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On cryptocurrencies, blockchain and all that

June 21, 2017 in Blockchain, Business, Cryptocurrencies, Distributed Ledgers, education, history, infrastructure, Internet, Links, money, News, Research, Science, Technology | 5 comments

Take a look at this chart:

CryptoCurrency Market Capitalizations

screen-shot-2017-06-21-at-10-37-51-pm

As Neo said, Whoa.

To help me get my head fully around all that’s going on behind that surge, or mania, or whatever it is, I’ve composed a lexicon-in-process that I’m publishing here so I can find it again. Here goes:::

Bitcoin. “A cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009. The system is peer-to-peer, and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Since the system works without a central repository or single administrator, bitcoin is called the first decentralized digital currency.” (Wikipedia.)

Cryptocurrency. “A digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Cryptocurrencies are a subset of alternative currencies, or specifically of digital currencies. Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created. These are frequently called altcoins, as a blend of bitcoin alternative. Bitcoin and its derivatives use decentralized control as opposed to centralized electronic money/centralized banking systems. The decentralized control is related to the use of bitcoin’s blockchain transaction database in the role of a distributed ledger.” (Wikipedia.)

“A cryptocurrency system is a network that utilizes cryptography to secure transactions in a verifiable database that cannot be changed without being noticed.” (Tim Swanson, in Consensus-as-a-service: a brief report on the emergence of permissioned, distributed ledger systems.)

Distributed ledger. Also called a shared ledger, it is “a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions.” (Wikipedia, citing a report by the UK Government Chief Scientific Adviser: Distributed Ledger Technology: beyond block chain.) A distributed ledger requires a peer-to-peer network and consensus algorithms to ensure replication across nodes. The ledger is sometimes also called a distributed database. Tim Swanson adds that a distributed ledger system is “a network that fits into a new platform category. It typically utilizes cryptocurrency-inspired technology and perhaps even part of the Bitcoin or Ethereum network itself, to verify or store votes (e.g., hashes). While some of the platforms use tokens, they are intended more as receipts and not necessarily as commodities or currencies in and of themselves.”

Blockchain.”A peer-to-peer distributed ledger forged by consensus, combined with a system for ‘smart contracts’ and other assistive technologies. Together these can be used to build a new generation of transactional applications that establishes trust, accountability and transparency at their core, while streamlining business processes and legal constraints.” (Hyperledger.)

“To use conventional banking as an analogy, the blockchain is like a full history of banking transactions. Bitcoin transactions are entered chronologically in a blockchain just the way bank transactions are. Blocks, meanwhile, are like individual bank statements. Based on the Bitcoin protocol, the blockchain database is shared by all nodes participating in a system. The full copy of the blockchain has records of every Bitcoin transaction ever executed. It can thus provide insight about facts like how much value belonged a particular address at any point in the past. The ever-growing size of the blockchain is considered by some to be a problem due to issues like storage and synchronization. On an average, every 10 minutes, a new block is appended to the block chain through mining.” (Investopedia.)

“Think of it as an operating system for marketplaces, data-sharing networks, micro-currencies, and decentralized digital communities. It has the potential to vastly reduce the cost and complexity of getting things done in the real world.” (Hyperledger.)

Permissionless system. “A permissionless system [or ledger] is one in which identity of participants is either pseudonymous or even anonymous. Bitcoin was originally designed with permissionless parameters although as of this writing many of the on-ramps and off-ramps for Bitcoin are increasingly permission-based. (Tim Swanson.)

Permissioned system. “A permissioned system -[or ledger] is one in which identity for users is whitelisted (or blacklisted) through some type of KYB or KYC procedure; it is the common method of managing identity in traditional finance.” (Tim Swanson)

Mining. “The process by which transactions are verified and added to the public ledger, known as the blockchain. (It is) also the means through which new bitcoin are released. Anyone with access to the Internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards. The rewards, which incentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin.” (Investopedia.)

Ethereum. “An open-source, public, blockchain-based distributed computing platform featuring smart contract (scripting) functionality, which facilitates online contractual agreements. It provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. Ethereum also provides a cryptocurrency token called “ether”, which can be transferred between accounts and used to compensate participant nodes for computations performed. Gas, an internal transaction pricing mechanism, is used to mitigate spam and allocate resources on the network. Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowdsale during July–August 2014. The system went live on 30 July 2015, with 11.9 million coins “premined” for the crowdsale… In 2016 Ethereum was forked into two blockchains, as a result of the collapse of The DAO project. The two chains have different numbers of users, and the minority fork was renamed to Ethereum Classic.” (Wikipedia.)

Decentralized Autonomous Organization. This is “an organization that is run through rules encoded as computer programs called smart contracts. A DAO’s financial transaction record and program rules are maintained on a blockchain… The precise legal status of this type of business organization is unclear. The best-known example was The DAO, a DAO for venture capital funding, which was launched with $150 million in crowdfunding in June 2016 and was immediately hacked and drained of US$50 million in cryptocurrency… This approach eliminates the need to involve a bilaterally accepted trusted third party in a financial transaction, thus simplifying the sequence. The costs of a blockchain enabled transaction and of making available the associated data may be substantially lessened by the elimination of both the trusted third party and of the need for repetitious recording of contract exchanges in different records: for example, the blockchain data could in principle, if regulatory structures permitted, replace public documents such as deeds and titles. In theory, a blockchain approach allows multiple cloud computing users to enter a loosely coupled peer-to-peer smart contract collaboration.(Wikipedia)

Initial Coin Offering. “A means of crowdfunding the release of a new cryptocurrency. Generally, tokens for the new cryptocurrency are sold to raise money for technical development before the cryptocurrency is released. Unlike an initial public offering (IPO), acquisition of the tokens does not grant ownership in the company developing the new cryptocurrency. And unlike an IPO, there is little or no government regulation of an ICO.” (Chris Skinner.)

“In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin…During the ICO campaign, enthusiasts and supporters of the firm’s initiative buy some of the distributed cryptocoins with fiat or virtual currency. These coins are referred to as tokens and are similar to shares of a company sold to investors in an Initial Public Offering (IPO) transaction.” (Investopedia.)

Tokens. “In the blockchain world, a token is a tiny fraction of a cryptocurrency (bitcoin, ether, etc) that has a value usually less than 1/1000th of a cent, so the value is essentially nothing, but it can still go onto the blockchain…This sliver of currency can carry code that represents value in the real world — the ownership of a diamond, a plot of land, a dollar, a share of stock, another cryptocurrency, etc. Tokens represent ownership of the underlying asset and can be traded freely. One way to understand it is that you can trade physical gold, which is expensive and difficult to move around, or you can just trade tokens that represent gold. In most cases, it makes more sense to trade the token than the asset. Tokens can always be redeemed for their underlying asset, though that can often be a difficult and expensive process. Though technically they could be redeemed, many tokens are designed never to be redeemed but traded forever. On the other hand, a ticket is a token that is designed to be redeemed and may or may not be trade-able” (TokenFactory.)

“Tokens in the ethereum ecosystem can represent any fungible tradable good: coins, loyalty points, gold certificates, IOUs, in game items, etc. Since all tokens implement some basic features in a standard way, this also means that your token will be instantly compatible with the ethereum wallet and any other client or contract that uses the same standards. (Ethereum.org/token.)

“The most important takehome is that tokens are not equity, but are more similar to paid API keys. Nevertheless, they may represent a >1000X improvement in the time-to-liquidity and a >100X improvement in the size of the buyer base relative to traditional means for US technology financing — like a Kickstarter on steroids.” (Thoughts on Tokens, by Balaji S. Srinivasan.)

“A blockchain token is a digital token created on a blockchain as part of a decentralized software protocol. There are many different types of blockchain tokens, each with varying characteristics and uses. Some blockchain tokens, like Bitcoin, function as a digital currency. Others can represent a right to tangible assets like gold or real estate. Blockchain tokens can also be used in new protocols and networks to create distributed applications. These tokens are sometimes also referred to as App Coins or Protocol Tokens. These types of tokens represent the next phase of innovation in blockchain technology, and the potential for new types of business models that are decentralized – for example, cloud computing without Amazon, social networks without Facebook, or online marketplaces without eBay. However, there are a number of difficult legal questions surrounding blockchain tokens. For example, some tokens, depending on their features, may be subject to US federal or state securities laws. This would mean, among other things, that it is illegal to offer them for sale to US residents except by registration or exemption. Similar rules apply in many other countries. (A Securities Law Framework for Blockchain Tokens.)

In fact tokens go back. All the way.

In Before Writing Volume I: From Counting to Cuneiform, Denise Schmandt-Besserat writes, “Tokens can be traced to the Neolithic period starting about 8000 B.C. They evolved following the needs of the economy, at first keeping track of the products of farming…The substitution of signs for tokens was the first step toward writing.” (For a compression of her vast scholarship on the matter, read Tokens: their Significance for the Origin of Counting and Writing.

I sense that we are now at a threshold no less pregnant with possibilities than we were when ancestors in Mesopotamia rolled clay into shapes, made marks on them and invented t-commerce.

