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Online Advertising

Is Time Up for 230?

In 1996, several Internet lifetimes ago, Congress passed a bill called the Communications Decency Act (officially, it is Title V of the Telecommunications Act of 1996). The law was a somewhat ham-handed attempt at prohibiting the posting of indecent material online (big chunks of the law were ultimately ruled unconstitutional by the Supreme Court). But one of the sections of the law that remained in force was Section 230. In many ways, Section 230 is the basis for the modern Internet.

Section 230 is short – only 26 words – but those 26 words are so important there has even been an entire book written about their implications. Section 230 says the following: 

“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another content provider.”

 The impetus for Section 230 was a string of court decisions where the owners of websites were being held liable for things posted by users of their websites. Section 230 stepped in to provide near-absolute immunity for website owners. Think of it as the “don’t shoot the messenger” defense. Without Section 230, websites like Facebook, Twitter and YouTube probably wouldn’t exist. And most newspapers and online publications probably wouldn’t let users post comments. Without Section 230, the Internet would look very different. Some might argue we’d be better off without it. But the protections of Section 230 extend to many information companies as well.

 That’s because Section 230 also provides strong legal protection for online ratings and reviews. Without Section 230, sites as varied as Yelp, TripAdvisor and even Wikipedia might find it difficult to operate. Indeed, all crowdsourced data sites would instantly become very risky to operate.

 The reason that Section 230 is in the news right now is that it also provides strong protection to sites that traffic in hateful and violent speech. That’s why there are moves afoot to change or even repeal Section 230. Some of these actions are well intentioned. Others are blatantly political. But regardless of intent, these are actions that publishers need to watch, because if it becomes too risky to publish third-party content, the unintended consequences will be huge indeed.

 

 

ADS.DATA

It’s not news that fraud is rampant in online advertising. It turns out that one of the biggest reasons is the fact that the buyers and sellers of online advertising in large part do not deal directly. They transact through third party brokers and marketplaces. Increasingly, it’s now computers ordering through third party brokers and marketplaces – the wonderful world we call programmatic. With no humans watching, much less policing the buying process, it is notsurprising that crooks and thieves have rushed in.

One of the easiest types of fraud is simply to misrepresent yourself online. You can tell an online marketplace that you represent the CNN website, collect the revenue, then run the ads you sold on some other website, often one that gets lots of bot traffic and other fake clicks in order to show performance.

To fight this type of misrepresentation, the Internet Advertising Bureau (IAB) created a new standard called ADS.TXT. It’s a small standardized format file that a website owner creates and places on the website that lists all the website’s authorized sellers. If you’re familiar with ROBOTS.TXT, it is exactly analogous.

The idea is that programmatic advertising buyers can easily and confidently check a website’s list of authorized resellers. It’s a full, workable solution to a significant problem, but it comes with one big catch: the ADS.TXT file is necessarily open to everyone who wants to view it. And a lot of publishers and other website owners aren’t thrilled about exposing what they consider proprietary information.

The solution? In my view, it’s a central database, operated by an independent third party. The same information can be placed in the database, but access can be easily restricted to those who “need to know” the information. I’ve always liked opportunities where an industry needs to share information but at the same time doesn’t want to make that information public. A neutral data provider is most times the perfect answer, as I think it is in this case.

Moreover, a central database can add additional value, because it can track what is happening. It can automatically nag website owners who don’t update their reseller lists regularly. It can check which advertising marketplaces are using the service. In these and many other ways, it can actively work to keep all players engaged and honest.

And of course, data being data, there’s an easy opportunity to aggregate this reseller data to look for sales trends and market share. This information can be given or sold back to the industry without any privacy concerns.

ADS.TXT is just one example of a good idea that could be a much better idea if there was a trusted data provider in the middle, protecting privacy while mediating and recording access to insure compliance and data accuracy. I’d like to see ADS.TXT as what you might call ADS.DATA. You’d be wise to look for analogous opportunities in your own market.

 

Don't Turn Strength Into Weakness

For some time now, the publishing world has been crying foul over the growing power of ad blocking software products. Several studies suggest that as many as 50% of all online users have some ad blocking software installed. Some see this as a death knell for the industry, which is already struggling to maintain viability living off so-called “digital dimes,” a term to describe how much less lucrative online advertising is compared to traditional print advertising which is in decline.

One of the more prominent ad blocking software tools, Adblock Plus, which is published by a German company called Eyeo GmbH, is somewhat less militant than some its competitors, and has come up with a concept called “acceptable ads” that allows specific advertisements to be whitelisted. Some third-party research has concluded that nearly one-third of all U.S. Internet users may be using AdBlock Plus.

Ad blocking software that allows some ads to appear? It may seem odd, but that’s what Adblock Plus does. And how does Eyeo decide what ads are acceptable? Well, that’s where things get really strange. You see, Eyeo will accept payment from “larger organizations” in exchange for whitelisting their advertising. Don’t ask about the specifics of these deals because they are not disclosed. Not surprisingly, some publishers refer to this as a “protection racket.”

If you’re starting to see that Eyeo is compromising its entire brand promise, hold onto your seat. That’s because Eyeo has just rolled out its own real time bidding platform for whitelisted ads. Yes, the company that built its business blocking ads is now in the business of selling ads!

Eyeo justifies all this is by allowing users to click on any of the ads Eyeo serves to them to rate them. How users rate various ads will determine what ads they see in the future. This ostensible innovation is supposed to make this initiative palatable to Adblock plus users.

