Michael Nutley: Why personalised ads fail to find their target

The great promise of new media, at least as far as advertisers are concerned, has always been personalisation. But up to now, that promise hasn’t really been kept.

The idea was that by asking people to subscribe to, or register for, online content and services, and by supplementing the data collected in the process with information gleaned by monitoring their online behaviour, it would be possible to deliver precisely targeted advertising. Ads would become so relevant, timely and personal that wastage would be eliminated, along with Lord Leverhulme’s maxim. And because the ads were so relevant, they would become more like a service, meaning consumers would welcome them rather than trying to block them out.

But while there are certainly areas where that is happening – e-mail being the most obvious example – in general, advertisers are still waiting. Last week however, a development came from an unexpected quarter. A number of publishers, including the Financial Times, News International, The Guardian and EMAP, were reported to be considering pooling sensitive information on reader behaviour to address the personalisation problem.

Part of that problem has been a reluctance among people to fall in with the model. Subscription services have proved generally unpopular in the face of free competition. Even fairly basic registration has proved a barrier to people signing up. At the same time, the Web audience often objected to having its online movements tracked on privacy grounds. A few years back the Internet Advertising Bureau fought a long, and ultimately successful, battle to prevent the European Commission outlawing cookies, the software that sites place on your browser to allow such tracking to take place.

The argument for cookies hinged on the question of targeting, the idea that such tracking enabled advertisers to serve you more relevant ads. But some Web experts dismissed this, saying that consumers weren’t seeing the benefits of targeting in the kind of ads being served on the webpages they looked at, that the advertisers weren’t keeping their side of the bargain.

This in turn reflected the inadequacy of the data available. A few registration questions only yielded the most basic demographic information which, although it could be allied to geographical data der­ived from the browser’s IP address and statistics about how regularly someone was visiting a certain site and how long
they were staying, was far from the depth of detail required for any sort of meaningful personalisation.

The next step, which was particularly attractive to online media owners and operators of advertising networks, was behavioural targeting. This allowed a user to be followed much more closely through a site, or network of sites, thus enabling more data about them to be captured and improving the quality of the targeting of ads.

It also held out the promise of allowing media owners to sell hard-to-shift or non-premium inventory. Ad spaces on the motoring section of your site might command a premium, for example, but if you knew that someone who looked at those pages then went on to other pages that were harder to sell, you could serve them another lucrative car ad when they got there.

Two or three years ago, most of the major publishers started experimenting with behavioural targeting. The moves under discussion increase the number and diversity of sites across which consumers’ movements are tracked. This makes the profiles of those consumers more detailed and increases the potential value of the inventory the networks are selling.

This is already the approach of some online ad networks. When he launched US behavioural targeting-based network Blue Lithium in the UK a couple of years ago, managing director Tim Brown told me he thought it was the only way for such businesses to survive and prosper.

The $64m question raised by the aforementioned publishers’ move is one of attribution. The online advertising industry is already struggling with the question of which message seen by a customer is responsible for the sale. Up to now the assumption has been that “last click wins”, but that approach is under siege as the complexity of the buying process and the many touch points offered by interactive media become clear. And since the participants in the publishers’ discussion are all competitors, the question of attribution of sales could be a sticking point.

In the background is Google. The search giant keeps a record of every click made though its various offerings, building up what industry watcher John Batelle describes in his book The Search as “the database of human desires”. That database dwarfs any held by publishers or ad networks. And while Google’s use of the information it collects is limited at present, in a world where data is the key to personalisation and therefore performance, the person who collects the most is going to be in a very powerful position.