via:techcruch

Well, Groupon certainly isn’t afraid of rustling a few feathers. The red-hot group buying site has just posted its celeb-laden Super Bowl ads, and they’ve taken to poking fun at global crises like dwindling whale populations and deforestation. They’re a little weird, and likely to spark waves of debate and plenty of extra publicity.

Groupon rival LivingSocial will be running a Super Bowl ad as well, that reportedly tells the story of a LivingSocial addict — Groupon poked fun at this with its own rejected” ad. Guess whose commercials people will be talking about at the water cooler tomorrow?

And while some people won’t like the joke, Groupon isn’t being mean-spirited about it: its Save The Money site has offers for a variety of charity organizations. For example, making a $15 donation to GreenPeace will score you $15 in Groupon Credit (it’s essentially a free donation on your part).

In fact, the art of anonymous, Internetwide monitoring of who visits what webpage has been advancing dramatically, driven by advertisers' desire to tailor their messages to specific groups of customers.

This month, however, the Federal Trade Commission — responding to complaints that "tracking" software can violate the privacy of those using the Web — moved to put the brakes on such monitoring. The FTC called for a "Do Not Track" mechanism that would enable consumers to opt out of being tailed around the Web.

Privacy advocates praised the move, saying that tracking has gotten out of hand.

"Consumers have a right to know what information is gathered about them, how it is used and whether it is gathered at all," says John M. Simpson, spokesman for the advocacy group Consumer Watchdog.

Opponents counter that the Do Not Track plan would disrupt the burgeoning online advertising industry, putting at risk the estimated $300 billion of U.S. economic activity it helps to foster, as calculated by the Interactive Advertising Bureau (IAB).

Display ads, video ads and animation ads that rely heavily on Internet tracking could be thrown out of whack in unpredictable ways, critics of the FTC plan say. And that could negatively affect a $25.8 billion-a-year advertising and marketing industry that's expected to swell to $40.5 billion by 2014, according to research firm eMarketer.

The debate over the FTC's plan reflects long-simmering tensions over how privacy and commerce intersect on the Internet. And it's raising questions about the necessity for a federal law that would require ad networks to heed consumers' Do Not Track requests.

The technology that would enable people to opt out of being spied on while surfing the Internet is easy to build into a Web browser. Users could check a box telling their Web browser to notify every webpage they visit not to track them. The catch: The advertising industry would have to universally honor such requests. That's unlikely, absent regulation-backed enforcement.

"Tracking is not a bad thing," says Steve Sullivan, the IAB's vice president for supply chain and revenue solutions. "It needs to stay self-regulated within the industry."

A 'fingerprint' of Web use

Anonymous, Internetwide tracking quietly has grown into a gargantuan industry. An estimated 80% of online ad campaigns use some form of "behavioral targeting" technology, according to a 2009 IAB study.

A cadre of large technology companies leads the way in collecting massive amounts of data about how consumers use their Web browsers and computing devices — all without asking Internet users for their permission, according to research conducted by Balachander Krishnamurthy of AT&T Labs and computer science professor Craig E. Wills of Worcester Polytechnic Institute in Massachusetts.

Krishnamurthy and Wills found that Google, Adobe, Yahoo, Microsoft, AOL, Coremetrics and Quantserve act as aggregators, operating families of tracking systems that encompass dozens more smaller, independent ad networks, data analytics firms and tracking services.

Each aggregator and ad network can use myriad techniques to make note of when a person clicks to a particular webpage, instantaneously gathering rich, detailed information from the visitor's Web browser and computer operating system.

One way to track users is via a snippet of text, called a tracking cookie, that gets downloaded to the visitor's browser and lets the aggregator record all visits to Web pages on which it has a tracking mechanism. Aggregators also can take a "fingerprint" of the unique combination of plug-ins, fonts and other browser tools and settings a specific visitor tends to use.

Most often, visitors to popular Web pages are tracked by multiple aggregators. "This puts the aggregator in a position to be able to track users' activities across a wide range of sites that they visit," Krishnamurthy says.

Last spring, Krishnamurthy and Wills examined 127 popular consumer websites and found Internet users were tracked at 84% of the sites. Their most stunning discovery was that sensitive personal information often was "leaked" from popular social networks — including Facebook, MySpace and LinkedIn — to the top aggregators.

Such a transfer of information occurred when a Web user who already was being tracked by an aggregator happened to visit a social-network page containing the user's name, address, gender, age, employers, friends and similar profile data.

"One doesn't know what aggregators are doing with this information," Wills says. "But if these companies don't need this information and are not using it, they should not be receiving it."

Facebook, which has the largest social network at about 500 million members, acknowledged the exposure found by Krishnamurthy and Wills but says it rarely happened. Facebook has adjusted its profile pages to prevent the flow of such personal information to aggregators, spokesman Simon Axten says.

