and niches that the platform’s original developers could not have possibly contemplated, much less had the time to accommodate.”

To one degree or another, the major Internet giants appear to be following Mr. Andreessen’s definition. Several of them are evolving into platform companies that are building advertising exchanges -- stock-market-like mechanisms that connect advertising buyers and sellers, price available inventory, and clear it in real time -- and integrating them with their growing multi-site advertising networks. These platforms, in effect, marry a liquidity mechanism to a pool of inventory, a continuing flow of behavioral data, and analytics and optimization tools that can automate many of the expensive people-centric processes that have typified advertising for generations.

AOL’s acquisition of Tacoda (and, just last week, Quigo) and the consolidation of it,, and other services and network businesses is demonstrably an effort to position AOL as a platform – hence the name of its new business, Platform A. Google’s development and acquisition of various open platforms and its pending purchase of Doubleclick (which is starting up an ad exchange) is another example of platforming. So is Microsoft’s acquisition and integration of aQuantive, the AdECN exchange, and other services. And so is Yahoo’s acquisition of the Right Media exchange and its services buildout.

Could platforms represent another threat to content sites – an effort to aggregate and monetize their audience without them? Sure. But it’s very telling that the intended transformation of the social networking site Facebook into a platform has been accompanied by enormous interest by major content developers. Every day, it seems, heralds a new Facebook application from The New York Times, the Washington Post, Conde Nast, or another premium publisher. They believe that open platforms can represent opportunity as much as threat. In a dramatic turnabout, they a chance to take the aggregator’s audience and enhance the publisher’s brand, reach, and stickiness.

Indeed, rather than positioning themselves to “own the world,” as branded publishers feared during the era of the “portals,” the new platforms seem to be wanting to develop scalable businesses that can add value to others’ businesses in the marketing-media value chain.

“Live by Openness”

At the Right Media Open last month, I had the privilege of conducting an on-stage interview with Yahoo’s co-founder and new CEO, Jerry Yang. He was explicit about his platform’s value proposition to others. He defined a platform as “a business that has a set of standards that allows a set of companies to participate and find benefit from it.” The key to success, he indicated, would be the platform’s availability to players across the value chain. “Yahoo will have to embrace openness,” Mr. Yang told me. “We must live by openness, leverage the data to be smarter and improve upon our partnerships with important companies like Comcast.”

I like Mr. Yang’s definition of platform more than Mr. Andreessen’s, if only because the latter, focused as it is on systems, seems more of an engineering construct than a social construct – and because, ultimately, the value-additive collaboration that Mr. Yang foresees will require tapping into real human needs, emotions, and satisfactions. I’d even go Mr. Yang one further: A platform is a collection of scaled or scalable services that help players up and down the value chain grow their customers’ businesses, and their own businesses in turn.

While there is reason for publishers and agencies to feel threatened by the evolution of the platforms, more and more of them seem to be perceiving them as opportunities, as Mr. Yang would have them do. Mike Walrath, the founder and CEO of Right Media, the exchange that was acquired earlier this year by Yahoo, spoke directly (albeit with background noise on the Flip camera) to the issue when I queried him specifically on the subject of advertising exchanges and commoditization at his conference.

Joe Fiveash, Senior Vice President and General Manager of and a member of IAB’s Board of Directors, agreed that the opportunities presented by the platforms must be explored. While aware of the pitfalls of commoditization, he, too, saw more to embrace than to fear in the ad exchanges and the platforms.

Small players are arising to realize the advantages Mr. Fiveash foresees to grow the overall marketplace. As Yahoo’s Developer Network Director Matt McAllister blogged at the Right Media Open, there is “an interesting market of middlemen that I didn’t know existed. For example, I spoke with a guy from a company called exeLate that serves as a user behavior data provider between a publisher and an exchange. There were also ad services providers like Text Link Ads and publishers like Jim Mansfield’s PhoneZoo all discussing the tricky aspects of managing the mixture of inventory, rates and yield, relationships with ad networks, and the advantages of using exchanges.”

My point is a simple one: As Ecosystem 2.0 evolves, we’re likely to benefit from thinking more about symbiosis than about victory. If you’re looking for an image to carry you through a 2008 that will be at least as tumultuous as 2007, I’d recommend one from my scuba days: Not dolphins and sharks, but clownfish and anemones. It looks scary, but it’s mutually beneficial.

Thursday, November 01, 2007

The Contradictions of Anti-Advertising Advocacy

“Our every move is being tabulated, tracked and sold to the highest bidder,” Jeff Chester, the executive director of a Washington anti-advertising organization called the Center for Digital Democracy, said ominously at the opening of the FTC “town hall” on online behavioral targeting.

Yikes! Really?

As I sit through this FTC presentation, I’m reminded that American consumer culture – a backbone of U.S. economic growth from the beginnings of the nation – has long been paralleled by a smaller but quite vocal anti-consumerist tradition.

