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Perspectives | Policy

No, Apple isn’t destroying digital advertising. It’s meeting consumer expectations…again

Apple recently announced that iOS 11 will include Intelligent Tracking Prevention (ITP) in Safari. In a nutshell, ITP will go beyond merely blocking 3rd party cookies by segregating any cookie after 24 hours without interactivity on its parent domain’s website. The segregated cookie could still be used for log-ins, but not for tracking and/or retargeting purposes.

Despite a chorus of cries that this move will “sabotage” the current economic model of the internet, I actually think this is just Apple trying to keep up with consumer expectations. For years, Apple has attempted to block 3rd party cookies, although ad tech companies have worked to bypass Apple’s efforts. The thinking has been that consumers only want to be tracked by companies with which they have a relationship. ITP simply ensures that consumers can only be tracked by the companies with which they have a current relationship. There are some kinks, for sure, but overall it makes sense.

After reading some of the reactions to Apple’s move, I had to step outside just to make sure the sky wasn’t actually falling. The response from the ad tech industry has not been surprising. The ad tech lobby has a long track record of protecting legacy models, even when they are probably not the best path for long-term success. However, calling Apple’s move one that will “harm consumers by distorting the digital advertising ecosystem and undermining its operations” seems pretty far off base.

Given the industry’s fear of government regulation, I’m surprised the tech giants aren’t more supportive of private sector moves like Apple’s that seek to address underlying consumer concerns. As we see in the EU’s forthcoming General Data Protection Regulation (GDPR), governments can and will step in if the industry does not demonstrate that it can effectively self-regulate. When our trade bodies fail to step up and put into place strong guidelines that address customer concerns about important issues such as privacy, we put ourselves at risk of increased government scrutiny (many states already have privacy bills in the works.)

Instead, ad tech companies have dedicated massive amounts of capital and resources to developing new ways to track consumers, build larger and more sensitive profiles of consumers and deliver highly targeted ads. For the most part, the returns for investors have been terrific. For consumers – not so much. The well-documented reality is that digital tops the list of consumers’ least favorite forms of advertising. And tracking (aka “targeting”) is one of the aspects of digital advertising cited as particularly irksome.

Think about it: Right now, 67% of digital ads are direct response ads designed to get consumers to click. This is the equivalent of the junk mail cluttering your email inbox and those direct marketing ads that stuff your mailbox and end up in landfills. On top of that, digital ads are often overloaded with calls to unknown 3rd party servers, which dramatically slow the down the page. Worse, on mobile, it not only damages user experience, it soaks up more of a consumer’s data plan.

It’s no wonder consumers are downloading ad blocking software at higher rates each year. It’s no wonder that almost no one ever intentionally clicks on an ad. Suffice it to say that the claim that reducing the persistence of tracking cookies will harm the user experience is absurd. And frankly, a model that relies on these cookies to create an experience that’s driving ad blocker adoption is not one we need to defend.

Contrast that dynamic with Apple. Countless books have been written on how Apple is dialed into the wants and needs of consumers. The company boasts a loyal customer base and for good reason: Consumer experience is the priority. ITP is an extension of Apple’s consumer focus. Given the company’s track record as compared to the current state of digital advertising, ITP is likely to join the long line of successful consumer-friendly features developed by Apple. And if we want to have the same kind of success in the digital ecosystem, respecting the consumer and creating an experience they enjoy must be at the foundation of our advertising efforts.

Perspectives | Policy

Why the GDPR will force you to understand your customers’ needs

When I was 14, I walked door to door selling subscriptions for the local newspaper. It paid a lot better than ditch digger (which I also tried), but it also required thick skin. I quickly learned that I needed a good elevator pitch that captured the essence and value of what I was selling and that helped me make a connection with the person on the other side of the door-frame. If I could do all of that in 10 seconds, then the conversation almost always went well. Sometimes it led to a sale, sometimes it led to “come back later,” and sometimes it just led to a pleasant conversation. All of those outcomes were infinitely better than getting a door slammed in my face. I imagine it was also a much better experience for the prospective subscriber who had just been interrupted by some 14-year-old kid ringing their door bell.

One key to improving my elevator pitch was having a thorough understanding of the product. In this case, the local newspaper. Then I needed to master the value proposition, which meant tuning into the customers’ needs. The key value for most subscribers was the connection to their local community. This was the 1980s, so the paper was the primary way to keep abreast of local politics, sports, events, weather, and to read the classifieds. It was impossible to communicate the value proposition to a prospective subscriber without understanding how a subscription would be helpful to them.