Google, the largest tracking aggregator, says it provides ways for folks to opt out of tracking. "We work to give users meaningful choices to protect their privacy and to protect the data that users entrust to us," company spokesman Brian Richardson says.

Even so, privacy advocates worry about similar data leaks. There currently are too few restraints to prevent aggregators from correlating personal data with information about which Web pages an individual visits most often, says Consumer Watchdog's Simpson.

Doing such analytics could be highly profitable — and invasive. For example, such information could help insurance companies decide on whether to offer someone coverage, or allow banks to decide whether to approve someone's loan application. It also could affect an employer's hiring decisions, or help political partisans identify potential targets for support.

"Currently, consumers don't know how information gathered about them when they go online is used and have no opportunity to correct the data if it is wrong," Simpson says.

After more than a decade of letting the online advertising industry regulate itself, the FTC during the past year has become increasingly sensitive to consumer privacy concerns. The agency's Do Not Track plan is part of a broader set of recommendations to give consumers truly meaningful choice over whether to be tracked or not, says Maneesha Mithal, associate director of the FTC's division of privacy and identity protection.

"No matter what the business model, no matter what the interface, you need to give consumers choice before you share their data with third parties," Mithal says.

The agency is accepting written comments until Jan. 31, after which the full commission will vote on whether to formally request a congressional mandate requiring ad networks and website publishers to honor Do Not Track requests. Industry lobbyists already are pushing hard for the FTC to stick with the self-regulatory approach.

Do Not Track could hinder website publishers from customizing their services and carrying out certain kinds of ad campaigns, says Pam Horan, president of the Online Publishers Association, a trade group representing large media organizations, including USA TODAY. It also could put an undue burden on website publishers to make sure Do Not Track works at the nuts-and-bolts level, Horan says.

Smaller ad networks and tracking services, in particular, would suffer if Do Not Track is implemented broadly, says Kevin Lee, CEO of online advertising consultancy Didit. That's because ads aimed at high-end products, which account for a good portion of the smaller ad networks' profits, command higher premiums because they can be targeted at specific groups of Web users who are being tracked anonymously across the Internet.

"Failure to price this advertising inventory based on anonymous tracking information would probably drop its value in half," Lee says.

Innovation would prosper

Even so, other analysts say disrupting the status quo could be a good thing, potentially breathing new life into the online advertising models of companies willing to innovate.

"Many things are possible, technologically speaking, in trying to target ads to users without doing the kind of pervasive tracking that raises concerns," says Edward Felten, a Princeton computer science professor who will become the FTC's chief technologist on Jan. 1.

Big media websites and large social networks, in particular, should be able to better leverage their trusted brands and develop fresh marketing techniques that aren't so reliant on Internetwide tracking, says Blake White, director of PricewaterhouseCoopers' entertainment, media and communications practice.

"The more creative companies will find new ways to legally and ethically make profitable use of information that users openly volunteer," White says.

A high-visibility website publisher, such as sports network ESPN, for instance, could buttress strategies centered around nurturing "first-party relationships" — open dealings between a website publisher and visitor that stand apart from Internetwide tracking by a third-party ad network. ESPN's fantasy football leagues and insider columns, for example, already are trusted by hordes of loyal customers who disclose personal information specifically to ESPN in exchange for access to free services.

Facebook, too, looks to be well-positioned for a new era of information-sharing. In support of generating about $1 billion in annual advertising revenue, the world's No. 1 social network methodically innovates around strategies that involve getting its members to interact and voluntarily share personal information on the company's Web pages.

"We never share our users' personal information with advertisers and do not sell it to anyone," company spokesman Andrew Noyes says.

Facebook recently added new and updated features with the intent of encouraging members to say more about themselves.

It redesigned profile pages so members could more clearly show personal data, added an online check-in application for people to share their location and introduced a groups function for specialized conversations.

Members of Facebook-specific groups, for example, receive tailored ads that reflect their interests. Fans of the World Series champion San Francisco Giants group are being pitched ads for World Series merchandise.

The new features are "designed to strengthen the bonds between Facebook members and the site," says Charlene Li, an analyst at Altimeter Group who follows Facebook. "There's value for members, Facebook and, most definitely, advertisers."

Google has erected a new interactive billboard in New York's Times Square as part of "Watch This Space," the company's campaign to promote its lesser-known display advertisement services.

For the past decade, Google has dominated online advertising space with search ads that match advertisers with people who search for their products.

But last month, Google put up an old-fashioned billboard right in the middle of Times Square in New York to remind everyone that it's also in the display ad business, making it one of the many companies that are vying for a chunk of that market. That's because display ads, the ads that run on the sides and tops of websites, are becoming more lucrative as they get better at targeting the right customers.