The first tendency is known to all of us, and has long been recognized. Alexis de Tocqueville, writing in the early 19th century, observed that “without exception, travelers to the United States found the most striking feature of the American character to be the obsession with business and wealth.” This obsession manifested itself in the acquisition of goods – “conspicuous consumption,” the sociologist Thorstein Veblen labeled it.

Desire to Acquire

This desire to advance, continually and publicly, has been a driver of U.S. economic growth. We acquire things because it shows off our personal growth, our success, our maturity. To acquire, we strive to make more money. To serve our desire to acquire, businesses innovate. And some of that innovation aims to make people feel richer than they are. “Among a democratic population all the intellectual faculties of the workman are directed to these two objects,” Tocqueville wrote. “He strives to invent methods that may enable him not only to work better, but more quickly and more cheaply; or if he cannot succeed in that, to diminish the intrinsic quality of the thing he makes, without rendering it wholly unfit for the use for which it is intended. When none but the wealthy had watches, they were almost all very good ones; few are now made that are worth much, but everybody has one in his pocket. Thus the democratic principle not only tends to direct the human mind to the useful arts, but it induces the artisan to produce with great rapidity many imperfect commodities, and the consumer to content himself with these commodities.”

But that consumerist impulse has made other Americans, a minority, to be sure, deeply unhappy.. “We are united by what we are being sold,” the writer Naomi Klein, author of No Logo and other books critical of consumerism and the latest darling of the anti-capitalists, has said, “There is no escape.” She follows an anti-consumerist line that stretches all the way back to Thomas Jefferson’s agrarian idealism, which stood in stark contrast to the rapacious mercantilism Jefferson perceived in John Adams’s Boston.

For some reason, and for several decades, such anti-growth reactionaries have aimed particular venom at advertising. Advertising is the public face of a capitalism they revile. Their arguments are, at times, contradictory. Advertising, in their formulation, is the generator of unnecessary mass wants and needs. Yet it also segments us in ways that subvert the American consensus.

The anti-consumerist tendency has been on display here at the FTC hearings on behavioral targeting -- and so have the contradictions. “Online marketers can eavesdrop on members of social networks,” Mr. Chester said. Yet he added that online advertising “has profound implications for the future of democracy, for whether or not we’re going to have a diverse array of voices.”

Ads Create Diversity

That latter comment was made without irony. Mr. Chester and other critics seem not to see that the diversity of voices links inexorably to the availability of online advertising. I noted in my first Clog posting from the FTC that the promise of online advertising has contributed to greater communications diversity and accessibility than ever in our history: 12 million Americans blogging; 1.3 million Americans supplementing their income by selling on eBay; 41 million resumes posted for free on; 500 million free email accounts from Yahoo!, Google, and MSN alone.

While several of the anti-consumer advocates here today expressed admiration for the European Union’s stricter rules regarding online data use and privacy, those come at a significant cost they did not acknowledge – until Tacoda founder (and IAB board member) Dave Morgan noted it. “There’s dramatically less free content and services available to European consumers,” he said. “It’s not for lack of technology infrastructure. Rather, it’s they are being offered on a paid subscription basis.” Thus is the digital divide larger in Europe than in the U.S. “Online advertising and the capital investments companies are making to get it is a $20 billion, $30 billion subsidy paying for free content and free services,” Mr. Morgan said.

None of this is meant to imply that there are not serious issues relative to data retention and use. One FTC panelist, Kathryn C. Montgomery, a communications professor at the American University, has done important work helping to assure that advertising to children adheres to appropriate strictures. Yet even Prof. Montgomery revealed herself less as an opponent of bad actors, but as an opponent of online advertising generally. “Digital technologies enable companies to track every move, online and off, compiling elaborate personal profiles, and aggregating that data across different media,” she fretted.

But many of the concerns about behavioral targeting lie somewhere between diseconomic and mythical. Responding to Prof. Montgomery, Dave Morgan said here today, “I don’t know any companies that are behaviorally targeting ads at children. That’s the third rail, as we’d say in New York.”

"My Mother" Rules

“I use ‘my mother’ rules,” Mr. Morgan added. “If my mother would be uncomfortable with it, we shouldn’t do it.”

Equally important, of what concern is it, if the data collected are anonymous and aggregated and used to create more relevant – and thus more user-friendly – advertising? Another panelist here, Larry Ponemon, chairman of a research think tank, unveiled research indicating that more than half of Americans believe that an online ad that targets individuals’ preferences or interests improves or greatly improves their online experience. Fully 86 percent said they would prefer to accept relevant advertising, rather than pay for content. “There is an opportunity,” Dr. Ponemon said, “to educate people about internet economics.”

That is very true – and it’s moved beyond major opportunity to a must-do for our industry. We really have to continue to work,” said Ralph Terkowitz, a general partner at ABS Capital Partners, and a former CEO of the Washington Post’s electronic publishing subsidiary, “to drive transparency, to drive education, and to create policies to deal with those actors who are not interested in transparency, education and ease of use.”