Online: The interactive ingredient

Online ‘just got started’ Danny Meadows-Klue May 2004

IAB EuropeIAB Europe

European Parliament

Committee on Civil Liberties, Justice and Home Affairs

www.IABeurope.eu

The panThe pan--European trade European trade association of digital and association of digital and

interactive marketing representing interactive marketing representing the Nationalthe National associationsassociations

Online: The interactive ingredient

Online ‘just got started’ Danny Meadows-Klue May 2004

Our mission statement Our mission statement ““Promote, Regulate, Promote, Regulate, Educate and Defend Educate and Defend the digital industrythe digital industry””

5 new countries 2008

15 established countries 2007

January 2008 :

Established countries :-15 countries with 45 staff-3150 member companies

New countries in 2008 :-5 countries closing W-Europe

Advanced discussions :-6 CEE countries for 2009

Objectives 2008 :-Best Practices-Education-Regulation

Partnerships :-WFA-EACA-FEDMA-EASA-EIAA-ADVANTAGE PLATFORM-AIG

6 potential countries 2009

AdExAdEx BenchmarkBenchmark

Display31%

Email 2%

Classifieds & Directories

22%

Search45%

8 Billions € in 2006 andreaching 12 Billions € in 2007

UK38%

Germany22%

France15%

Netherlands7%

Italy6%

Spain4%

All other5%

Denmark3%

Benchmark 2006 : Display Advertising, Content Integration,E-mail, Search, Affiliate, Directories and Classifieds

Digital Digital EmploymentEmployment

• The right message on the right moment to the rightpeople

• Transparancy is the message

TheThe Digital ConsumerDigital Consumer

Online Business BasicsOnline Business Basics• Online Services and Online Business

• Online services and portals, big and small, aren't really for free.• Most of the services used by every consumer every day exist only on the ability use other financing

funnels, e.g. sell advertising. • Advertising is funding the growth and dynamism of the Interactive Era. In addition the Internet

has torn down barriers to entry in both content creation and distribution fueling major growth in small, medium and big sized companies.

• All these companies across the spectrum provide jobs to hundreds of thousands of European citizens.• The innovation of Targeting makes adverting more productive.

• It is a guarantee for the Interactive Era to continue for the mutual benefit of economies and consumers.

• Consumers• Consumers´ trust in service providers and portals is core for any interactive business, big or

small -> those that have been trusted in the past have grown more than others• Services, that risk their consumers trust, e.g. by illegally exploiting personal data, immediately

risk their existence -> thus consumers loyalty is basic• Date protection is key otherwise consumers wouldn’t have transfer lots of their communication

online

• Data protection• Behavioral Targeting systems are usually working without any personal data to provide

relevant advertisement to the consumer.• The responsible and sensible handling of any information the consumer directly or indirectly

exposes to any service provider is happening under a well established legal framework. Legal regulation in E.U. IS strict and sufficient.

• E.U. governments must be aware that further regulations could change the interactive business as it is and lowering economic growth pace

Behavioral Marketing & TargetingBehavioral Marketing & Targeting• Definition

• Behavioral Marketing &Targeting (BMT)• Behavioral Targeting refers to the delivery of digital advertising to user groups based on previous surf

patterns (behavior). Advertising for a car model is for example only displayed on condition that a user has often enough visited car related pages on one portal within a certain time period. This behavior shows that the user is highly interested in car related topics.

• Predictive Behavioral Marketing & Targeting• Predictive Behavioral Targeting refers to the delivery of digital advertising to user groups whose specific

characteristics (socio-demographic, product and buying interests, psychographic characteristics, etc.) are ascribed to by means of statistical prediction based on surfing behavior, questionnaires and possibly external data.

• Behavioral Marketing & Targeting …• … makes advertising more productive.• … delivers more relevant information to the consumer. • … helps consumers making better buying decisions.• … ensures cost free and ever better online services to the consumer. • … is catalyst for the revival of small regional business within European regions.• … is the foundation of hundreds of thousands of livings in Europe.

• Technologies• Behavioral Targeting is based on the innovative development of mathematical, statistical and

technological systems, that enable the analysis of anonymous data to detect pattern in relevant interests and habits.

• The most advanced systems are model based analytical tools, that allow to predict probabilities for relevant interests and habits.