A Whole New World Of Advertising

Let's say Internet user Jane Smith is in the market for a car. She's browsing around on, say, General Motors' website and while she's there, the site places a cookie — or tracking device — on her browser.

Michael Baker, the president and CEO of the online advertising technology company DataXu, says that cookie tells advertisers just what they want to know.

"They've measured the fact that you came to their website but you did not buy," Baker says. That means they now know Jane is looking to buy a car.

"As she continues surfing, she next goes to CNN," Baker continues. And that's when she sees something interesting: an ad for a new car.

This is the new world of targeted online display ads — and it goes pretty deep.

"There are sort of a host of other kinds of data points that are available for targeting," says Joanna O'Connell, who follows online display advertising for the marketing research firm Forrester Research. "Your gender, your age, your income, whether you have children. Psychographic information like whether or not you consider yourself to be an introvert or an extrovert or liberal or conservative."

Companies like Yahoo are well positioned to be gathering up this kind of information. According to Yahoo's vice president of North American sales, Mitch Spolan, more than 600 million people visit Yahoo every month and about half of them have Yahoo accounts — meaning they've offered up their name, gender, birth date and ZIP code.

"There is certain information that they volunteer when they're registered that we can leverage to deliver even a more targeted message," Spolan says.

So targeted, in fact, that Yahoo can run a kind of ad exchange, or computerized auction for ad placement. So when Jane Smith goes to a particular website, all sorts of information about her is sent to the exchange. In a millisecond, advertisers may know that Jane is looking for a car, is a mother of three, lives in Phoenix and has a household income of $150,000. Advertisers looking for someone like Jane will then start bidding to get her to see their ad.

"We have thousands of advertisers that are bidding in real time on these impressions to reach the target audience that they're seeking," Spolan says.

Jane's eyes will eventually go to the highest bidder — so that Jane may ultimately see an ad for an SUV that's family safe and for sale near her Phoenix home.

Joanna O'Connell says that's just the kind of targeted advertising that is helping to revive the online display ad market — which is expected to grow by 6 percentage points in the next four years, according to the analyst firm eMarketer.

"It's less waste," O'Connell says. "It's a better impression for [the advertiser] and they're going to be willing to pay more."

'The "Ick" Factor'

But that isn't all good news. Some, like Jeff Chester of the Center for Digital Democracy, think the new world of targeted display ads has gone too far.

He says as people continue to handle more of their personal business online, from health matters to personal finance, advertisers could begin gathering information that many would not want to share.

"You're talking about a commercial system that's a digital dossier about your innermost secrets, concerns and personal matters," Chester says. "These Fortune 1000 companies, these big advertising companies, not only do they know that but they're studying those behaviors very closely."

Proposed legislation might give consumers more control over their own information, but Steve Sullivan, of the industry trade group Interactive Advertising Bureau, says that's not really the issue.

"Most people are not actually concerned about receiving a targeted ad," Sullivan says. "Most people are concerned about somebody they don't know taking information about them and using it for some bad purpose."

And to that, O'Connell says that for fear of offending potential customers, the industry will regulate itself. She says advertisers know many people find it creepy when an ad follows them around.

"There's sort of the human element — the sort of 'ick' factor — and marketers are aware of that," O'Connell says. "Depending on the marketer, there are some that are very reticent about using certain types of marketing."

She says that many consumers recognize the role ads play in supporting free online content.

But while that may mean consumers are happy to watch an ad, it does not necessarily mean they're willing to give up their privacy.

Shoemaker Adidas has reportedly canceled a $10 million deal for mobile advertisements on Apple's iAd service, because the iPhone maker has allegedly exerted too much control over the process.

Citing two mobile industry executives, Silicon Alley Insider has claimed that Adidas pulled its campaign because "Apple CEO Steve Jobs was being too much of a control freak." Adidas is rumored to have a creative concept rejected three times, prompting the move.

"In addition to Apple's unusual control over the ad creation process, advertisers complain about the lack of control over visibility into where their ads appear, lack of third-party ad serving tools, and other issues," the report said. "Apple plans to open up the process once its' more comfortable with the program, but it appears some advertisers have lost their patience."

The report largely reaffirms what The Wall Street Journal claimed in August, when the paper said that advertisers have been frustrated over Apple's "tight control over the creative process" for iAds. It was said that Apple's mobile advertisements take between eight and 10 weeks from start to finish, and Apple, which builds the ads itself, was taking two weeks longer than advertisers expected.

It was noted that Chanel, one of the launch partners with iAd, decided to cancel its campaign. If true, the departure of Adidas would be the second high-profile customer lost.

iAds provide richly interactive ad experiences inside developers' apps, providing them a 60 percent cut of the advertising revenue. The hope is the advertisements -- noted by the iAd logo in the corner -- will be more compelling to users, because they don't have to leave their app and launch a browser to view them.