And here is a running list of sources I’ve visited, so far:

You’re welcome.

To improve it, that is.

Exploring the business behind digital media’s invisibility cloaks

December 10, 2016 in adtech, advertising, Broadcasting, Business, Culture, data, infrastructure, Internet, Journalism, Life, Links, marketing, News, Politics, privacy, problems, publishing, Research, Technology | 5 comments

 

amsterdam-streetImagine you’re on a busy city street where everybody who disagrees with you disappears.

We have that city now. It’s called media—especially the social kind.

You can see how this works on Wall Street Journal‘s Blue Feed, Red Feed page. Here’s a screen shot of the feed for “Hillary Clinton” (one among eight polarized topics):

blue-red-wsj

Both invisible to the other.

We didn’t have that in the old print and broadcast worlds, and still don’t, where they persist. (For example, on news stands, or when you hit SCAN on a car radio.)

But we have it in digital media.

Here’s another difference: a lot of the stuff that gets shared is outright fake. There’s a lot of concern about that right now:

fakenews

Why? Well, there’s a business in it. More eyeballs, more advertising, more money, for more eyeballs for more advertising. And so on.

Those ads are aimed by tracking beacons planted in your phones and browsers, feeding data about your interests, likes and dislikes to robot brains that work as hard as they can to know you and keep feeding you more stuff that stokes your prejudices. Fake or not, what you’ll see is stuff you are likely to share with others who do the same. This business that pays for this is called “adtech,” also known as “interest based” or “interactive” advertising. But those are euphemisms. Its science is all about stalking. They can plausibly deny it’s personal. But it is.

The “social” idea is “markets as conversations” (a personal nightmare for me, gotta say). The business idea is to drag as many eyeballs as possible across ads that are aimed by the same kinds of creepy systems. The latter funds the former.

Rather than unpack that, I’ll leave that up to the rest of ya’ll, with a few links:

 

I want all the help I can get unpacking this, because I’m writing about it in a longer form than I’m indulging in here. Thanks.

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A few words about trust

November 29, 2016 in Business, data, infrastructure, Internet, marketing, privacy, Research, VRM | 7 comments

cropped-wst-logo-main[3 December update: Here is a video of the panel.]

So I was on a panel at WebScience@10 in London (@WebScienceTrust, #WebSci10), where the first question asked was, “What are two aspects of ‘trust and the Web’ that you think are most relevant/important at the moment?” My answer went something like this::::

1) The Net is young, and the Web with it.

Both were born in their current forms on 30 April 1995, when the NSFnet backed off on its forbidding commercial traffic on its pipes. This opened the whole Net to absolutely everything, exactly when the graphical Web browser became fully useful.

Twenty-one years in the history of a world is nothing. We’re still just getting started here.

2) The Internet, like nature, did not come with privacy. And privacy is personal. We need to start there.

We arrived naked in this new world, and — like Adam and Eve — still don’t have clothing and shelter.

The browser should have been a private tool in the first place, but it wasn’t; and it won’t be, so long as we leave improving it mostly up to companies with more interest in violating our privacy than providing it.

Just 21 years into this new world, we still need our own clothing, shelter, vehicles and private spaces. Browsers included. We will only get privacy if our tools provide it as a simple fact.

We also need to be the first parties, rather than the second ones, in our social and business agreements. In other words, others need to accept our terms, rather than vice versa. As first parties, we are independent. As second parties, we are dependent. Simple as that. Without independence, without agency, without the ability to initiate, without the ability to obtain agreement on our own terms, it’s all just more of the same old industrial model.

In the physical world, our independence earns respect, and that’s what we give to others as a matter of course. Without that respect, we don’t have civilization. This is why the Web we have today is still largely uncivilized.

We can only civilize the Net and the Web by inventing digital clothing and doors for people, and by providing standard agreements private individuals can assert in their dealings with others.

Inventing yet another wannabe unicorn to provide “privacy as a service” won’t do it. Nor will regulating the likes of Facebook and Google, or expecting them to become interested in building protections, when their businesses depend on the absence of those protections.

Fortunately, work has begun on personal privacy tools, and agreements we can each assert. And we can talk about those.

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Nobody else owns our experiences

August 3, 2016 in adtech, advertising, Broadcasting, Business, Internet, News, problems, publishing, Research, Technology, VRM | 15 comments

shackles

Who Owns the Mobile Experience? is a report by Unlockd on mobile advertising in the U.K. To clarify the way toward an answer, the report adds, “mobile operators or advertisers?”

The correct answer is neither. Nobody’s experience is “owned” by somebody else.

True, somebody else may cause a person’s experience to happen. But causing isn’t the same as owning.

We own our selves. That includes our experiences.

This is an essential distinction. For lack of it, both mobile operators and advertisers are delusional about their customers and consumers. (That’s an important distinction too. Operators have customers. Advertisers have consumers. Customers pay, consumers may or may not. That the former also qualifies as the latter does not mean the distinction should not be made. Sellers are far more accountable to customers than advertisers are to consumers.)

It’s interesting that Unlockd’s survey shows almost identically high levels of delusion by advertisers and operators…

  • 85% of advertisers and 82% of operators “think the mobile ad experience is positive for end users”
  • 3% of advertisers and 1% of operators admit “it could be negative”
  • Of the 85% of advertisers who think the experience is positive, 50% “believe it’s because products advertised are relevant to the end user”
  • “the reasons for this opinion is driven from the belief that users are served detail around products that are relevant to them.”

… while:

  • 47% of consumers think “the mobile phone ad experience (for them) is positive”
  • 39% of consumers “think ads are irrelevant
  • 36% blame “poor or irritating format”
  • 40% “believe the volume of ads served to them are a main reason for the negative experience”

It’s amazing but not surprising to me that mobile operators apparently consider their business to be advertising more than connectivity. This mindset is also betrayed by AT&T charging a premium for privacy and Comcast wanting to do the same. (Advertising today, especially online, does not come with privacy. Quite the opposite, in fact. A great deal of it is based on tracking people. Shoshana Zuboff calls this surveillance capitalism.)

Years ago, when I consulted BT, JP Rangaswami (@jobsworth), then BT’s Chief Scientist, told me phone companies’ core competency was billing, not communications. Since those operators clearly wish to be in the “content” business now, and to make money the same way print and broadcast did for more than a century, it makes sense that they imagine themselves now to be one-way conduits for ad-fortified content, and not just a way people and things (including the ones called products and companies) can connect to each other.

The FCC and other regulators need to bear this in mind as they look at what operators are doing to the Internet. I mean, it’s good and necessary for regulators to care about neutrality and privacy of Internet services, but a category error is being made if regulators fail to recognize that the operators want to be “content distributors” on the models of commercial broadcasting (funded by advertising) and the post office (funded by junk mail, which is the legacy model of today’s personalized direct response advertising  online).

I also have to question how consumers were asked by this survey about their mobile ad experiences. Let me see a show of hands: how many here consider their mobile phone ad experience “positive?” Keep your hands down if you are associated in any way with advertising, phone companies or publishing. When I ask this question, or one like it (e.g. “Who here wants to see ads on their phone?”) in talks I give, the number of raised hands is usually zero. If it’s not, the few parties with raised hands offer qualified responses, such as, “I’d like to see coupons when I’m in a store using a shopping app.”

Another delusion of advertisers and operators is that all ads should be relevant. They don’t need to be. In fact, the most valuable ads are not targeted personally, but across populations, so large populations can become familiar with advertised products and services.

It’s a simple fact that branding wouldn’t exist without massive quantities of ads being shown to people for whom the ads are irrelevant. Few of us would know the brands of Procter & Gamble, Unilever, L’Oreal, Coca-Cola, Nestlé, General Motors, Volkswagen, Mars or McDonald’s (the current top ten brand advertisers worldwide) if not for the massive amounts of money those companies spend advertising to people who will never buy their products but will damn sure known those products’ names. (Don Marti explains this well.)

A hard fact that the advertising industry needs to face is that there is very little appetite for ads on the receiving end. People put up with it on TV and radio, and in print, but for the most part they don’t like it. (The notable exceptions are print ads in fashion magazines and other high-quality publications. And classifieds.)

Appetites for ads, and all forms of content, should be consumers’ own. This means consumers need to be able to specify the kind of advertising they’re looking for, if any.

Even then, the far more valuable signal coming from consumers is (or will be) an actual desire for certain products and services. In marketing lingo, these signals are qualified leads. In VRM lingo, these signals  are intentcasts. With intentcasting, the customers do the advertising, and are in full control of the process. And they are no longer mere consumers (which Jerry Michalski calls “gullets with wallets and eyeballs”).

It helps that there are dozens of companies in this business already.

So it would be far more leveraged for operators to work with those companies than with advertising systems so disconnected from reality that they’ve caused hundreds of millions of people to block ads on their mobile devices — and are in such deep denial of the market’s clear messages that they deny the legitimacy of a clear personal choice, misdirecting attention toward the makers of ad blocking tools, and away from what’s actually happening: people asserting power over their own lives and private spaces (e.g. their browsers) online.