Now, we get all this local information in a very different way. But, what’s now often missing in today’s digital ecosystem is the basic communication with consumers. Some companies do it well – see Apple’s just-in-time notices that allow apps and websites to ask consumers for permission to collect and use sensitive data like location and contacts. However, entire categories of companies aren’t communicating with consumers AT ALL. Just look at the thousands of ad tech companies that track unwitting consumers across the web.

Maybe there’s value to data collection in these contexts. But companies that don’t have a solid value proposition on the added value that they can effectively communicate to consumers better be ready for the door to slam.

The coming enforcement of the General Data Protection Regulation (GDPR) and the likely passage of ePrivacy Regulation in Europe will force companies to better explain what they are offering to consumers. In short, they’ll have to develop an elevator pitch.

For years, industry trade groups have heralded the consumer benefits of big data. But these benefits are often articulated in long-winded, research white papers designed to justify unbridled data collection to regulators. The fact is that, like their predecessor, direct mail, these “highly targeted ads” are more often viewed as creepy than carefully customized. Certainly, customers sometimes appreciate experiences tailored to their past behavior and preferences. However, giving them control over what data is collected and telling them why does not negate that possibility. Effectively communicating the “why” is the essence of the elevator pitch after all.

Starting in the spring of 2018, ubiquitous, non-transparent data collection is not going to fly in Europe. And in a global economy, that means marketers and advertisers everywhere need to pay attention. Companies will have to figure out concise and compelling ways to explain their value proposition to consumers in order to get their consent.

As a young newspaper salesman, I had to knock on the door and—if a customer was willing to open it—I had a brief opportunity to demonstrate the value the local newspaper could deliver. Otherwise, that door would close and I might not get another chance.

Based on my experience, the companies that understand why consumers value their product will be the ones that emerge victorious in this new landscape. Along the way, the whole digital experience might be improved for everyone. And the result will certainly be better than a potential customer opting to download an ad blocker instead.

Perspectives | Policy

DCN letter to the NRA

Today DCN sent a letter to The National Rifle Association (NRA), in response to their campaign to attack the press—including our members directly—with incendiary language. We’ve been watching carefully after they released this video and are increasingly disturbed by the transition into a much larger campaign by the NRA and other political actors. As we state in the letter, we respect their right to have a viewpoint and are simply calling out, particularly in a sensitive time, there are lines which shouldn’t be crossed regardless of the side of the debate you’re on. 

CNN’s Brian Stelter broke the news here.

Perspectives | Policy

Discriminatory deals could close the open web

Earlier this week, we filed our formal comments with the FCC detailing DCN’s view on net neutrality. In the comments, we noted the potential hazards associated with allowing ISPs to give preferential treatment to some websites over other, particularly when it comes to those owned by the ISPs themselves.  

 

The issues really come into focus when you consider the case of Verizon. Over the last few years, Verizon has made a series of strategic acquisitions of digital content – first, by purchasing AOL and all its properties and, recently, Yahoo (which have been combined under the Oath brand). 

 

Many have speculated that these purchases were all about Verizon building scale to attract advertising dollars. And, if that was in fact their goal, Verizon is now heavily incentivized to maintain and even grow the audiences and platforms they have acquired. To do so, a natural next step would be for Verizon to provide faster access to its vertically-owned sites.  

 

In addition, Verizon would be disincentivized to allow the same speedy access to websites that compete with, say, Yahoo Finance. It’s not even a matter of whether a competing site could try to pay for preferential access (which on its own makes it hard for smaller content providers to compete). In this case, Verizon would simply want to ensure that Yahoo Finance gets the most traffic. And given its unique ability to control access speeds, it would be in a position to do so.  

 

It’s hard to imagine that a public company with profit motives and shareholder expectations wouldn’t make every effort to drive more traffic to its sites in order to show the value of these acquisitions. However, the larger issue here is that—as an on-ramp to the internet—Verizon could prioritize delivery of its websites, thus ensuring that consumers are more likely to access them. 

 

The same dynamic would play out in any space where Verizon has its own content. It is not a stretch to assume that Verizon’s shareholders would expect Verizon to provide preferential access to Yahoo Tech, Yahoo Beauty, Yahoo Sports, Yahoo Lifestyle, TechCrunch, and HuffPost. In short, other tech review sites, fashion magazines, sports sites, lifestyle publications, and news organizations would lack the ability to compete fairly.  

 

Adding to the problem is that there are only a handful of mobile broadband providers. (And, as we all know, mobile increasingly dominates content consumption.) So, if each of the mobile broadband providers has their own content for a specific vertical, the remaining content creators would be left without a chair in the game. In fact, they would find themselves at a significant competitive disadvantage. Instead of competing on quality of content, publishers would be forced to compete over who can be bought first by a mobile broadband provider.

