eView: Behavorial Targeting Networks Should Learn eBay's Lessons
The biggest recent news item you might have missed is the death of eBay's Online Media Exchange. First articulated in 2005 by maverick marketer Julie Roehm -- who ran marketing for Chrysler at the time -- the Exchange was meant to be an online marketplace for ad spots on radio and cable TV, modeled after NASDAQ. eBay announced its intentions to run a pilot in 2006, launched it in '07, and killed the program this June.
There's a critical lesson in that story for the behavioral targeting networks.
Let's start with a post-mortem. The Exchange's immediate cause of death was that the cable networks whose inventory it was meant to sell simply wouldn't join the program. Without the cable networks supplying inventory, the system was a non-starter. (Oxygen was a notable exception, but one major member wasn't enough to keep the Exchange alive.)
It's hard to blame the cable networks -- which perceived the Exchange as an attempt to commoditize their inventory and unseat their upfronts -- for not wanting to play along. eBay did assert it wasn't interested in undoing the upfronts -- claiming that, instead, it only hoped to help advertisers and cable networks get more value from their "scatter market" inventory (leftover network inventory that is sold at rates differing from those negotiated during the upfront season). But for the cable networks, there was obviously a fear of a loss of control, and a loss of real money. And so the cable networks didn't join.
I believe that the Exchange did offer real value to the TV cable networks that opposed it. As traditional media becomes increasingly digital, and traditional advertising clamors for spend with the highly transparent digital space, TV's perceived lack of transparency could only become a liability. The ad exchange offered TV a way to introduce necessary transparency into its system and to solve its biggest problem as it headed toward the digital future.
Unfortunately, eBay did a poor job of explaining that value to the cable networks -- and, from what I saw, did little to reach out to them at all. And so despite interest from blue-chip advertisers including Johnson & Johnson, Toyota and Wal-Mart, the Exchange was terminated.
The situation that behavioral targeting faces isn't so different. eBay had an easy sell to advertisers, but a hard sell to the other set of partners it would need -- namely, the cable networks. BT also has an easy sell to make to advertisers -- for whom it can provide rich data and targeted advertising. But for the public, the intended target of BT ads, the sale is much harder to make since the public sees behavioral targeting as an unnecessary intrusion on personal privacy.
Are the BT networks doing a better job of explaining themselves to their "second constituency" than eBay was at explaining to theirs? I don't think so. Consider, for instance, the argument I encounter most from BT professionals -- in presentations, in articles and in person. That argument goes as follows: The public shouldn't fear BT, because BT offers more relevant ads, which in turn means providing consumers with a richer online experience. To a citizen concerned with online privacy, that's essentially an argument that an Orwellian 1984 is OK, just as long as Big Brother offers good commercials to watch. The argument doesn't fly.
And because the BT community has done a poor job of stating its case to the public, it (along with watchdog groups and the government), has responded with suspicion.
The BT networks and related providers need to learn what the eBay Marketplace didn't -- that in order for our product to survive, we need to bring all concerned parties on board. We'll need to become what eBay wasn't able to become -- a good communicator and a good listener.
How would I state the BT case to the public? I would start by explaining how BT makes an ad-supported Internet more lucrative, and therefore more viable over the long term and across more types of sites; that means more dissemination of free information across the Web, and across society. At the same time, I would call on BT providers to think seriously about privacy policies and self-policing, if only to be worthy of the cooperation of the public that serves as its audience.
Does this sound like too much fluff to worry about as we're rushing in to advertising 2.0? Perhaps it is. But it would be a pity for BT networks to fall prey to an inability (or a refusal) to communicate their own value to the public. And if the BT networks don't realize this before it's too late, many of them may join the ranks of the kind of neglected, unusable stuff you can only find on eBay.