If companies actually believe in free markets, they need to believe in free customers. Those are people who, at the very least, are in charge of their own experiences in the networked world.

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The Data Bubble redux

April 9, 2016 in adtech, advertising, Business, Events, Law, marketing, problems, publishing, Research, Technology, VRM | 3 comments

It didn't happen in 2010, but it will in 2016.

It didn’t happen in 2010, but it will in 2016.

This Post ran on my blog almost six years ago. I was wrong about the timing, but not about the turning: because it’s about to happen this month at the Computer History Museum in Silicon Valley. More about that below the post.
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The tide turned today. Mark it: 31 July 2010.

That’s when The Wall Street Journal published The Web’s Gold Mine: Your Secrets, subtitled A Journal investigation finds that one of the fastest-growing businesses on the Internet is the business of spying on consumers. First in a series. It has ten links to other sections of today’s report.

It’s pretty freaking amazing — and amazingly freaky, when you dig down to the business assumptions behind it. Here’s the gist:

The Journal conducted a comprehensive study that assesses and analyzes the broad array of cookies and other surveillance technology that companies are deploying on Internet users. It reveals that the tracking of consumers has grown both far more pervasive and far more intrusive than is realized by all but a handful of people in the vanguard of the industry.

It gets worse:

In between the Internet user and the advertiser, the Journal identified more than 100 middlemen — tracking companies, data brokers and advertising networks — competing to meet the growing demand for data on individual behavior and interests.The data on Ms. Hayes-Beaty’s film-watching habits, for instance, is being offered to advertisers on BlueKai Inc., one of the new data exchanges. “It is a sea change in the way the industry works,” says Omar Tawakol, CEO of BlueKai. “Advertisers want to buy access to people, not Web pages.” The Journal examined the 50 most popular U.S. websites, which account for about 40% of the Web pages viewed by Americans. (The Journal also tested its own site, WSJ.com.) It then analyzed the tracking files and programs these sites downloaded onto a test computer. As a group, the top 50 sites placed 3,180 tracking files in total on the Journal’s test computer. Nearly a third of these were innocuous, deployed to remember the password to a favorite site or tally most-popular articles. But over two-thirds — 2,224 — were installed by 131 companies, many of which are in the business of tracking Web users to create rich databases of consumer profiles that can be sold.

Here’s what’s delusional about all this: There is no demand for tracking by individual customers. All the demand comes from advertisers — or from companies selling to advertisers. For now.

Here is the difference between an advertiser and an ordinary company just trying to sell stuff to customers: nothing. If a better way to sell stuff comes along — especially if customers like it better than this crap the Journal is reporting on — advertising is in trouble.

Here is the difference between an active customer who wants to buy stuff and a consumer targeted by secretive tracking bullshit: everything.

Two things are going to happen here. One is that we’ll stop putting up with it. The other is that we’ll find better ways for demand and supply to meet — ways that don’t involve tracking or the guesswork called advertising.

Improving a pain in the ass doesn’t make it a kiss. The frontier here is on the demand side, not the supply side.

Advertising may pay for lots of great stuff (such as search) that we take for granted, but advertising even at its best is guesswork. It flourishes in the absence of more efficient and direct demand-supply interactions.

The idea of making advertising perfectly personal has been a holy grail of the business since Day Alpha. Now that Day Omega is approaching, thanks to creepy shit like this, the advertsing business is going to crash up against a harsh fact: “consumers” are real people, and most real people are creeped out by this stuff.

Rough impersonal guesswork is tolerable. Totally personalized guesswork is not.

Trust me, if I had exposed every possible action in my life this past week, including every word I wrote, every click I made, everything I ate and smelled and heard and looked at, the guesswork engine has not been built that can tell any seller the next thing I’ll actually want. (Even Amazon, widely regarded as the best at this stuff, sucks to some degree.)

Meanwhile I have money ready to spend on about eight things, right now, that I’d be glad to let the right sellers know, provided that information is confined to my relationship with those sellers, and that it doesn’t feed into anybody’s guesswork mill. I’m ready to share that information on exactly those conditions.

Tools to do that will be far more leveraged in the ready-to-spend economy than any guesswork system. (And we’re working on those tools.) Chris Locke put it best in Cluetrain eleven years ago. He said, if you only have time for one clue this year, this is the one to get…

Thanks to the Wall Street Journal, that dealing may finally come in 2010.

[Later…] Jeff Jarvis thinks the Journal is being silly. I love Jeff, and I agree that the Journal may be blurring some concerns, off-base on some of the tech and even a bit breathless; but I also think they’re on to something, and I’m glad they’re on it.

Most people don’t know how much they’re being followed, and I think what the Journal’s doing here really does mark a turning point.

I also think, as I said, that the deeper story is the market for advertising, which is actually threatened by absolute personalization. (The future market for real engagement, however, is enormous. But that’s a different business than advertising — and it’s no less thick with data… just data that’s voluntarily shared with trusted limits to use by others.)

[Later still…] TechCrunch had some fun throwing Eric Clemons and Danny Sullivan together. Steel Cage Debate On The Future Of Online Advertising: Danny Sullivan Vs. Eric Clemons, says the headline. Eric’s original is Why Advertising is Failing on the Internet. Danny’s reply is at that first link. As you might guess, I lean toward Eric on this one. But this post is a kind of corollary to Eric’s case, which is compressed here (at the first link again):

I stand by my earlier points:

  • Users don’t trust ads
  • Users don’t want to view ads
  • Users don’t need ads
  • Ads cannot be the sole source of funding for the internet
  • Ad revenue will diminish because of brutal competition brought on by an oversupply of inventory, and it will be replaced in many instances by micropayments and subscription payments for content.
  • There are numerous other business models that will work on the net, that will be tried, and that will succeed.

The last point, actually, seemed to be the most important. It was really the intent of the article, and the original title was “Business Models for Monetizing the Internet: Surely There Must Be Something Other Than Advertising.” This point got lost in the fury over the title of the article and in rage over the idea that online advertising might lose its importance.

My case is that advertisers themselves will tire of the guesswork business when something better comes along. Whether or not that “something better” funds Web sites and services is beside the points I am making, though it could hardly be a more important topic.

For what it’s worth, I believe that the Googles of the world are well positioned to take advantage of a new economy in which demand drives supply at least as well as supply drives demand. So, in fact, are some of those back-end data companies. (Disclosure: I currently consult one of them.)

Look at it this way…

  • What if all that collected data were yours and not just theirs?
  • What if you could improve that data voluntarily?
  • What if there were standard ways you could get that data back, and use it in your own ways?
  • What if those same companies were in the business of helping you buy stuff, and not just helping sellers target you?

Those questions are all on the table now.

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9 April 2016 — The What They Know series ran in The Wall Street Journal until 2012. Since then the tracking economy has grown into a monster that Shoshana Zuboff calls The Big Other, and Surveillance Capitalism.

The tide against surveillance began to turn with the adoption of ad blockers and tracking blockers. But, while those provide a measure of relief, they don’t fix the problem. For that we need tools that engage the publishers and advertisers of the world, in ways that work for them as well.

They might think it’s working for them today; but it’s clearly not, and this has been apparent for a long time.

In Identity and the Independent Web, published in October 2010, John Battelle said “the fact is, the choices provided to us as we navigate are increasingly driven by algorithms modeled on the service’s understanding of our identity. We know this, and we’re cool with the deal.”

In The Data Bubble II (also in October 2010) I replied,

In fact we don’t know, we’re not cool with it, and it isn’t a deal.

If we knew, The Wall Street Journal wouldn’t have a reason to clue us in at such length.

We’re cool with it only to the degree that we are uncomplaining about it — so far.

And it isn’t a “deal” because nothing was ever negotiated.

To have a deal, both parties need to come to the table with terms the other can understand and accept. For example, we could come with a term that says, Just show me ads that aren’t based on tracking me. (In other words, Just show me the kind of advertising we’ve always had in the offline world — and in the online one before the surveillance-based “interactive” kind gave brain cancer to Madison Avenue.)

And that’s how we turn the tide. This month. We’ll prepare the work on VRM Day (25 April), and then hammer it into code at IIW (26–28 April). By the end of that week we’ll post the term and the code at Customer Commons (which was designed for that purpose, on the Creative Commons model).

Having this term (which needs a name — help us think of one) is a good deal for advertisers because non-tracking based ads are not only perfectly understood and good at doing what they’ve always done, but because they are actually worth more (thank you, Don Marti) than the tracking-based kind.

It’s a good deal for high-reputation publishers, because it gets them out of a shitty business that tracks their readers to low reputation sites where placing ads is cheaper. And it lets them keep publishing ads that readers can appreciate because the ads clearly support the publication. (Bet they can charge more for the ads too, simply because they are worth more.)

It’s even good for the “interactive” advertising business because it allows the next round of terms to support advertising based on tracking that the reader actually welcomes. If there is such a thing, however, it needs to be on terms the reader asserts, and not on labor-intensive industry-run opt-out systems such as Ad Choices.