Competitors have been quick to highlight Apple's unconventional approach with iAds. In September, Yahoo CEO Carol Bartz said she thinks Apple's tight control will drive advertisers away and cause the fledgling service to "fall apart."

Following the money in the social media ad boom

In the social media world a number of trends are dictating how, why and where money gets spent--trends that will push the industry past the $2 billion mark in 2011, according to eMarketer's projections.

Not surprisingly, the biggest beneficiary of the current euphoria around social is Facebook, with several estimates now pegging the company's 2010 revenue at better than $1 billion. That growth is being fueled in part by what some advertisers see as competition to scoring prime advertising space on the site

"Most of our clients see a real need to spend a lot on Facebook ads," says Andrea Wolinetz, a partner at MEC Global, which represents the likes of Ikea, AT&T  and Citi . "There's so much noise and clutter on Facebook now, that spending a good deal has become important in order to be heard."

There's also a growing sense that social media advertising can deliver a return on investment. Neil Kleiner, head of social media at Havas Media UK says, "We've found advertising on social networks to be very effective, but mainly as a part of a larger piece of activity that involved more 'traditional' social media techniques ... ads on social media work best when they drive interaction and engagement. Interaction and engagement can then drive purchase."

Kleiner, whose firm does work for brands ranging from McDonald's  to Warner Bros., adds that Facebook advertising has become a "default for most brands as a part of their media spend."

Twitter's Experimental Phase
After years of fielding questions about how it plans to make money, Twitter has launched numerous experimental business models over the past several months. At the forefront is Promoted Tweets, a program that inserts a brand-sponsored topic into Twitter's "trending topics" list and presents a tweet from that sponsor to users, in hopes of generating retweets, replies and other forms of engagement.

Early testers of the program include Virgin America and Coca-Cola , the latter of which reported 86 million impressions and an "engagement rate" of 6% back when it used the program in June during the World Cup. More recently, the online brokerage firm Zecco reported that engagement on its promoted tweets was 50% higher than its regular tweets, with "200 to 300% increases in some cases."

Case studies are still limited, though. "Promoted Tweets have not seen that much traction [with my clients]," Kleiner says, though he sees an opportunity to "add real value to a long tail of advertisers." For the moment though, that long tail is mostly left out of Promoted Tweets, as the program remains in limited beta.

As the program sees public rollout later this year, the results could be significant for Twitter and advertisers. In its report, eMarketer said it expects "spending on the microblogging service [to] be low in 2010," but adds that, "the potential for 2011 and beyond could be dramatic if it proves that its 'resonance' model of measuring advertising effectiveness works."

Location Excites Marketers, Maybe More Than Consumers
The latest extension of social--knowing not just what your friends are doing but where they're doing it--is one of the hottest trends of the year.

The field collectively referred to as "location" has marketers from Starbucks  to Best Buy  excited about the possibilities of increasing foot traffic through programs that reward customers for "checking in" and sharing their location and brand affinity with their friends.

That said, such programs are largely experimental, and many of the startups in the space lack the critical mass to significantly move the needle for big brands. "Foursquare is the buzz word on a lot of people's lips, but it has such a comparatively small audience that are niche to the point of incestuous," Kleiner says. "It's mainly used by people that work in marketing, not 'normal' people."

Still, getting started in the location realm requires less of an investment than competing for space on Facebook. Says Wolinetz: "We spend a lot of our time testing and focusing interest in location-based services and Twitter, as our clients are eager to 'master' these emerging platforms, and [they] generally require less of a paid media investment than Facebook does."

Kleiner concedes that he's bullish on the potential of Facebook getting into location with the recent launch of Places, though the tools aren't yet there for advertisers. "We will have some real mass to play with when Facebook allows advertisers to buy against location," he says.

Social No Longer Sits at the Kids' Table
While the market sorts out the winners and losers from a platform perspective, one thing that's becoming clear is that social--which eMarketer estimates will account for 6.7% of total online ad spend this year--is being thought of in a much broader light than even the increasingly optimistic projections show.

"Social campaigns used to be more siloed from the rest of the communications and marketing strategies," says Wolinetz. "Now we're seeing social as either an extension of an overall activation idea that occurs throughout other media outlets, or conversely, the marketing/communication strategy is at its heart and inception social, and we're using other media outlets to drive awareness and scale."

And while that might mean social's share of ad dollars is still relatively small, its importance within organizations is as high as it has ever been. "The biggest shift for us is that we are now seeing brands move away from pure campaign planning altogether and are allowing social media to be the bedrock for a 24-7, 365 days a year chance to engage their customers," says Kleiner.