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For years, marketers have honed their ability to promote brands and products through traditional media channels. As consumption increased on digital devices – where users were addressable and it was easier to discern consumer intent – marketers began experimenting more with targeted advertising, measurement and attribution. Today, the most efficient way for a marketer to engage a consumer is in response to explicit intent expressed in places like search engines, and vertical destinations such as travel apps and e-commerce sites.
To approximate that precision in places where interest and intent is less clear, marketers, publishers, developers, and ad tech vendors have invested billions of dollars to collect as much consumer data as possible to help target and tailor ads, and then try to figure out which of those ads were most influential in driving the desired outcome. Technology innovation has significantly reduced the cost of storing all that data, and made it much more affordable to process. Yet marketers are still starving for insight into what the data tells them and how they should use it to engage consumers more efficiently and effectively.
This is a classic “Big Data” problem – one that a growing number of data miners and machine learning experts will be working on for years to come. And though it is a worthwhile pursuit, there’s a better approach. Instead of fixating on “Big Data” as the entire industry is clearly doing today, we really ought to be taking a “less is more” approach and focusing on something far more meaningful: smart data.
I know this borders on heresy, given I’m positing this at the IAB’s Annual Leadership meeting, themed “Big Data and Big Ideas,” so let me put this another way. Rather than searching for the proverbial needle in the haystack, taking a smart data approach would effectively increase the “signal-to-noise” ratio, enabling data miners and marketers alike to get to the right answer faster, and engage consumers better.
The idea behind smart data is simple.
Instead of tracking everything a consumer does in the hopes of finding something useful to target and optimize against, we should create experiences that encourage people to share only what’s necessary to help them make informed decisions about which brands and products will best serve them, and engage with those brands and products on their own terms. This will create enormous value for consumers, which in turn is better for marketers. This is because an active and engaged consumer is likely to buy more and more often – and will be an advocate for the brands, products and services he or she loves. This makes each consumer interaction more valuable – creating a win-win-win for marketers, consumers and the developers and publishers who produce consumer experiences.
Like many “innovations” today, this is not a novel concept – just another thing that hasn’t been done well yet. As a matter of fact, it’s something that the IAB’s own Randall Rothenberg alluded to in an email to author Doc Searls, as noted in the book Intention Economy:
“There are two discrete conversations taking place in our realm that simply don’t ever intersect. One conversation posits that the future of marketing will be based entirely on the reduction of all human interactions and interests into sets of data points that can be analyzed and traded. The other conversation posits that marketing success derives entirely from content, context, environment and the qualitative engagement of human emotion.”
In spite of the fact that the idea has been around for years, you won’t see many examples of smart data in the industry today. Following are a few examples of the good, as well as the not-so-good:
OpenTable: Tell us what and when you’d like to eat, and we’ll help you find a restaurant and make a reservation.
Ads preferences managers: Tell us what you like and don’t like, and we’ll use it to sell more ads that you really don’t want to see anyway.
Netflix: Tell us what movies you like, and we’ll recommend to you other programming we think you’ll enjoy as well.
Contextual email ads: Let us scrape your private messages, and we’ll show you something we think is relevant, but not that you really care to see while you’re reading and writing your email.
Xbox SmartGlass: Let us know what show you’re watching, or what game you’re playing, and we’ll give you a companion experience that enhances your enjoyment.
Ad selectors: You probably don’t want to see any of these ads, but please pick the one you’ll dislike the least.
If we can transform digital marketing using smart data practices, it will not only improve marketer-consumer engagement, it will help fund the future of digital innovation. Hundreds of thousands of companies rely on advertising to fund the development of apps for smartphones, tablets and services for the Web. In 2012, about 75% of the apps in app stores, and 90% of the apps downloaded from app stores were ad-funded, not to mention popular consumer services like Facebook, Hulu, Bing, and YouTube -- many of which are supported by the promise of better-targeted advertising. In a recent study, (Ovum Study) Ovum reported that only 14% of respondents believe that Internet companies are honest about their use of consumers’ personal data. If the industry continues with this bait-and-switch, it could undermine the fundamentals of the Internet economy as we know it.
But this isn’t just about privacy, though as we saw recently with Instagram, consumers really do care about how their data is used, and they’ll flee a service – no matter how popular – if they feel unsafe or invaded. It’s about delivering on the promise of technology: making people’s lives better. And great advertising can do that, by connecting consumers with the brands and products they love, and that help them realize their full potential.
The digital-enabled world is a much smaller and more personal place, where less truly can be more. By applying smart data practices, we can earn people’s trust, deliver incredible and engaging experiences, and create more productive and longer-lasting relationships between consumers and the businesses that serve them.
Mark Jacobson, Director of Strategy, Microsoft Advertising
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