If you have a stake in these outcomes, come to VRM Day and IIW and help us make it happen. VRM Day is free, and IIW is very cheap compared to most other conferences. It is also an unconference. That means it has no keynotes or panels. Instead it’s about getting stuff done, over three days of breakouts, all on topics chosen by you, me and anybody else who shows up.

When we’re done, the Data Bubble will start bursting for real. It won’t mean that data goes away, however. It will just mean that data gets put to better uses than the icky ones we’ve put up with for at least six years too long.

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This post also appears in Medium.

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Rethinking John Wanamaker

January 18, 2016 in adtech, advertising, problems, Research, VRM | 7 comments

He didn't say it, but let's look at why it's wrong anyway.

He didn’t say it, but let’s look at why it’s wrong anyway.

This is an improved edit of a post I made to a list I’m on. Rather than let it scroll off to oblivion, I decided to put it here as well. The other parties are in italics. I’m in plain text.

If you work in advertising or marketing, kill yourself – Bill Hicks

Brilliant bit. Watch it here. The dude was also deep.

…or, from The Economist in 2013, a wonderful article which draws attention to research which counters the common view about search engine advertising. 

(which says, among other things…)

…search ads appear to solve a puzzle that has preoccupied advertisers since John Wanamaker, the 19th-century founding father of marketing, reportedly declared: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

Two problems with that oft-quoted one-liner. One is that Wanamaker didn’t say it. From The Intention Economy:

While this line is customarily attributed to John Wanamaker, he was neither the first nor the only source. In The Quote Verifier: Who Said What, Where, and When (New York: St. Martin’s Press, 2006), Ralph Keys writes, ‘In the United States this business truism is most often attributed to department store magnate John Wanamaker (1838–1922), in England to Lord Leverhulme (William H. Lever, founder of Lever Brothers, 1851–1925). The maxim has also been ascribed to chewing gum magnate William Wrigley, adman George Washington Hill, and adman David Ogilvy. In Confessions of an Advertising Man (1963), Ogilvy himself gave the nod to his fellow Englishman Lord Leverhulme (Lever Brothers was an Ogilvy client), adding that John Wanamaker later made the same observation. Since Wanamaker founded his first department store in 1861, when Lever was ten, this seems unlikely. Fortune magazine thought Wanamaker expressed the famous adage in 1885, but it gave no context. While researching John Wanamaker, King of Merchants (1993), biographer William Allen Zulker found the adage typed on a sheet of paper in Wanamaker’s archives, but without a name or source. Wanamaker usually wrote his own material longhand. Verdict: A maxim of obscure origins, put in famous mouths.’

The other is that it isn’t true. Or, not exactly.

In terms of direct effects (what direct response marketing wants, and the Economist piece concerns itself with), 99.x% of advertising is wasted. In terms of brand effects, 100% might be effective.

In “The Waste in Advertising is the Part That Works,” (Journal of Advertising Research, December, 2004, pp. 375-390.), Tim Ambler and E. Ann Hollier say brand advertising has the effect of making a company familiar, whether the audience likes it or not, and that this is a requirement for any large company selling to a large market. You may never get Geico insurance, but you’re sure as hell going to know the company exists, and perhaps as well that “fifteen minutes will save you fifteen percent” (which has been burned into my brain because of all of the Geico-sponsored sports I watch and listen to on radio and TV). In other words, it doesn’t hurt to have everybody know who you are and what you sell. And it can help. A lot. (Geico and Progressive both became household insurance names on the strength of their spending on brand advertising.)

Branding is an applied example of what economists call signaling theory (and for which Michael Spence won a Nobel prize). Writes N. Gregory Mankiw in Principles of Economics (p. 401), “the firm signals the quality of its product to consumers by its willingness to spend money on advertising.”

This principle was taken for granted in the advertising business for generations. But today it’s being forgotten because advertising has become digital, and leading the digital craze is the four dimensional shell game called adtech, which is thick with fraud, malware and world-class rudeness — such as planting tracking beacons on your digital person to follow you around the Net and report your activities to parties unknown, all the better to plant crosshairs on your eyeballs as you go about your private business.

The biggest problem with advertising today is that something that wasn’t advertising in the first place — direct response marketing, which includes both junk mail and spam — is now called advertising, because it looks the part. You don’t know whether the GMC ad you see on Huffington Post is there for every reader or just for you (because some tracking-based targeting mechanism has put it there for you).

Lately individuals have been putting a stop to all forms of advertising, with ad and tracking blockers. According to PageFair and Adobe, the number of people blocking ads passed 200 million worldwide last June, with increase rates in the prior year of 41% worldwide, 48% in the U.S. and 82% in the U.K. If this be a boycott, it’s the biggest in human history.

Most of the whining about ad blocking has been from those directly affected: publishers and ad agencies, since ad blocking costs them exposure and therefore income. Approximately no whining is coming from actual advertisers. (Who don’t call themselves that, by the way. They call themselves retailers, car makers, brewers and bankers.) For them advertising is just a line item on the expense side of the balance sheet. They can cut it or re-deploy it in other ways. For example, they can spend on the kind of old-fashioned non-tracking-based advertising they did before direct response marketing (best known as junk mail) body-snatched Madison Avenue, making it “digital” at all costs, including the good will of advertising’s consumers, who now have a valve to shut it off. (Or just to shut off the tracking. The valves are getting better every day.)

Naturally this has caused a “war” to break out. (FWIW, I’ve been covering this for some time. Here’s a list of posts and articles. Three of the most recent are in HBR, MIT Technology Review and Linux Journal.)

This conflation of direct response marketing with old fashioned Madison Avenue brand advertising has too many of us judging the latter by the metrics of the former. Among those is the author of this Economist piece. Let’s continue…

But new research shows that the simple measures often used to assess the impact of search ads may be exaggerating their effectiveness.

Again, while search ads are called ads, they’re really direct marketing. They are data-driven, want to get personal, and are looking for a direct response. Brand advertising is also data-driven, but the data is always in aggregate form, because the targets are populations, not individuals. Brand advertising doesn’t want to get personal. That would be too expensive, might creep people out, and isn’t the idea anyway, because brand advertising isn’t looking for a direct response. All it wants is to make an impression. Not a sale.

Establishing cause and effect in offline advertising is hard. Ads are difficult to target: space on billboards and in newspapers is seen by lots of shoppers. Some of these eyeballs are worth spending money on; others, either because they belong to existing customers or to people who never will be, are not.

But the whole point of billboards is to be “the waste that works.” If you’re McDonalds (the biggest outdoor advertiser in the U.S.), you want every driver to know they serve more kinds of coffee now. If you’re Geico, you want to maintain top-of-mind consideration when people (not just you) get around to buying insurance again (something nobody does every day).

And even when big ad campaigns are followed by strong conclusion—that rising sales are the result of good budgets often rise in good times so that spending and sales grow together, even if the advertisements are useless. The ads and the sales have a common cause—strong demand—but may have no causal link.

Right. And that is not a problem if you’re McDonalds or Geico.

Internet advertising seems to offer a solution to both these problems.

Again, for brand advertising those aren’t problems.

First, internet search ads are targeted: the links that search engines show are based on a combination of the search term a user has typed in and his browsing history. Second, because firms can track whether visitors to their websites come from search-engine links they have paid for, they can work out whether ads convert into sales…

The most tendentious adtech assumption is that everybody is buying something all the time. Most of the time we are not. When I looked up the Bill Hicks videos above, I wasn’t buying anything. In fact when I look through my browsing history over the past week, I find only one shopping example, and that was the exercise in futility that led me to post my buying intentions on my blog. So far the response has been nil. Nobody wants to fix a ten-year-old subwoofer, least of all from a company that’s out of business.

Now here’s what matters about brand advertising in my one little case, and why the waste in it is the part that works: when I replace my busted subwoofer, I am far more likely to be attracted to brands I know than to be swayed by advertising targeted at me because robots that follow me suspect I’m looking for a subwoofer at this moment in time. (None do, by the way. I’m seeing no ads anywhere for subwoofers.)

Another false adtech assumption is that “big data” can “know us better than we know ourselves.” This is worse than wrong: it is delusional, and an insult to our sovereign humanity. All of us are not only different from each other, but from how we were ten minutes ago. To be fully human is to learn and change constantly. “I know this orbit of mine cannot be swept by a carpenter’s compass,” Whitman writes. “I do not trouble my spirit to vindicate itself or be understood… I was never measured, and never will be measured… The spotted hawk swoops by and accuses me. He complains of my gab and my loitering. I too am not a bit tamed. I too am untranslatable. I sound my barbaric yawp over the roofs of the world.”

No direct response advertising system, no big data algorithms, can begin to comprehend the wild, free, untamed, barbaric and untranslatable spotted hawk in each of us. But brand ads can still make us aware that Geico will save you 15% in 15 minutes.

(The next paragraph refers back to an earlier one I snipped.)