 

We all agree that ISPs should not block or throttle consumers trying to access the plethora of available lawful content. But, we need to be equally careful to ensure that discriminatory deals don’t dramatically limit the number and variety of websites available to consumers. As the internet’s inventor Tim Berners-Lee said, “The important thing is the diversity available on the Web.” The Internet is a wonderfully weird place where innovation is the norm and a cacophony of voices flourish. Let’s keep it that way.

Policy

DCN perspective on ePrivacy regulation

Dear Member(s) of European Parliament,

As you consider updates to the ePrivacy Directive, we are writing to offer the perspective of premium publishers of digital media content. Digital Content Next (DCN) was founded in 2001 and remains the only U.S.-based trade association that exclusively represents premium digital content creators. Several of our members are based in Europe and many more have a substantial presence in Europe.  DCN members include many of the Internet’s most trusted and respected media brands, collectively reaching an unduplicated audience of 230.6 million unique visitors – or 100% of the U.S. online population monthly. Importantly, DCN members maintain direct, trusted relationships with consumers and advertisers.

We agree with the need to update and modernize the ePrivacy Directive to account for new technologies that are employed to track consumers in the digital world and hope to see a text which will more closely harmonize the Directive with the General Data Protection Regulation (GDPR).  As you consider changes to the text of the Draft Regulation, we encourage you to focus on consumer expectations.

Context is Key

Consumers have nearly unlimited choices over where they can find news and entertainment online.  If a consumer does not trust the site or the content, they can and do choose to go elsewhere. This creates a dynamic in which consumer-facing websites and apps must continue to earn the trust of their audiences or risk losing them. A key to maintaining that trust is to collect and use a consumer’s data in ways that meet with the consumer’s expectations.  For example, when consumers visit a premium publisher’s site or app, they expect their data will be collected and used in ways to benefit their experience for purposes such as analytics, fraud protection, personalization, subscriptions and content recommendation.  Consumers also are not likely to be concerned when their data will be used for benign purposes such as audience measurement or other uses where data is aggregated. At the same time, publishers need to be able to monetize their content through advertising in order to minimize costs for consumers. Certainly, there are also societal benefits from properly funded news organizations.

However, most consumers do not approve of their data being collected in one context and then used in a different context.  For instance, absent any transparency, a consumer would not expect or even know that a data broker or a broadband service provider might be tracking their activity across the internet for the purpose of building a profile about them, which could then be used to deliver targeted advertising.  A consumer might see the value in allowing a social media company or a search engine to track their activity while using their website or app, but that consumer would not approve of those companies continuing to track them long after the consumer had left their domain and visited a different website.

Our position is that the ePrivacy Regulation should require transparency and consumer consent in cases where consumer data will be collected and used across multiple contexts.Consumers understand and can see the benefits of the collection and use of their data within a single context. Conversely, collection and use of consumer data across different contexts is far less transparent and  is  much  less  likely  to  result in  direct benefits  for  consumers.  While differentiating between data collection and use within a single context versus data collection and use across multiple contexts would map with an average consumer’s expectation, it would have the additional benefit of avoiding over-notification of consumers.  As the Draft Regulation notes in (22) of the preamble, “end-users are overloaded with requests to provide consent.” When consumers are flooded with notifications in digital media,they tend to become fatigued. They can also become annoyed when notifications cause friction in their digital experience – especially when they are simply attempting to access content from a trusted source.  By focusing consent requirements on non-transparent data collection and use, the ePrivacy Regulation would minimize friction where consumers have trusted relationships while also creating a choice mechanism where a relationship does not exist.

The Role of Browsers

Finally, the current version of the ePrivacy Regulation suggests a central role for browsers in obtaining and storing consumer consent.  While there may be merits to providing clear choices to consumers at the browser level, we are concerned that by making the browsers the sole point of obtaining consent for tracking, there could be an unintended consequence of increasing the leverage of large companies with browsers or platforms in the digital ecosystem, such as Google and Facebook, particularly if their primary business is selling advertising across the web thereby competing with publishers. At the same time, it would not make sense to require publishers to ask consumers for consent to track all of their activity across the internet. Indeed, publishers would likely ask consumers for consent to be tracked by the publisher and their chosen third party partners solely while on the site.  As you consider the role that browsers can and should play, it is important that options are preserved and encouraged for narrow consent required for delivery of the context in which value is being delivered to the consumer.

We appreciate your efforts to protect the rights of European citizens. Please let us know if we can be of assistance.

