Saturday March 30, 2013
How Brands Track You Online.
Hyper-Targeting is the next frontier in 21st century marketing.
Marketers are gleaning and buying more and more personal information about consumers. That information is then being used to track people online, as marketers watch their buying habits. As a result, advertisers are "hyper-targeting" consumers with ads that are tailor-made for individuals, featuring the products they want, when they want them, at a price based on their spending ability, at the precise moment they are about to make a choice. How do you like your ad - over easy or sunny-side up?
This is the movie John Dillinger went to see at the Biograph Theatre in Chicago the night he was gunned down.
It was called, "Manhattan Melodrama," its theme song was Blue Moon, and it starred Clarke Gable.
But at that time, Dillinger was almost as famous as Gable. He was a bank robber with a flair for the dramatic.
In Indiana, he pretended to be a sales representative for a bank alarm company, then "tested" the alarm by carrying out a robbery.
Another time, he pretended to be a film company scouting out locations for a "bank robbery" movie. As bystanders smiled and applauded, Dillinger actually robbed the bank and rode off waving.
When he needed machine guns and bullet-proof vests, he robbed police stations. Then one day, he stole the Sheriff's car and drove to Chicago.
But by taking the stolen car across state lines, he suddenly came under the jurisdiction of the Bureau of Investigation. A precursor to the FBI, the Bureau used superior fingerprinting technology that linked Dillinger to many robberies. It also plastered his face on bulletins, naming him the first Public Enemy Number One.
Source: Minnesota Historical Society
This notoriety made it harder for Dillinger to move around undetected.
He tried black market plastic surgery to change his appearance. At that time, the surgery was primitive and very painful, and it only slightly altered his features.
But Dillinger was becoming increasingly wary of being silently tracked by the Bureau. And it was fingerprint evidence that worried him most - no matter how he looked, or what city he moved to, his fingerprints would always give him away.
So in an attempt to stop being tracked, he tried to burn off his fingerprints with acid. His fingers were utterly destroyed. But when they healed, Dillinger was shocked to discover his fingerprints just grew back.
It was only a matter of time before the agents tracked him down that fateful night at the Biograph Theatre.
Fingerprints are an interesting aspect of tracking.
They are coded identification marks unique to each individual. Two people with identical fingerprints have never been found in history. Being tracked via fingerprints is not something that is unique to the world of crime.
It has an accomplice in 21st century marketing.
The technology is leading edge, the information gathered is vast and secret, and it enables marketers to track you no matter where you go. And like Dillinger, it involves a lot of money.
It's called Hyper-Targeting. And it may surprise you to learn how much advertisers already know regarding your whereabouts...
By the 1960s, media buying had become predictable.
You could reach 80% of your target market by buying a handful of top television programs. The most popular newspapers and magazines were abundantly obvious.
The media buyer's skill was simply about negotiating price. That's why, in an agency, the superstars were in the creative department. Because, all things being equal, if advertisers were buying the same ad space in the same programs, then the only distinguishing feature was the creative quality of the ads themselves.
That thinking existed for over 40 years.
Then, everything changed. Today, the media people are becoming the superstars. Media departments have become a lure for highly paid software engineers, financial statisticians, numerical analysts and data scientists. It's now the hot, sexy department.
When the internet arrived in the early 90s, people moved online in search of content, but didn't want to pay for it. So online publishers did the only thing they could do - they looked to media buyers for survival.
They knew if they could figure out who was visiting their websites, that information could be sold to advertisers. So they began to hire companies that specialized in analyzing how many visitors were logging onto their sites, who they were and where they were coming from.
In his very insightful book titled, "The Daily You," author Joseph Turow cites 1994 as the beginning of the first decade of the commercialization of the internet.
Companies started to sell their wares online. Then a small problem occurred almost immediately. When someone was purchasing online using an electronic shopping cart, they would click on an item and put it in their cart.
But if they put a second item in the cart, the website would treat that transaction as a new customer. It had no way of discerning if multiple purchases were coming from the same person.
So in 1994, a computer programmer at Netscape came up with the idea of using electronic "cookies."
Essentially, cookies were small text files that assigned an identification code to the visitor. Like a fingerprint. It worked this way: The moment you log onto a website, it automatically placed a cookie on the your computer. And the next time you visited, the website recognized that cookie.
Therefore, when you put several items into your shopping cart, the website recognized all those purchases were made by the same person. That cookie also gave the website other information - like where you had clicked previously, what had been put in the cart but not purchased, what pages you had viewed, and for how long.
But the creators of the electronic cookie made one other important decision: To place the cookies on people's computers without asking permission.
