Take behavioural targeting as an example. In principle, a sound idea – the more you know about the user, the more you can target ads at them. This can improve quality for both the user and the advertiser, which can increase the value of the communication… all fine, then.
“It Doesn’t Work Like That”
However, in recent conversations with two ad networks who major on profiling… Adviva and Tacoda… something is emerging that requires a little more scrutiny. Their detailed profiling of customers doesn’t seem in an effort to increase the value to the publisher – but to further increase margin on sale.
Do the ‘Math’
Let’s say we have publisher A who usually sells at £0.70 CPM for media on his site. The advertiser currently pays £1.50 CPM to their agency (as the agency takes a slice, the ad network takes a cut).
However, with profiling, the ad network can raise the revenue to £2.00-3.00 (and possibly more) CPM – which is great… but for whom. In most cases the publisher is actually getting their sell on reduced – to as little as £0.45 CPM. If the agency takes a standard slice, then who’s really benefitting?
We would be interested in hearing how the alleged improvements in profiling and targeting are going to benefit the publisher because from what we can see, it actually negates the value of the publisher entirely. The message seems to be: “we know what the customer is interested in – so we don’t place any value on the space on your site”.
So, in this industry, ownership of the most attractive profiling is key… until, of course, the various personal data security concerns are aired and shared in the House of Commons. Perhaps the next wave of advertising is going to be defined by government policy rather than technology? We’re watching the forthcoming debate in the US and UK with interest.