You probably already see the issue. Having built a popular tool to block ads that may be used by as many as a third of all Internet users, Eyeo has a chokehold on almost every ad-supported website, giving it tremendous market power. And it exercised that power by accepting payments to allow ads to slip through its blocking software. It’s an approach that isn’t totally satisfactory to either Adblock Plus users or website owners. My experience has been that when you are not absolutely clear who your customer is, things end badly. It’s one thing to be a marketplace where you match buyers and sellers for a fee. It’s entirely another thing to try to get paid to match reluctant sellers to reluctant buyers. Indeed, it’s not even clear that what Eyeo has is even a marketplace at all.

The object lesson here is that having tremendous market power is always a two-edged sword and thus must be handled with extreme care. The more greedily and ruthlessly you wield your market power, the more likely you will ultimately lose it as you offend all the various constituents in your market. Through its actions, Eyeo may be sowing the seeds of its own demise. There’s a lesson here for data publishers. 

Monetizing Mediocrity

I laughed out loud while reading a recent Bloomberg article describing how Apple has a secret team hard at work to improve search in Apple’s App Store. Key to this initiative: finding a way to introduce paid search so that app developers can pay to come up first in search results. Oh yes, as a secondary objective, this secret team is also “trying to improve the way customers browse in the App Store.” Note that they’re improving browsing, not search!

Yes, the App Store, which the article correctly notes is a vital part of Apple’s business, urgently needs to be better monetized. Better functionality? Maybe, they’ll look at that too.

The App Store is a case study in bad design and a bad user experience. My sense is that it was created with the notion that users would primarily browse for apps of interest. But with 1.5 million apps and only 25 categories, you better have a lot of time to kill if that’s the way you want to find new apps.

Search is even worse. It starts with the well-hidden search box. Start typing in a word, and the search software will helpfully suggest phrases. But if you click on one of these search phrases, more often than not, you’ll come up with no results. Further, Apple seemingly permits companies to stuff their entries with the names of competitive products too, so you have to be extremely careful what apps you download, something I discussed in an earlier post.

Searching in the App Store is incredibly literal too. Apparently, concepts like wildcars or Soundex or even relevancy eluded Apple’s celebrated designers. In almost every respect, Apple appears to have succeeded in spite of itself.

Besides serving as a useful case study of how not to build an online store, business information companies need to consider how this impacts their products and digital strategies. Most business information companies distribute their apps through the App Store. It’s important not to take for granted that they will be found. Try searching for your own app in the App Store using common searches your typical user might try. I can pretty much guarantee you’ll be disappointed if not shocked by the results. Saying “download our app from the App Store” is unfortunately not enough direction for users. Also, spending some time to really think through your App Store listing is absolutely time well spent.

You should also keep an eye out for scammy apps that may be presenting themselves in confusingly similar ways in the App Store. Apple doesn’t seem to care, but you may be losing business to other app developers that don’t have your user’s best interests as heart, and this could ultimately reflect back on you. There are a stunning number of apps that seem to be gaming the system.

Apple’s planned solution to App Store search seems to be not to improve it, but to charge money for you to get the results you would expect to get if its search functionality worked properly. And much as I hate to say it, it may be worth paying up, because digital adoption starts with your users getting their hands on your app, and Apple is making that incredibly and unnecessarily difficult to do.

The 50% Solution

A saying attributed to the famous Philadelphia retailer John Wanamaker is that, “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” Apparently, that saying can be updated for the Internet age to read, “Half the traffic to my website is non-human; the trouble is I don't know which half.”

In fact, the percentage is worse than that. According to a study by online researcher Imperva, a whopping 61.5% of traffic on the web is non-human. What do we mean by non-human? Well, it’s a category that include search engines, software that’s scraping your website, hackers, spammers and others who are up to no good.

And yes, it gets worse. The lower the traffic to your website, the greater the percentage that is likely to be non-human. Indeed, if your site gets 1,000 of fewer visits per day, the study suggests that as much as 80% of your traffic may be non-human.

Sure, a lot of this non-human traffic is search engines (and you’d be amazed how many there still are out there), and that’s probably a good thing. After all, we want exposure. But the rest of this traffic is more dubious. About 5% of your overall site traffic is likely to be scrapers -- –people using software to grab all the content on your site, for purposes benign or evil. Sure, they can’t get to your password protected content, but if you publish any amount of free data on your site in structured form, chances are that others now have that data in their databases.

Obviously, if your sell online advertising, these statistics represent an inconvenient truth. The only saving grace is that your competitors are in the same boat. But if you are a subscription site, does any of this even matter?

I think it does. Because all this non-human activity distorts all of our web analytics in addition to our overall visitor counts. Half the numbers we see are not real. These non-human visitors could lead you to believe certain pages are more popular on your site than the really are; this could cause you to use bad insights to fashion your marketing strategy. And if you are using paid search to generate traffic, you could be getting similarly bad marketing data, and paying for the privilege as well.

Most importantly, this non-human traffic distorts reality. If you’re beating yourself up because of low response, lead generation or order rates, especially given the number of uniques and page views you appear to be getting, start by dividing by two. Do your numbers suddenly look a lot better? Bots and scrapers and search engines don’t request demos, don’t download white pages and certainly don’t buy merchandise. Keep that in mind next time you’re looking at your site analytics reports or puzzling why some pages on your site get so much more attention than others. Remember, not all data are good data.