That decision would have lasting ramifications.
In other words, it could track consumers.
Many online companies began to share and purchase data about their registrants using third party vendors. For example, an auto company might purchase information about you from an airline you've dealt with - and learn your age, gender, marital status, ethnicity, profession, credit status, number of airline flights you've taken in the past 12 months, number of kids you have, their age ranges, and the value of your home.
All of which is done without your knowledge.
When that information is added to the past details you provided when you registered on their site, a robust "behavioural" profile is created for you.
And with that, "hyper-targeting" begins.
Hyper-Targeting allows media planners to send perfectly-tailored ads directly to individuals, based on deep knowledge of that individual's personal life, at the exact moment they are about to buy something.
Turow gives this example: Say a car company has been quietly tracking you, and they see you've been on five different auto sites. It's obvious you're shopping for a new car. Because they've bought access to your credit information, they know you have the financial resources to buy a car. And from your recent Internet behaviour, they know you are closing in on a decision.
Then one morning - they observe you visiting a vehicle financing site.
At this point, the car company would take advantage of hyper-targeting, and place an ad on that website at the very moment you are about to arrange financing, and offer you a discount on their car.
While it appears a "Do Not Track" browser button is on the way, many people routinely block or erase cookies from their browsers because they don't like the idea of being tracked.
Facebook has over 170 million users in North America, at the time of this writing. Last year, Facebook's ad revenue was well over $3 billion, and it generated that by supplying personal user data to advertisers.
Using Advertiser Fan pages, for example, Facebook tells advertisers the name and profile characteristics of every person visiting.
Clicking a "like" button gives advertisers a list of propects who are likely to buy a similar product. There are 50 million "likes" on Facebook everyday.
Facebook is also able to monitor conversations to gather comments and insights from customers talking about brands. My wife was having a conversation with some girlfriends on Facebook about an upcoming wedding. Not long after, wedding-related ads started appearing on her home page.
While Facebook claims this monitoring is done by software, that no humans are reading your posts, it's still another example of what is called "data scraping."
Recently, Facebook started experimenting with monitoring conversations in real-time. So if you uttered the line, "Boy, I could go for a pizza tonight" you would be served up a pizza ad or coupon instantly.
Source: Pizza Pizza
It's every advertiser's dream.
Interesting aside: 20 to 33% of divorce petitions in the U.K. cite Facebook as a factor. All message records are kept and stored - and it appears that even deleted messages are retained by Facebook.
As someone said recently, Facebook and Google may know more about you than your wife.
There was a time when credit card companies were only interested in making sure you kept up your payments. But now, they seem to be judging you on your purchases.
Credit card companies routinely monitor our spending to create profiles to determine credit-worthiness. They look for signs of financial and personal distress.
For example, if you begin using your credit card at second-hand stores, or when charges start appearing for marriage therapy, the credit card company starts watching you more closely. If you log in to your credit card balance at one in the morning, it might signal sleeplessness due to financial anxiety. If you check your balance three times a day, it's a warning sign.
By tracking your private purchases, companies create a profile for you, and determine whether they should lower your credit limit or raise your interest rate.
Charles Duhigg, a business reporter with New York Times Magazine, published a fascinating article recently.
He wrote that a math-loving analyst at Canadian Tire began to evaluate every piece of information they had collected from its credit card transactions that year. The analyst determined that the brands we buy were windows to our soul. For example, people who bought cheap, generic motor oil were more likely to miss a credit card payment than those who bought the more expensive, brand-name oil.
People who bought carbon monoxide detectors, premium birdseed, or felt pads for the bottom of furniture legs almost never missed payments.
The reasoning - these people had a sense of responsibility toward the world, and wanted to protect their belongings, be it hardwood floors or credit ratings.
On the other hand, people who bought chrome skull car accessories or "mega thruster exhaust systems" were credit risks.
It's not surprising, then, that "Erosion of personal privacy" was the number two concern in a recent survey of consumers - which ranked above terrorism.
80% of people don't want to be tracked online.
Yet it's safe to say almost 100% of consumers are.
Hyper-targeting is the new 21st-century frontier in marketing, because it delivers the two things advertisers have craved since the dawn of time - addressability and accountability.
And some people are fine with giving away personal information on the Internet. As one friend said to me, it's the price of a free Google and Facebook.
But it's important not to be apathetic about your data. The more you understand how it all works, and where it's heading, at least you can begin to exert your own influence on the software engineers, financial statisticians, numerical analysts and data scientists who are tracking you.
It's no longer the Mad Men you have to look out for, it's the Math Men...
... when you're under the influence.