Sincerely,

Jason Kint Signature

Jason Kint
CEO
Digital Content Next

Perspectives | Policy

A level playing field for companies and consumers

Whether your browsing history should be private by default has become a key question in the past year. Shortly after the election, Congress repealed privacy rules that would have required broadband providers to get consent from consumers before they could share this consumer data with advertisers. Members of Congress noted that it was unfair to apply these rules only to the internet providers but not to other giant digital companies, including Facebook and Google. When Senators and Representatives returned to their home districts, however, they promptly got blasted by some of their constituents for appearing to protect the shady practices of cable companies.

Partly in response to the backlash, Rep. Marsha Blackburn (R-TN) introduced the BROWSER Act. It’s a bill designed to level the playing field for companies that collect data about consumers at massive scale. And it is inclusive of all companies that are able to collect data across much of the web like ISPs, Google and Facebook. At the same time, the bill guarantees more transparency and choices for consumers. Ignore the shrill extremists in this debate. For good faith actors representing industry or consumer groups, there’s a lot to like about this bill.

In short, the bill would require companies to obtain opt-in consent from consumers before using “sensitive” data. This would include financial, location, and health information as well as browsing history and app usage. Some have argued browsing history and app usage shouldn’t rise to the level of sensitive information. However, common sense suggests otherwise. How would you feel if someone tried to buy and then publish a list of the websites you visit? In short, this bill says where you go in both the real and virtual worlds should remain private until you grant consent. I find it hard to argue with this.

The bill goes a step further in prohibiting companies from altering or denying service for consumers who do not opt-in. This provision is likely to draw the ire of industry lobbyists. But there’s a lot of merit in putting the onus on companies to develop a good “elevator pitch” for consumers. Companies that convince customers of the value to consumers are likely to be rewarded with their business—and trust.

The bill also requires a “clear and conspicuous” privacy policy that is easy to find. This generally codifies what is standard practice for good actors today. It’s unlikely that anyone can make a credible argument against providing transparency for consumers.

Finally, the bill designates enforcement authority to the Federal Trade Commission (FTC). This is something that the entire cable lobby advocated for just a few months ago. Consumer advocates might want more robust enforcement tools for the FTC, but I question whether the federal rulemaking procedure is agile enough to adapt to changing technologies and business models. FTC guidance and enforcement cases can provide useful direction and clear lines for appropriate behavior.

To be clear, this is just the beginning of a long and uncertain legislative process. But, it’s an important development that Rep. Marsha Blackburn (R-TN), a conservative Republican with a decent amount of experience with tech issues, has moved down this path. The fact that a few voices at the edges of the spectrum are opposed means she probably got it exactly right.

Perspectives | Policy

Unbridled tracking, zero rating, and how we’re about to break the internet

According to recent reports, Federal Communications Commission (FCC) Chairman Ajit Pai is preparing to roll back the net neutrality rules put in place by former Chairman Tom Wheeler. While we don’t know the exact details yet, Chairman Pai is aiming to restore the jurisdiction of the Federal Trade Commission (FTC) over ISPs in exchange for promises from the ISPs to not block or throttle content and to not engage in paid prioritization deals.

Let’s put aside the debate over whether the FCC or FTC is best positioned to police broadband providers and whether mere promises from cable companies will be enough to protect consumers. Make no mistake – there is a lot to consider there.

For now, let’s dig into what provisions of net neutrality are important for a free and open society. As we noted in our 2015 comments to the FCC, consumers should be able to access content they choose. Therefore, it makes sense to prohibit blocking and throttling by ISPs. Also, “paid prioritization” deals could potentially favor content creators with more resources and market power over non-profit or startup companies. “Paid prioritization” would also likely favor content companies that are owned by the ISPs. Certainly, without transparency and safeguards, “paid prioritization” quickly starts to feel like paying a ransom.

Missing the Plot  

What’s more concerning about Chairman Pai’s proposal is what is missing. Namely, the silence on “zero rating” plans and the lack of basic privacy protections for consumers.

During the debate over the FCC privacy rules for broadband providers, many cable lobbyists complained that these rules would create an un-level playing field. There was concern that ISPs would have more restrictions on their ability to surreptitiously collect and sell consumer data than companies like Google. To be clear, if you’ve watched the continued rise in the use of ad blocking software by consumers, then you know consumers aren’t happy with the rise in “big brother” data collection methods by corporate giants.

