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The $21.8-Billion Reason Ultra-Personal Online Ads Are Coming

Globally, $21.8 billion worth of ads won’t make it to eyeballs this year because of ad blocking. A possible savior: hypertargeted ads.

The $21.8-Billion Reason Ultra-Personal Online Ads Are Coming
[Photo: Flickr user Courtesy of the Boston Public Library]

Quick: When’s the last time you noticed an ad on a website?

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This question may not even apply to you, because you already have a program like Adblock Plus that wipes them all away. But if you do see ads, perhaps you barely notice them now because they are pathetically irrelevant, like that one for a product you just bought.

“Frankly, our industry today has taken the easy step, which is showing ads to people who have just gone to that website or just seen that product,” says Jag Duggal, head of product for online audience measurement and realtime ad placement company Quantcast.

If only online ads were more targeted, Duggal says, everyone would be happy. “We believe that if we can show more relevant ads, it’ll be more useful for users. They will be less inclined to block them, we will have to show fewer ads, advertisers will be willing to spend more for each ad. And the revenue for publishers and data providers like us will go up.”

Duggal’s everybody-wins worldview is not surprising: That’s the promise Quantcast and companies like it are selling to advertisers and content sites such as BuzzFeed and The Wall Street Journal. Quantcast has just boosted the promise by introducing a new system called Audience Grid. This open platform can absorb more information from many more data sources than before.

Audience Grid is now pulling in data on what people buy, what they drive, what they watch, and more. It brings in 14 new data companies such as TiVo Research (for customer viewing habits), Kantar Shopcom (a purchase database of more than 231 million U.S. consumers), Relevate (info on the cars that millions of people drive), and PlaceIQ (which tracks people’s mobile-device movements with accuracy down to squares of 100 x 100 meters). Quantcast plans to keep pursuing more sources. (It had already been tracking general interest, demographic information, and political interests before launching Audience Grid.)

The Watching Game

If the hairs on the back of your neck just stood up, you’re not alone. A March 2014 survey of 1,000 Americans by market research firm GfK (which later became part of Audience Grid) reported that “almost 80% of respondents feel that there should be more regulations preventing organizations from repurposing personal data to third parties.” Those “third parties” include advertisers. This attitude doesn’t change when you remove the older consumers. A full 80% of millennials felt that way (versus 73% of gen-Xers). Just 25% of all respondents (and 33% of millennials) said they mostly or completely trust how marketers and advertisers handle their personal data.

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Those marketers and advertisers would counter that this data isn’t really personal, or at least, not “personally identifiable,” as the term of art describes it. Quantcast knows that somebody with particular shopping and TV interests also happens to be on a specific webpage or mobile app screen for participating media companies including BuzzFeed, Demand Media, The Economist, Federated Media, Gawker Media, NBC Universal, OpenTable, The Telegraph, Vox Media, Yelp, or The Wall Street Journal—all of which use Quantcast’s measurement and ad-placement technology. That helps it serve an ad targeted to at least some of those interests. (Note: Fast Company, its sister site Inc., and parent company Mansueto Ventures are not Quantcast clients.)

According to Quantcast, there are no laws that specifically prohibit it or competitors such as Alexa, Compete, comScore, Criteo, Localytics, and RocketFuel from collecting personally identifiable information (PII). But it’s actually easier, the company says, to use only anonymous data, as that saves the headache of navigating a host of laws that do regulate use of personal info, such as the U.S. Children’s Online Privacy Protection Act and the California Online Privacy Protection Act.

Quantcast also maintains that preserving anonymity is one of its company values. “We’ve deliberately built our entire data-management and modeling approach to not use PII,” says Quantcast’s CEO and cofounder, Konrad Feldman. Instead, Quantcast hires services such as LiveRamp, Datalogix, Drawbridge, or Tapad, which specialize in “de‑identification” of consumer information, stripping names, email addresses, or other personal info out of its marketing data before sending it to Quantcast.

Here’s an example of how the anonymizing process works: TiVo knows what you watch and has the email address you used to register for the service. Other companies, such as Evite, may also have your email if someone has sent you an invitation–and because you have to visit Evite’s site to RSVP, it can add a cookie (a small text file) to a cache in your web browser. Quantcast also drops cookies, which links them to viewing preferences on sites of clients like The Wall Street Journal.