To test this problem of “activity bias”, the authors recruited volunteers online and split them into two groups. The first group watched a video promoting Yahoo, and the other group watched a political broadcast. The first group used Yahoo around three times more after seeing the ad, giving the impression it was very influential. But the control group—those subjected to a bout of politics but no Yahoo promotion—also used Yahoo a lot more. Both groups happened to be in an active period of internet use. This is why they were recruited in the first place and why they used Yahoo sense of advertising impact…

Three years ago I was invited to a Yahoo offsite in the Caribbean to give a talk to their biggest advertisers, plus a bunch of celebrities who came along for the junket. I told them the future was one of liberated individuals who would only increase their agency (the power to act with full effect in the world), and that they should place their bets on the side of those individuals, rather than only on adtech, which was all the rage at the time (and still is, although now it’s looking more like a cancer). I also pointed to the rise in ad blocking and its inevitable effect on Yahoo’s business. There was a lot of agreement, but no action. They kept investing in adtech, and we see where they are now.

Bosses should still take Wanamaker’s fear seriously: a rise in sales after an ad campaign does not automatically mean that the ads worked. But it also shows how the online world is getting closer to solving the conundrum he posed. Far from being an industry where cause and effect remain murky, online advertising may yet become one area where the dismal science can predict how to get costs down and profits up.

It would have helped this piece if the signaling corner of the dismal science were sourced as well. So I advise The Economist and others covering advertising to look for signaling in the jewel case that is Don Marti’s blog. On the subject of advertising, there’s none better.

Talking customer power and VRM

December 1, 2015 in adtech, advertising, Business, Cluetrain, Internet, Law, Life, Live Web, marketing, News, Personal, privacy, problems, Research, Technology, VRM | 3 comments

I’ll be on a webinar this morning talking with folks about The Intention Economy and the Rise in Customer Power. That link goes to my recent post about it on the blog of Modria, the VRM company hosting the event.

It’s at 9:30am Pacific time. Read more about it and register to attend here. There it also says “As a bonus, all registered attendees will receive a free copy of Doc’s latest book, The Intention Economy: How Customers Are Taking Charge in either printed or Kindle format.”

See/hear you there/then.

 

 

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Will Content Blocking push Apple into advertising’s wheat business?

August 29, 2015 in advertising, marketing, problems, Research, Technology, VRM | 9 comments

wheat+apple

[Update on 3 January 2016: Buzzfeed reports that Apple is killing iAd and getting out of that business, ending the conflict I detail below. And Apple confirms the decision, here. For a look at what I am sure is behind that, scroll down to “Sacrificing its adtech business…”.]

A couple weeks ago, I posted Separating advertising’s wheat and chaff, contrasting privacy-respecting brand advertising (the wheat) with privacy-offending tracking-based advertising (the chaff), better known in the industry as “adtech.”

Apple pushes both, through its own advertising business, called iAd. The company is also taking sides against both — especially adtech — by supporting Content Blocking in a new breed of mobile phone apps we can expect to see in iOS 9, Apple’s next mobile operating system, due next month.

In Apple’s Content Blocking is chemo for the cancer of adtech, which I posted a few days ago, I visited the likely effects of content blocking. Since then a number of readers have pointed to posts about iAd and the opt-out choices Apple provides for advertising on iPhones and iPads.

Both iAd and the opt-outs reveal that Apple is as much in the adtech business as any other company that tracks people around the Net and blasts personalized advertising at them.

Apple is clearly taking sides against adtech with its privacy policy, which has lately become more public and positioned sharply against the big tracking-based advertising companies (notably Google and Facebook). In September of last year, for example, Apple put up a new page — apple.com/privacy — that contained this paragraph:

Our business model is very straightforward: We sell great products. We don’t build a profile based on your email content or web browsing habits to sell to advertisers. We don’t “monetize” the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you. Our software and services are designed to make our devices better. Plain and simple.

What we have here, then, is Apple’s massive B2C business in conflict with one of its B2B businesses. Since there is a lot of history here, let’s review it.

On 8 July 2010, Engadget published iAds uses iTunes history, location information to target advertising. It begins,

We’ve heard about this before, but now that it’s up and running, this is probably worth a revisit. Apple’s iAds system actually uses lots of your information, including your iTunes purchasing history, location data, and any other download or library information it can suss out about you, to determine what ads you see. So say a few marketing firms working with the large companies now buying and selling iAds.

A recent series of ads for soap was able to target “married men who are in their late 30s and have children.” That’s very specific, and when Apple rolls out the full program, it’ll even be able to use things like iBooks purchases and iTunes movie and TV downloads to target you with advertising.

On 15 October 2014, Digiday published Apple revamps mobile ads with retargeting options. It begins,

Apple’s release of its new mobile operating system last month came with an overlooked gift for marketers: the ability to retarget ads based on users’ in-app browsing behaviors.

According to ad agencies, Apple is actively pitching the new capability as a way to effectively solve the mobile cookie problem.

Say, for example, a visitor to a retailer’s iPhone app adds a pair of shoes to his cart but ultimately decide not to buy it. In this scenario, the retailer will now be able to retarget that user with an ad for that exact pair — even in another app on his iPad. When tapped, the ad would direct him back to his abandoned checkout page and automatically add the shoes to his online shopping cart.

That was when iAd was new. Since then it has come to be regarded, at least by the online press, as something of a failure. On 16 Ocbober 2014, Business Insider published Here’s Apple’s Plan To Turn Around iAd, One Of Its Biggest Flops. The gist:

Several sources have confirmed to Business Insider that Apple is currently visiting mobile specialists at the top media agencies in New York City to push the new function. (Cross-device retargeting.)

Cross-device retargeting is of most use to retailers: if a customer spends some time looking at a dress on their iPad app but decides not to buy it, that same retailer can “retarget” them with an ad displaying an image of that dress, options to buy, or directions to the store when they next pick up their iPhone.

On 19 November 2014, AdExchanger published iAd starts selling programmatically, and explains how it works:

iAd has more than 400 targeting options for advertisers. Its audience is also validated, since users must create an iTunes account in order to download apps. With the release of iOS 8, Apple announced that those Apple IDs could be used by iAds advertisers to retarget users across their devices. Those capabilities make it a good fit for advertisers doing audience-based targeting, who often prefer transacting in programmatic channels.

iAd has scale: “Apple iAd’s sell-side SDK is one of the most penetrated SDKs in the industry,” said Michael Oiknine, CEO of Apsalar. “They now have added iTunes radio inventory, so it’s a smart yield maximization strategy for Apple and is akin to Facebook strategy, which maximizes inventory sales via FBX and PMDs.”

On 21 November 2014, Venturebeat published Apple and AdRoll enable iOS ad retargeting — with extra data from iTunes and the App Store. It begins,

In a significant move for the mobile advertising industry, Apple and retargeting leader AdRoll have announced a partnership that will see AdRoll providing its retargeting and programmatic buying capability for iAd. In addition, Apple will enable advertisers to target potential customers via access to its proprietary data sets from iTunes and the app store.

On 21 November 2014, AdWeek published Get Ready for More Mobile Ads on Your iPhones as Apple Launches New iAds. The gist:

Today, Apple is unveiling partnerships with companies like AdRoll, which will flip a switch and start serving iAds through its automated marketing platforms. This turn toward programmatic mobile advertising has been in the works for at least a year. Last year, the company stopped treating iAd like a high-end marketing platform for only the top brands with the most cash.

Apple wanted to build a self-serve mobile advertising system in house, and it bought Quattro Wireless to help. Sources said that effort faltered, and Apple decided to partner with ad tech companies like AdRoll and The Rubicon Project to compete with mobile ad giants like Facebook, Google and Twitter.

AdRoll is a retargeting specialty firm that lets marketers use their own consumer data profiles to deliver ads across such platforms. And Rubicon unexpectedly leaked word earlier this week that it was partnering with Apple.

On 22 January 2015, ExchangeWire asked What will Apple’s Ad Tech Play look like? They say,

Apple’s renewed designs on the advertising business were revealed when it was announced it was to start selling its iAd inventory on a programmatic basis, with several firms including MediaMath, Rubicon Project, among others, over four years after its iAd unit was initially launched, asking advertisers for (the then audacious sum of) $1m per campaign on its iOS devices.

Since launch, Apple’s presence in the advertising business has been largely underwhelming (apart from its own spend). But the revelation it had chosen several supply-side platforms (SSP) to sell programmatic guaranteed opportunities on behalf of the 250,000-plus App Store developers indicated its renewed designs on the sector.

The announcement itself made waves, not least because of the bungled nature of the announcement,which itself raises a number of issues to debated about Apple’s influence in the ad tech sector (more on that later).

The initial announcement read: “Apple’s iAd provides 400-plus targeting options to advertisers, based on hundreds of millions of validated iTunes accounts worldwide. This rich first-party data asset makes it easy for buyers to target the specific mobile audiences of their choice.”

The move represented, for the first time, that Apple is willing to loosen control over its first-party iTunes data with advertisers expected to be willing to pay top dollar for the access.

They add,

Apple has since started to advertise for roles within its iAd business, requesting applications for UK candidates to join its iAd Marketplace Sales Organisation.

Among the skills requested are: “Apple’s customers on the various products iAd has to offer as well as how to leverage iAd’s self service buying platform, iAd Workbench.”

