Congress's ongoing investigation into online privacy concerns could spell trouble for online advertising. Many Congressmen and consumers would like to see less of their data being shared online, but advertisers argue that tracking users online helps serve more relevant advertising. If a rumored opt-in requirement from the FTC goes through, behavioral tracking could cease to exist as we know it.
Zephrin Lasker thinks that the key to online advertising is making it opt-in. As CEO of online lead generation company Pontiflex, Lasker wants to see more transparency in online advertising. I caught up with him to talk about how another FTC investigation changed the face of online lead generation and what the current Congressional inquiry could do to advertisers who rely on behavioral tracking.
First off, can you talk a bit about the problems that the lead generation industry had with the FTC a few years back?
Lead generation began with list brokering, which at that point was a completely different way of buying leads. For example, a company could buy a list of 100 people who say would be good candidates for vacation homes. But the problem with this was that no one explicitly opted in for a particular offer. It was way too complicated and way too fuzzy. And, there was no transparency in the entire process.
About two years ago, the FTC as well as the attorney general of Florida and Texas investigated a number of lead generation companies. There were a variety of trade practices under investigation, including practices having to do with offers of free iPods for opting in to advertising. That really grew out of companies that weren’t disclosing the way they were generating their leads, and then they resold their lists to more than one buyer. There wasn’t any transparency in the process. The consumer was often tricked into signing up for an offer (through a free iPod offer) and the advertiser wasn’t entirely sure where the leads came from.
Where does Pontifiex fit into that?
We offer a very different way to buy leads. Two years ago, we decided to create an efficient way for advertisers to acquire leads in a transparent way. Pontiflex has been disruptive because we’re completely transparent. Our approach was to say we'd offer brand specific leads versus category specific and generic leads.
Marketing leads are the category that we use, and we generate leads specifically for one brand. If a user has specifically opted in for a Huggies advertisement, that data is 100% owned by the end client. It will never be resold to any other company. Plus because Pontiflex is transparent, the advertiser knows where that lead came from.
We're all about opt in. When we started Pontiflex three years ago, we got skeptical responses from venture capitalists and people in the online advertising industry. But many in the industry took it for granted that they’d be able to use third party cookies forever. Everyone was very wedded to the idea of tracking user data. Our view was that long term it wouldn’t be sustainable. Some parts of what people are trying to do with behavioral targeting are interesting. But without real visibility, it’s problematic. That’s what Congress is trying get a handle on.
Will behavioral targeting go away?
Not as a category of targeting. Because after all, it’s a way of determining interests. But if advertisers continue to monitor consumers surreptitiously, there will be more restrictions placed on it. Everyone is being followed now unless they go and opt out (there is a page on DoubleClick and Yahoo for this. It is the equivalent of a do not call list). The government is saying it should be clearer. And maybe it should be opt in to get any cookie. If that happens it would be a fairly extreme outcome.
Do you think it would cripple the practice of behavioral targeting?
Parts of it, yes. I think it would have a significant effect.
Is a universal opt-in policy for behavioral tracking likely?
There will be a tightening in what they’re allowed to do. There are parts of the industry that want to self-regulate, but understandably some people in Washington are more skeptical about that.
But a lot of why we believe opt-in advertising is important is that it reflects what’s happening on the Internet right now. All these things are completely based on users and user info. The web is becoming a more personal space. Selling self-reported data when consumers have agreed to do so makes a lot more sense then selling an abstract idea, such as a click or an impression. Our industry is catching up with the nature of the Internet. Cost per thousand (CPM) never really made sense. It’s just where we started.
But does Cost Per Lead make sense for all brands?
That's a good question. There will always be an appropriate mix. From an advertiser perspective cost per lead advertising allows advertisers to acquire the contact information of interested consumers at a guaranteed ROI. From a publisher perspective it allows them to tap into performance advertising, which is the fastest growing segment of online advertising.
The front page of The New York Times could be sold on a CPM basis. However, within more targeted parts of a site, the publishers could then rotate then cost per click or CPL, which makes more sense.
CPC is important for things like search, but when you look at what a lot of advertising is trying to accomplish - to drive people to a form and submit information — CPL is allowing people to skip all the way until the end. We believe a lot of advertising is CPL, it’s just not being sold that way.
Is the problem now that our measurements for advertising online are faulty?
There's always a healthy discussion going on between whether things should be cost per lead or cost per action or just impression based. Of course there will be some type of measurement out there we haven’t thought of yet, but we’ve gotten closer to whatever the natural measurement of online behavior is. Web 2.0 makes sense to sell on a cost per lead basis because it’s the user information we want. That’s the natural method to sell, because it’s all about the user and the data and a transparent and relevant way in which to engage them.
Can you give an example of where opt-in advertising has served a client better than behavioral targeting?
While we can’t speak to specific campaigns of companies that have used Pontiflex, you can see from public records that the 2008 Barack Obama Presidential Campaign spent more on Pontiflex in six months than on the Washingtonpost.com in the entire year. This is a good example of the merits of CPL advertising. The campaign needed to acquire the contact information of a specific number of people in crucial swing states. They needed actual people -- for at the end of the day, cookies don’t vote. They needed to talk to people interested in the Obama brand that they could nurture into volunteers, votes and donations. With CPL advertising, the process was transparent. People knew what they were signing up for. They knew they would be contacted by the advertiser, who could converse with them in a meaningful and transparent way.