Now along comes LiveRamp. It links the TiVo data and Evite cookie using the email address. LiveRamp also links Evite and Quantcast in the case of web browsers that hold cookies from both companies. So now Quantcast knows what you watched on TiVo and what you read on the Journal‘s site, but LiveRamp has stripped out the name and any other info that can be traced back to a particular human.

From that, Quantcast can not only tell advertisers that people who read the Journal also watch, say, The Good Wife, it can also place ads for shows similar to The Good Wife on WSJ web pages that Good Wife fans read. The WSJ gets lucrative ads, and readers might get suggestions for a show they actually want to watch. Another example from Quantcast’s research: People who visit both ThinkProgress.org and Eater.com tend to like the show Sleepy Hollow on Fox.

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“We don’t know who you are,” says Feldman. “We only have essentially a random number that we’re able to synchronize at some point with our other random number.”

In other words, Quantcast is associating the random number of the eVite cookie, which is now linked with TiVo viewership, from the above example to the random number of the Quantcast cookie, which is connected to readership on a “Quantified,” or Quantcast-enabled site.

All of this assumes anyone is even seeing the ad. As of the second quarter of this year, 16% of online Americans, about 45 million people, had installed ad-blocking software, according to an August 2015 report by PageFair, a company that helps websites use ads that blockers will allow through. That’s a doubling from the year before. Meanwhile, 77 million Europeans are blocking ads. Globally, $21.8 billion worth of ads won’t make it to eyeballs this year.

Quantcast’s vision also requires that you hold onto cookies long enough for it, LiveRamp, and others to work their under-the-hood magic. “Many of those identifiers [including cookies] are deleted from time to time, or even frequently,” says Feldman. Web browsers tend to accept cookies by default, but offer options to block and delete them, especially the “third-party” cookies that don’t help you use a site better (such as automatically logging you in) but that are placed by marketers and ad companies such as Quantcast.

Tracking In Your Pocket

The traditional model of online advertising is ads in computer web browsers. But readership is moving to mobile fast and now accounts for 38% of all web browsing, according to that PageFair report. BuzzFeed’s mobile traffic had already outstripped its computer-based readership back in 2013, according to Quantcast.

The switch to mobile is somewhat good for advertisers. Like their computer versions, mobile browsers also allow people to block or delete cookies, but mobile apps don’t rely only on easily flushed browser cookies. Instead, advertisers access device identifiers, known as IDFA for iOS and AAID for Android. “Identifiers in the mobile space tend to be more durable,” says Duggal. (Quantcast is also expanding into smart TVs, providing device identifier capability to Roku’s ad-supported apps.)

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Online advertising’s nemesis is chasing it onto phones and tablets. PageFair’s study found that only 1.6% of ad blocking was happening on mobile devices, but that was before Apple released iOS 9, which for the first time allows ad blockers on Apple’s mobile devices. One of them, Been Choice, even blocks ads inside apps. (Apple has intermittently banned Been Choice from the App Store due, it says, to concerns about it collecting user data.)

In short, there is no escaping ad blockers, so if publishers and advertisers can’t beat them, perhaps they can join them. Adblock Plus’s parent company, Eyeo, has developed acceptable ad guidelines for ads that it will allow through its blocker. These ads have to be “whitelisted” with Adblock Plus as acceptable prior to running. The guidelines include requiring that ads aren’t animated and don’t appear as pop-ups that cover the webpage. (Users can still elect to block all ads.) Given the dominant role of Adblock Plus in the market (with more than 300 million downloads), it has the power to determine if and in what form online advertising survives.

The promise by Quantcast and others to come up with more relevant ads that are more valuable to advertisers and users seems to jibe with Eyeo’s mission. Eyeo states on its home page that the company has “ . . . learned that most users wouldn’t mind seeing better, more informative ads.”

That seems to contradict what web surfers have said in surveys, but Duggal thinks the critical factor is just how targeted those ads are. “Taken too far, it is creepy,” he says. “You don’t do advertising for sensitive categories or sensitive topics that is hyper-relevant.”

People won’t get wigged out by an ad for a new soda, he says, or even for products that target them by age group. But Quantcast steers clear of many pharmaceuticals. Duggal then keeps hinting about “the obvious one,” without naming it, until I finally ask if he means highly targeted ads for erectile dysfunction medication.

“That,” he says, “is both annoying and creepy.”

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About the author

Sean Captain is a technology journalist and editor. Follow him on Twitter @seancaptain.

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