In addition: “Third-party tags familiarity a plus.”

What is clear, from all these pieces and many others like them, is that Apple’s adtech business is little if any different from the rest of them — meaning just as creepy and privacy-abusing — and notable as well for failing to live up to its original ambitions, which were both huge and (via Business Insider) outlined by Saint Steve himself:

At launch, Jobs set out the bold ambition that iAd would capture 50% of the mobile ad market. Apple marketed iAd as a best-in-class solution for advertisers because it owns both the hardware and operating system the ads ride on and gains valuable data when people sign up for Apple ID to register for iTunes accounts. That means it can target ads by age, gender, home address, iTunes purchases and App Store downloads.

However, it’s still somewhat behind that lofty 50% target. iAd made up just 2.5% of the mobile ad revenue booked in the US last year, according to eMarketer, behind Google which takes the lion’s share (37.7%) and Facebook (17.9%). The most recent data from IDC states Apple generated $125 million in mobile ad sales in 2012.

Apple’s total sales in FY 2012 were $125 billion, or 1000x its mobile ad sales that year. Put another way, iAd contributed 0.01% to Apple’s sales.

Meanwhile, does any Apple customer want advertising on their iPhone or iPad?

Apple knows the answer to that question, which is why Apple provides ways for you to “limit ad tracking on your iPhone, iPad, or iPod touch” and “ads based on your interests.”* (Just go to Settings > Privacy > Advertising to “Limit Ad Tracking,” and to Settings > Privacy > Location Services > System Services. to turn off “Location Based iAds.”) And soon we’ll have Content Blocking as well.

Sacrificing its adtech business would position Apple in full alignment with three things:

  1. Tim Cook’s privacy statement. It would take the loopholes out of that thing.
  2. Market demand. People are fed up with losing their privacy online — almost all of it to the tracking-based advertising business. (Sources: Pew, TRUSTe, Customer Commons, Wharton.)
  3. The moral high ground called simple human decency. Most people don’t want to be tracked in the online world any more than they want to be tracked in the physical one. Nor do they want information about them known by first parties to be sold to third parties, or to anybody, with our without their knowledge, no matter how normative that practice has become.

Dropping adtech would also be good for iAd, which could then concentrate on placing non-tracking-based brand ads, which are more valuable anyway: to brands, to publishers and to the marketplace. Also to Apple itself, because they would be selling wheat, rather than chaff.

Until then, the loopholes persist in Tim Cook’s privacy statement, and Apple retains major conflicts between its massive B2C businesses and its struggling B2B adtech business.

It will be interesting to see what the company does once the Content Blocking chemo hits the App Store bloodstream.

* “Based on your interests” (aka “interest based advertising“) is a delusional conceit by both adtech (examples here , here and here) and online retailing (prime example: Amazon). Neither visiting sites nor buying are measures of interests. All they show are actions that could mean anything — or nothing.

The interest-based advertisers say our interests are “inferred” by what we do (and they like to observe, constantly and everywhere). And yet those inferences are weakened by another assumption that is flat-out wrong, nearly all the time: that we are always in a shopping mode. In fact we are not.

We are, in fact, always in an owning mode, which is why I think that’s the real greenfield for e-commerce. If companies shifted a third of what they spend on adtech over to customer service, they would vastly increase both customer loyalty and brand value.

By the way, Apple knows this, possibly better than any other technology company. That’s one more reason why I think their B2C smarts will correct the adtech crowd-following errors of their B2B ways.

[Later…] @JamesDempsey tweets,

iOS 9 content blocking is in Safari. iAds appear in apps—not web pages: iAds not blocked.

Good to know. Apple’s iAd site doesn’t make that clear (to me, at least). What this tells me is that iAd is in the chaff business while Content Blocking encourages wheat on Safari. Doesn’t change the point of this post, or the earlier ones.

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Separating advertising’s wheat and chaff

August 12, 2015 in advertising, Business, Internet, marketing, privacy, problems, Research, Technology | 29 comments

Advertising used to be simple. You knew what it was, and where it came from.

Whether it was an ad you heard on the radio, saw in a magazine or spotted on a billboard, you knew it came straight from the advertiser through that medium. The only intermediary was an advertising agency, if the advertiser bothered with one.

Advertising also wasn’t personal. Two reasons for that.

First, it couldn’t be. A billboard was for everybody who drove past it. A TV ad was for everybody watching the show. Yes, there was targeting, but it was always to populations, not to individuals.

Second, the whole idea behind advertising was to send one message to lots of people, whether or not the people seeing or hearing the ad would ever use the product. The fact that lots of sports-watchers don’t drink beer or drive trucks was beside the point, which was making the brand familiar to everybody.

In their landmark study, “The Waste in Advertising is the Part that Works” (Journal of Advertising Research, December, 2004, pp. 375-390), Tim Ambler and E. Ann Hollier say brand advertising does more than signal a product message; it also gives evidence that the parent company has worth and substance, because it can afford to spend the money. So branding was about sending a strong economic signal along with a strong creative signal.

Plain old brand advertising also paid for the media we enjoyed. Still does, in fact.

But advertising today is also digital. That fact makes advertising much more data-driven, tracking-based and personal. Nearly all the buzz and science in advertising today flies around the data-driven, tracking-based stuff generally called adtech. This form of digital advertising has turned into a massive industry, driven by an assumption that the best advertising is also the most targeted, the most real-time, the most data-driven, the most personal — and that old-fashioned brand advertising is hopelessly retro.

In terms of actual value to the marketplace, however, the old-fashioned stuff is wheat and the new-fashioned stuff is chaff.

To explain why I say that, let’s start with two big value-subtracts of adtech: 1) un-clarity about where any given ad comes from; and 2) un-clarity about whether or not any given ad is personal.

For example, take the one ad that appears for me right now, on my Firefox browser, in this Washington Post story:

ziluly

What put that ad there?

If I click on the tiny blue button on the upper right corner of the ad (called “Ad Choices,” which I’ll visit later), I get to a linkproof “About Google Ads” page, so I guess Google placed this one. The page mostly pitches Google advertising to potential advertisers, but also says “you may also see ads based on your interests and more.” How do they know my interests? By tracking me, of course. Did I ask for that, or know how the tracking happens? No.

But I also don’t know if this ad is based on tracking. In fact I suspect it is not, because the ad is nowhere near any interest of mine. It was the only ad that got past the tracking blockers I have operating right now on Firefox. Why? Not sure about that either. According to my Ghostery add-on, these entities are following me on the Washington Post site:

ghostery-wapo

Google isn’t one of them. But then, Ghostery doesn’t see, or stop, as many trackers Privacy Badger, which I also have installed. Here’s that list:

privacybadger

Since I’m not currently running an ad blocker (e.g. Adblock Plus) on Firefox, but I am running Ghostery and PrivacyBadger (both of which follow and selectively valve tracking), I can assume that turned-off trackers causes some of the blank white spaces flanking editorial matter, each with the word “Ad” or “Advertisement” in tiny type.

Thus I suppose that the Google/Zulily ad got through because it either wasn’t tracking-based or because I have Ghostery and/or Privacy Badger set to wave it through. But I don’t know, and that’s my point. Or one of them.

Now let’s look at what I’m missing on that page. To do that, I just disabled all tracking and ad blocking on a different browser — Google’s Chrome — and loaded the same Washington Post page there.

It took twenty-seven seconds to load the whole page, including seven ads (which were the last things to load), over a fairly fast home wi-fi connection (35Mbps downstream).

Instead of the Zulily ad I saw in Firefox, there is an ad for the Washington Post’s Wine Club. A space-filler, I guess. Can’t tell.

Only one of the six other ads feature the little blue Ad Choices button. It’s one for the Gap. When I click on it, this comes up:

Screen Shot 2015-08-12 at 11.01.20 AM

Then, when I then click on “Set your Ad Preferences,” I am sent to Gap Ad Choices, which appears to be a TRUSTe thing. The copy starts,

Interest-based ads are selected for you according to your interests as determined by companies such as ad networks and data aggregators. These companies collect information about your activity – like the pages you visit – and use it to show you ads tailored to your interests; this practice is sometimes referred to as behavioral advertising.

You can prevent our partner companies listed below from showing you targeted ads by submitting opt-outs. Opting-out will prevent you from receiving targeted ads from these companies, but you may continue to see our ads that are not shown through the use of behavioral advertising.

I’ve never heard of any of those companies, or those on the PrivacyBadger list, except for Google, Facebook, Amazon, Twitter and other usual suspects. Nor have you, unless you’re in the business.

These companies are not brands, except inside their B2B sphere, which includes a mess of different breeds: trading desks, SSPs (Supply Side Platforms), DSPs (Demand Side Platforms), ad exchanges, RTB (real time bidding) and other auctions, retargeters, DMPs (Data Management Platforms), tag managers, data aggregators, brokers, resellers, media management systems, ad servers, gamifiers, real time messagers, social tool makers, and many more.