However, in restoring FTC jurisdiction, there is an opportunity to create a level playing field while at the same time providing some basic privacy protections for consumers. As I noted a couple of weeks ago, the industry’s self-regulatory code requires any company that tracks “all or substantially all” of a consumer’s activity on the web to obtain that consumer’s consent. Companies like Google and Verizon have already publicly promised to abide by these rules. If the FTC holds the industry to the promises made in their self-regulatory code, we would have a level playing field that begins to match with most consumers’ expectations under a flexible FTC enforcement regime.

Zero Rating Issues

“Zero rating” plans also need to be addressed. This is the practice whereby a broadband provider allows consumers to access content without counting that access against a data cap. ISPs tend to “zero rate” content that they own (see Verizon’s AOL and Yahoo content). As more and more content consumption moves to mobile devices (with data plans), “zero rating” will become a huge issue. Most consumers don’t have unlimited data plans and many broadband providers have stopped offering them altogether.

The concern with “zero rating” is that there are only so many content creators that can benefit. This is partly true because a broadband provider only wants one content creator per vertical. For example, AT&T might accept payment from sportingnews.com to “zero rate” their content. Verizon owns Yahoo Sports. But where does that leave every other content creator in the sports world? Doesn’t this create a barrier to entry for any startup? This quickly becomes a game of a musical chairs that doesn’t end well for consumers, innovation or minority voices.

Open or Closed

Content creators thrive in a competitive and open marketplace in which they compete on the value of their news and entertainment. Unchecked “zero rating” plans could have the same effect as ISPs engaging in blocking, throttling and paid prioritization.

We can and should have a robust debate about whether the FTC or FCC is best positioned to promote net neutrality. But let’s not lose sight of the opportunity to protect the internet’s promise of wide, open access and the societal good that promise has delivered since its inception.  Any net neutrality plan must also address “zero rating” and set a level playing field for consumer privacy protections.  Without these safeguards, the hallmark characteristics of the open web — diversity of voices, opportunity for discovery and freedom to innovate — are imperiled.

Perspectives | Policy

Press freedom—and friction—feed democracy

Freedom of the press around the world declined in 2016 for the 12th year in a row, according to Freedom House. Between reporters being jailed as enemies of the state and news organizations being shut down completely, journalism today faces a very hostile environment. Our current president’s tweet that the press is “the enemy of the American people” only introduces more turmoil for journalists and emboldens dictators around the world. His claim also couldn’t be further from the truth.

As Ronald Reagan famously noted, America is “a shining city on a hill.”  Our experiment with democracy is on full display for the world to see. And one of the more important factors of our success is a free and independent press. Over the course of our history, the world has seen an educated, relentless and free press expose the Teapot Dome Scandal and President Nixon’s Watergate along with countless local cases of corruption and deception. A free press is a bedrock principle of democracy. It provides necessary transparency, helping to educate citizens and fulfilling an important check on power.

On Presidents and a Popular Press

Yet, despite its importance, a recent Gallup poll showed that public approval ratings of major media platforms are at all-time low. It’s worth noting that, in the last 20 years, the media’s approval ratings have never risen above 40% for digital, print or television news. One could argue that if the press isn’t hated, then it’s not doing it right!

Before he became president, Thomas Jefferson was an original proponent of a free press. In a letter from 1787, he wrote “And were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.” However, during his successful campaign for President in 1800, candidate Jefferson endured heavy scrutiny by the press. By the time he took office, he hated the press or at least what he thought it had become. In his second term, he even ordered the arrest of newspaper editors for sedition. However, by 1816, seven years after he left the presidency, Jefferson wrote in a letter “where the press is free, and every man able to read, all is safe.”

Similar, strained relationships with the press continued with later administrations. After the failed invasion at the Bay of Pigs, President John F Kennedy stated “…the abrasive quality of the press applied to you daily, to an administration, even though we never like it, and even though we wish they didn’t write it, and even if we disapprove, there isn’t any doubt that we could not do the job at all in a free society without a very, very active press.”

Declaration of Independence

And just a few days ago, when asked about the role of the news media, former President George W. Bush responded, “I consider the media to be indispensable to democracy. We need an independent media to hold people like me to account. Power can be very addictive. And it can be corrosive. And it’s important for the media to call to account people who abuse their power, whether it be here or elsewhere.” This from a president who lost the popular vote but won the Electoral College. He assumed office at a time when the nation was highly politicized and divided. He weathered withering criticism from the press about his policies, cabinet picks and early missteps.

This is the point: Elected officials and most citizens will never like a healthy press corps. We don’t need journalists to be loved. We need them to be aggressive, persistent and abrasive. In turn, politicians should respect the press’ role in our democracy, not undermine it for their own political gain. Struggling democracies and entrenched dictators around the world are watching our “shining city on a hill.” What do we want them to see?

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