• All systems are highly automated and are thus cutting costs and improving the results from advertising for the mutual benefit of economies and consumers.

Interactive Advertising & TargetingInteractive Advertising & Targeting• Does Advertising need personal data ?

• It is a widespread error, that the advertising industry is struggling for ever more personalized marketing solutions and therefore collecting personal data.

• The natural person or specific individual is of no interest to the mass advertising industry.

• The costs for a hypothetical mass 1-to-1 marketing (micro-advertising) would be exorbitant.

• Advertising with Targeting• The focus of advertisers is the target group, who's

anonymous members potentially have a common interest in a good or a service.

• Behavioral targeting systems can build these target groups on clusters of data patterns. The systems work with mathematical and statistical data models based on collected non-personal data.

• Future predictive targeting models are even more designed to deliver relevant advertisements to target groups.

• It helps advertisers to reach the appropriate potential consumer and makes marketers´ and agencies´ work as well as media planning more efficient.

• Existing European Behavioral Targeting Solutions have developed according to actual national privacy guidelines and are mostly certified by national institutions.

Example for data protection certificate for behavioral targeting system (nugg.ad AG) issued by independent German data protection authority (ULDi).

Privacy and Data ProtectionPrivacy and Data Protection• E.U. data protection rules

• There seem to be some diversity in national practices. • Nonetheless, all E.U. members have strict data protection

rules effectively working in place.• Data protection rules in the E.U. could become a

guideline for privacy laws worldwide.

• Do we need further regulation ?• E.U. data protection rules are strict and sufficient, to

cover all issues on interactive advertising and also behavioral targeting.

• Further regulations could endanger the development of internet business as it is, because it would certainly cut future advertising revenues.

• Hundreds of thousands of jobs and small business could be lost.

• Education and Transparency• The industry must work on a better communication,

education and transparency on advertising and behavioral targeting.

• Dedicated industry committees deal with data protection and privacy issues, like the German BVDW working party “AK Targeting”.

• The IAB Europe and the National IAB’s are committed to the development of advertising self-regulations based on best practices like data protection certificates and opt-out solutions similar to NAI, putting the law systematically in practice.

Example of self-regulation initiated by German BVDW.

• Interactive media and advertising companies are contributing positively to the online economic revolution that is driving European competitiveness in the 21st Century.

• Advertising is funding the growth and dynamism of the Interactive Era. In addition to the presence of large multinational corporations, the Internet has torn down barriers to entry in both content creation and distribution fuelling major growth in small and medium sized companies. All these companies across the spectrum provide jobs to tens of thousands of European citizens.

• Just as your local retailer serves a particular geographic community, so these sites serve their online communities of interest that span towns, cities, regions and even Member nations of the EU. They do this with their content and services – and they finance this through advertising.

Some conclusionsSome conclusions

• It is now possible for an individual to publish a national “magazine” online, even schedule a video network and attract valuable advertising to provide revenues. Never before has freedom of expression been more open,available and varied. And never before has it been so global.

• With interactive media, marketing goods and services is becoming more accountable, more efficient and more available to a wide range of advertisers across the economic value chain from the largest multinational corporation to the one-man seller of specialist tea or ceramic tiles. This advertising-driven activity will underpin the growth of the European internal market bring goods and services to citizens throughout the European Union.

• This is possible because of the availability of tools that enable the analysis of non-personally-identifiable data to detect patterns in peoples’interests and consumption habits, and to allow the matching of advertisements to these patterns – like in the offline world of TV, radio and print media but faster.

• This is possible because of the availability of tools that allow for predictive modeling based on the consumers’ responses to these well-targeted ads, enabling the development of even better-targeted ads. All of these advancements ultimately work to the benefit of consumers. They not only receive advertisements more relevant to them; they can find more and better free content and services online – like in the offline world of TV, radio and print media but faster.

• Because internet based advertising processes are largely automated, they are taking costs out of, and improving the results from advertising -which benefits consumers as well as advertisers.

• None of this happens in a legal vacuum. Just as with legacy media of television, radio and the printed press, advertisers adhere to a well established body of legislation which includes specific laws on advertising, data privacy, eCommerce, intellectual property rights and competition as well as a international and national codes ofpractice. The IAB is committed to the development of advertisingself-regulation and takes seriously its responsibilities in this field.