To see how huge this field is, visit Ghostery’s Global Opt-Out page, which companies that “use your data to target ads at you.” I haven’t counted them, but to get to the bottom of the list I had to page down twenty-eight times. And it’s still just a partial list. Lots of other companies, such as real-time auction houses, aren’t there.

If you’re game for more self-torture, check out LUMAscapes such as this one:

display-advertising-lumascape-email-ads-1024x748

Or go to the master Ad Choices page. The headline there says “WILL THE RIGHT ADS FIND YOU?” — as if you want any ads at all. The copy below says,

Welcome to Your AdChoices, where you’re in control of your Internet experience with interest-based advertising—ads that are intended for you, based on what you do online.

The Advertising Option Icon gives you transparency and control for
interest-based ads:

  • Find out when information about your online interests is being gathered or used to customize the Web ads you see.
  • Choose whether to continue to allow this type of advertising.

Watch three short videos to learn how the Icon gives you control of when the right ads find you.

And if you want to go completely bonkers, try watching the videos, which feature the little ad choices icon as the “star” in “your personal ads.”

“Bullshit” is too weak a word for what this is. Because it’s also delusional. Disconnected from reality. Psychotic.

Reality is the marketplace. It’s you and me. And we have no demand for this stuff. In fact our demand, on the whole, is negative, for good reason. According to TRUSTe’s 2015 Privacy Index,

  • 92% of consumers worry about their privacy online. The top cause of concern there: “Companies collecting and sharing my personal information with other companies.”
  • 42% are more worried about their privacy than one year ago.
  • 91% “avoid doing business with companies who I do not believe protect my privacy online.”
  • 77% “have moderated their online activity in the last year due to privacy concerns.”
  • 86% “have taken steps to protect their privacy in the last twelve months.”
  • 63% “deleted cookies
  • 44% “changed privacy settings”
  • 25% “have turned off location tracking”

Ad blocking has also increased. According to PageFair’s latest report,

  • “Globally, the number of people using ad blocking software grew by 41% year over year.” (Q2 2014 to Q2 2015.) In the U.S. the growth rate was 48%. In the U.K. the rate was 82%.
  • In June 2015 “there were 191 million monthly active users for the major browser extensions that block ads.”

I should pause here to add that I use four different browsers on this laptop alone, and make it my business (as the chief instigator of ProjectVRM) to try out many different VRM (vendor relationship management) tools and services, including those for privacy protection, among which are tracking protection and ad blocking systems. These include Abine, Adblock Plus, Disconnect, Emmett‘s Web Pal, Ghostery, Mozilla’s Lightbeam, PrivacyFix, Privowny and others you’ll find listed here. I switch these on and off and use them in different combinations to compare results. The one thing I can say for sure, after doing this for years, is that it’s damn near impossible for any human being — even the geekiest — to get their heads around all the things adtech is doing to us, through our browsers and mobile apps, or how all the different approaches to prophylaxis work, especially if more than one is working at the same time in a browser. The easiest thing for everybody is to install (or switch on) a single ad and tracking blocker and be done with it. Which is exactly what we’re seeing in the research above.

Another delusion by the “interest-based advertising” business is the belief that we “trade” our personal data for the goods that advertising pays for. In October 2010 John Battelle wrote, “the choices provided to us as we navigate are increasingly driven by algorithms modeled on the service’s understanding of our identity. We know this, and we’re cool with the deal.” I responded,

In fact we don’t know, we’re not cool with it, and it isn’t a deal.

If we knew, the Wall Street Journal wouldn’t have a reason to clue us in at such length.

We’re cool with it only to the degree that we are uncomplaining about it—so far.

And it isn’t a “deal” because nothing was ever negotiated.

But adtech grew like crazy, rationalized by the faith John summarized. Then, in June of this year, came The Tradeoff Fallacy: How Marketers are Misrepresenting American Consumers and Opening Them Up to Exploiitation, a report from the Annenberg School for Communication of the University of Pennsylvania. In it Joseph Turow, Michael Hennessy and Nora Draper say that’s not the case. Specifically,

…a majority of Americans are resigned to giving up their data—and that is why many appear to be engaging in tradeoffs. Resignation occurs when a person believes an undesirable outcome is inevitable and feels powerless to stop it. Rather than feeling able to make choices, Americans believe it is futile to manage what companies can learn about them. Our study reveals that more than half do not want to lose control over their information but also believe this loss of control has already happened.

And it isn’t just about “giving up” data. It’s about submitting to constant surveillance by unseen entities, and participating, unwillingly, in what Shoshana Zuboff calls surveillance capitalism. This —

…establishes a new form of power in which contract and the rule of law are supplanted by the rewards and punishments of a new kind of invisible hand…

In this new regime, a global architecture of computer mediation turns the electronic text of the bounded organization into an intelligent world-spanning organism that I call Big Other. New possibilities of subjugation are produced as this innovative institutional logic thrives on unexpected and illegible mechanisms of extraction and control that exile persons from their own behavior.

And yet, scary as it is, Big Other is limited by three realities that are now beginning to become clear through the veil of adtech’s delusions.

First is the paradox Don Marti isolates in Targeted Advertising Considered Harmful: “The more targetable that an ad medium is, the less it’s worth…For targeted advertising, it’s damned if you do, damned if you don’t. If it fails, it’s a waste of time. If it works, it’s worse, a violation of the Internet/brain barrier.”

Second is adtech’s belief that we are nothing but consumers, and that all are ready at all times to hear a sales pitch — especially a personalized one.

Third is that this actually works, when most of the time it does not.

For example, I just looked up Mt. Pisgah at maps.google.com. In “search nearby” (which Google volunteers as a default search choice, along with a picture of a pizza), Google’s search algorithm assumes that I’m looking, by default, for hotels and restaurants. But what if I’m looking for hiking or biking trails, or something else that costs no money? No luck. Google instead gives me a hotel, a lake and another wilderness area. In fact Google — which one might think knows me well, since I’ve been a user of their services since the beginning, and has me logged in on Chrome  — has no idea why I want to look up that mountain. (In fact it was to illustrate this point, for this essay. Nothing more.)

I just went back through the last seven days of my browser usage on Firefox, Chrome, Safari and Opera, to see if there is any hint about anything I might have wanted to buy. Out of many hundreds of pages I’ve visited, there is a single hint: a search I did for a replacement remote control for my sister’s Sansui TV. (I didn’t buy it, but I did email her a link.)

Even Amazon, which deals with us mostly when we are in shopping mode, constantly promotes stuff to us that we looked for or bought once and will never buy again. (For years after my grandson had moved past his obsession with Thomas the Tank Engine, Amazon pushed Thomas-like merchandise at me.)

Worse, Amazon constantly mixes wheat and chaff banner ads, so you don’t know whether what you’re seeing is there because Amazon knows you, or because it’s blasting the same promo at everybody.

This has been the case lately with Amazon’s “Home Essentials” banner, “presented by Pure Wow.” If you click on the Pure Wow logo, you get sent to a page that identifies the company as “a women’s lifestyle brand dedicated to finding unique ways to elevate your everyday.” Is Pure Wow a division of Amazon? Is it a company that paid Amazon to place the ad as a branding exercise? Does Amazon think I’m a woman? WTF is actually going on?

Fortunately, it’s possible to tell, by looking at Amazon through a browser uncontaminated by cookies or spyware. (In my case that’s Opera.) This is how I determined that Pure Wow is a simple brand ad, blasted at a population. In other words, wheat. But the fact that it’s hard to tell is itself a value-subtract, for Amazon and Pure Wow as well as for the rest of us, illustrating Don Marti’s earlier point, that the value of a medium varies inversely with its target-ability. In other words, because Amazon is targetable, the ads it runs are worth less than they would be if it weren’t.

Because marketing is now so totally data-driven, and it is possible for marketing machinery to snarf up personal data constantly and promote at people in real time, the whole business has become obsessed with metrics, rather than the marketing fundamentals taught, for example, by Theodore Levitt and Peter Drucker.

Nearly the entire commercial Web — the part that’s increasingly monetized y tracking-based advertising — is so high from smoking its own exhaust that it actually believes that we are in shopping mode, all the damn time.

These intoxicated marketers completely miss the fact that 100% of the time we are dealing with stuff we’ve already bought, and often need serviced. (Like my sister with the lost remote control.)

Thus we have the strange irony of marketing talking about “brand value,” “loyalty,” and “conversation” while doing almost nothing to serve actual customers who need real help, besides answering complaint tweets and routing inquiries to robots and call centers (which are increasingly the same thing).

My point here is that giant companies — the Big Other — really think homo sapiens is homo consumerus, which is a category error of the first water.

Worse, it’s an illusion. Getting would-be oppressors to assume we are doing nothing but buying stuff all the time is one of the all-time-great examples of misdirection.

And think about what happens when personalized advertising works — for example, when it serves up an ad we can actually use. The actual value of that ad is still compromised by the creepy suspicion that we’re seeing it because we’re being followed, without permission, using who-knows-what, based on unwanted personal data leakage through tracking beacons sucking like leeches on our virtual, and put there flesh by parties that may not be Google or others who want to point us to the nearest pizza joint when we just want to know what exit to take.

