ISPs as Behavioral Targeting Networks
Thursday, January 3rd, 2008I wasn’t going to touch behavioral as a topic again for a bit, but everyone’s talking about a recent story on Clickz (such as on Mashable, where I left several comments) I figured I would throw a things into the conversation.
While I am a huge advocate of the wonders of Behavioral Targeting, I have some issues with this concept aside from the privacy issues. In regards to privacy, again as long as it’s opt-out I don’t see the tremendous concern.
A BT network today generally needs to establish specific behavioral contracts with publishers to make use of their users. So if a network wants to gather behaviors from a major site (for the sake of argument) ESPN, they need to get a legal agreement with ESPN over the terms of use. ESPN will then set up the behavioral coding from the BT network and the network can begin targeting the ESPN users across any site they touch.
The ISPs in this case will simply catch the packets on their own hardware between the end user and the publisher (say in this case ESPN) and resell that to the advertiser. They will then pay whoever they buy the actual ad space from, but not the property that provided the relevant piece of data. The argument I assume being that because the transaction occurred on the ISP’s hardware they have full right to mine that data. The only disadvantage I see for the ISP is that one can assume they won’t be able to go to market with the name ESPN as a source of their behaviors, they can simply say, “Here are users who are interested in sports/sports related content.” A ‘traditional’ BT network will most likely provide the advertiser with a list of publishers that make up the population bucket they’re selling.
If I were a major content provider with a huge brand name (say an ESPN, CNN, etc), I would be a tad upset at this development. The ISP can capture their users with limited cost, buying remnant inventory from a ValueClick is dirt cheap, and yet the ISP can command a decent premium from an advertiser thanks to the potentially detailed targeting. If I’m a major brand, this lowers the value of my users by creating a place to get them dirt cheap. While a BT network could arguably depress the CPMs a publisher earned, the publisher has control to cease the deal and the receive an additional revenue stream (without using any inventory such that it’s essentially pure profit). ISPs can easily undercut both the content provider and the BT network by avoiding the second payment.
All that said, I can’t say if publishers have any significant leverage against ISPs here. With a typical BT deal, the BT network can’t use a publisher’s users without consent. Theoretically, an ad network could compile behavioral data of users across the network they show ads on, however by going to market with this product (especially if it lists publishers by name) the publishers within the ad network can simply remove the tags and refuse to work with them. As such the BT network is forced to seek the publisher’s opt-in. The content providers may not have any means to cut off the ISP (short of damaging their own traffic and existing revenue streams) and could be locked into allowing someone else to monetize their users.
I’m not sure what the solution is to this, short of forcing the ISP to go down the route of a traditional BT network. But forcing them to go down this route, by paying content providers for their users removes a good part of the competitive advantage the ISP has and probably makes the idea worthless. In any case it will be interesting to see how this progresses.