Kapersky Labs calls the leeches “adware.” Specifically, adware is the payload of cookies, programs and other code inserted into your browser, your computer and your mobile device, mostly without your knowledge or permission. The industry and its associations (such as the IAB and the DAA) say adware is all about giving you a better “advertising experience” or whatever. But to the Kaperskys of the world, adware is an attack vector for bad actors such as malware spreaders — all looking to siphon money off an easily gamed system, often by planting hard-to-find bots and other malicious files inside the hardware and software through which we live our digital lives. Kapersky’s 2014 report, for example, is full of arcana that’s hard for civilians to understand, but is worth reading just to get an idea of how very bad this problem is for everybody. Here’s a sample:

Almost half of our TOP 20 programs, including the one in first place, were occupied by AdWare programs. As a rule, these malicious programs arrive on users’ computers alongside legitimate programs if they are downloaded from a software store rather than from the official website of the developer. These legitimate programs might become a carrier for the AdWare-module: once installed on the user’s computer it can add advertising links to browser bookmarks, change the default search engine, add contextual advertising, etc.

Here is one example of one piece of malware at work:

The Trojan-Clicker.JS.Agent.im verdict is also connected to advertising and all sorts of “potentially unwanted” activities. This is how scripts placed on Amazon Cloudfront to redirect users to pages with advertising content are detected. Links to these scripts are inserted by adware and various extensions for browsers, mainly on users’ search pages. The scripts can also redirect users to malicious pages containing recommendations to update Adobe Flash and Java – a popular method of spreading malware.

No wonder security expert T.Rob Wyatt says Online advertising is the new digital cancer. He explains,

I often refer to AdTech as the Research & Development arm of organized cybercrime. The criminals no longer have to spend money inventing new ways of penetrating the mobile device or PC since they can purchase a highly targeted ad for mere pennies instead. Thanks to very effective personalization capabilities delivered by ad networks, the cybercriminals can slice and dice their content and tailor the malware for specific audiences.

There are many ways to personalize content.  For instance, do you ever wonder why we so much email spam is obvious? Spam is often riddled with misspellings, bad grammar, and other glaring clues as to its malicious intent. We think “those must be some really dumb spammers” as we click delete.  Who would fall for that, right?  Actually, that is intentional. People who are so eager for the promised product that they are willing to overlook those obvious clues are self-selecting as the most gullible targets, and therefore the most lucrative. Malvertising relies on a similar filtering mechanism: Anyone NOT using ad blockers is self-selecting into the cybercriminal’s target pool.

There are many names for digital advertising’s chaff. “Interest-based advertising” is the Ad Choices conceit. Inside the business, “adtech” and “programmatic” are two common terms. Kapersky uses “adware.” Don uses “targeted.” I like “tracking-” or “surveillance-based.”

The original name, however, before it began to be called advertising, was direct response marketing. Before that, it was called direct mail, or junk mail.

Direct response marketing has always wanted to get personal, has always been data-driven.

Yes, brand advertising has always been data-driven too, but the data that mattered was how many people were exposed to an ad, not how many clicked on one — or whether you, personally, did anything.

And yes, a lot of brand advertising was annoying, and always will be. But at least we knew it paid for the TV programs we watched and the publications we read.

So now is the time to separate advertising’s wheat from its chaff, in the place where it’s easiest to do, and where it counts most: in our own browsers, apps and devices. It’s much easier to defeat the problem ourselves than by appealing to policy-makers and the industrial giants that rule the commercial Web. And we’re already part way there, thanks to friendly makers of browsers, extensions and add-ons that are already on the case.

Hence…

An easy solution

1280px-Batteuse_1881

All we need is a way to see what’s wheat and what’s chaff, and to separate them as we harvest content off the Web.

In agriculture this is done with a threshing machine. On the Web, so far, it’s done with ad and tracking blockers. All we need to do next is adjust our browsers and/or blockers to allow through the wheat. (Or to continue blocking everything, if that’s our preference. But I think most of us can agree that encouraging wheat production is a good thing.)

For that we need to do just two things:

  1. Label the wheat on the supply side, and
  2. Be able to pass through wheat on the demand side.

This can be done with UI symbols, and with server- and browser-based code.

By now it is beyond obvious that the chaff side of the chaff-obsessed advertising business won’t label its ads except with fatuous nonsense like the Ad Choices button. They can’t help us here.

Nor can attacking problems other than tracking. Not yet, anyway.

This is why well-meaning efforts such as AdBlock Plus‘s Acceptable Ads Manifesto can’t help. While everything the Manifesto addresses (ads that are annoying, disruptive, non-transparent, rude, inappropriate and so on) are real problems, they are beside the point.

As T.Rob puts it in Vendor Entitlement Run Amok, “My main issue with vendors turning us into instrumented data sources isn’t the data so much as the lack of consent.”

If we consent to wheat and block the chaff we solve a world of problems. Simple as that.

And we’re the only ones who can do it.

In her Black Hat 2015 keynote, Stisa Granick says,

Now when I say that the Internet is headed for corporate control, it may sound like I’m blaming corporations. When I say that the Internet is becoming more closed because governments are policing the network, it may sound like I’m blaming the police. I am. But I’m also blaming you. And me. Because the things that people want are helping drive increased centralization, regulation and globalization.

So let’s not just blame ourselves. Let’s fix the problem ourselves too, by working with the browser and ad and tracking blockers to create simple means for labeling the wheat and restricting our advertising diet to it.

And believe me, there are still plenty of creative people left on the old wheat-side advertising business — on Madison Avenue, and in the halls of AdAge and MediaPost — to rally around the idea of labeling the good stuff and letting the bad stuff slide.

By harvesting wheat and threshing out chaff, we also encourage good advertising and re-align it with good editorial (a word I prefer to “content,” which always sounds like packing material to me). We may not like all the ads we see, but at least we’ll know they have real value — to the sites we read, the broadcasts and podcasts we watch and listen to, and to the ad-supported services we depend on.

Then, for those of us who want or welcome certain kinds of tracking, we can also create useful flags for those as well, and consent that’s worthy of the noun.

But let’s start where we can do the most good with the least effort: by threshing apart advertising’s wheat and chaff.

Bonus links:

Fun with tropo

July 7, 2015 in Broadcasting, Business, Geography, infrastructure, North Carolina, radio, Research, weather | 1 comment

Right now every FM and TV station in Santa Barbara and San Diego can be heard in both places. Between them lays more than 200 miles of ocean across a curved earth. I’m not there right now, but I see what’s happening remotely over my TV set top box. (Thank you, SlingBox.) But, more importantly, John Harder‘s tropo map tells me so:

sb-sd-tropo

Tropo is tropospheric refraction of radio waves across a distance. Atmosphere has refractive properties that don’t matter most of the time. But we can see changes, for example, with mirages ahead of us above a hot road, which causes the air above to refract light at a low angle, essentially reflecting the sky, other cars and landscapes on the horizon. Something like this also happens over land and water for FM and many TV signals.

I see by the map above that tropo is happening in other parts of California, Nevada, Utah and Arizona. I also see that it’s starting to happen here in north central North Carolina, where I can already pick up stations in South Carolina:

nc-sc-tropo

On 88.1fm, for example, I’m getting WRJA from Sumter, South Carolina, atop WKNC in Raleigh. WRJA is about 160 miles away while WKNC is only 40 miles away. But WRJA is 100,000 watts atop a thousand-foot tower, while WKNC is 25,000 watts on a 260 foot tower. (It’s actually as little as 35% of full power in most directions from the transmitter at NC State. They have a construction permit to change that a bit.) So they’re making a hash of each other here.

Back when I lived in the woods north of Chapel Hill, long before the Internet showed up and made all of this stuff irrelevant for listeners (who can get the same stations on the Net, anywhere), I had a directional Finco FM-5 antenna and a Channel Master Crossfire 3610 antenna (both salvaged from abandoned structures) on a pole next to my 1-story house. I rotated them by hand. If I had the same rig here I could point at either WRJA or WKNC and “null out” the other. I did this on hot summer mornings for fun back then, and eventually logged nearly every FM station from Pennsylvania to Georgia. (It’s a summer thing, and coincidental with heat waves over large areas.)

Here is a whole-country map that shows tropo happening pretty much everywhere:

wholecountry-tropo

I would love to have had this kind of resource back in those days. Now that I do, it’s hardly worth the trouble, since nearly all my radio listening is over the Net.

Anyway, if you’re wondering why your local station is being obliterated by a signal coming from a state or two away, or why you’re suddenly getting far-away stations where none were before, tropo is the most likely reason.

The second most likely one is Sporadic E skip, which brings in stations from distances of 800-1200 miles or so away. In that case the E layer of the ionosphere turns into something like a hot road surface, reflecting distant signals, but only at a certain angle. I’ll cover those in a later post when the phenomenon is actually happening. It’s not right now.

Meanwhile, if any of this intrigues you at all, check out William Hepburn’s amazing Worldwide Tropo Forecast Maps. Great eye and brain candy, because it exposes a real-world view of the world that isn’t what you see with your eyes.

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