Customer Privacy: Get Serious

You may have noticed the news last week that AT&T is rolling out new, ultra-fast residential Internet service in Kansas City. But along with that announcement came a novel pricing structure: the service is $70 per month, or $99 per month if you want your online activity to remain private. Leave aside the ethical and moral arguments for a moment and just look at the optics. There it is in black and white: AT&T will monitor your web searches and browsing activity in order to serve up tailored advertising unless you pay a hefty premium to avoid this. Unsurprisingly, the press uniformly reported this as a “privacy premium” or “no-spy fee.” You are left with a creepy feeling about AT&T, and this pricing approach certainly doesn’t work to burnish the company’s brand. Also, is a typical residential customer really worth $350 in advertising revenue? This feels more like a penalty fee than recovery of foregone revenue.

And what about the ethics and morality? Many will argue, plausibly, that this is no different from what Google, Facebook and many others do – offering you services where they monitor your activity in order to better target advertising. All AT&T is doing is giving you an (paid) opt-out opportunity.

The small but important differences I see are two: the AT&T service is paid, and AT&T is in a privileged position as the on-ramp for its customers. If you offer a paid service, the business model is explicit and understood by both parties. Trying to further monetize your customer is good business, but it’s also a delicate business because you risk killing the golden goose. And when you put yourself in the position of having access to sensitive customer data (even if you don’t think it’s all that sensitive), you are in a trust position. When trust is lost, it’s very hard to get it back.

The implications for B2B data publishers?  Paid subscription services come along with a customer expectation of privacy. After all, your subscribers are using your databases to check on competitors, look for acquisition candidates, plan business strategy and lots of other sensitive activity. Even the perception that you are peeking into their activities for anything other than system maintenance represents a huge breach of trust that can seriously damage your brand and your business. Consider, as just one example, the blowback Bloomberg experienced when its customers learned that Bloomberg editors could and did access their accounts.

Think hard about your own approach to customer privacy. Don’t fall into a common trap of thinking that because all this customer data is so accessible to you, it’s yours to use. It even filters down to everyday activities such as managing customer engagement. Contacting customers that haven’t logged in in 60 days is one thing; calling them up to discuss their recent queries probably crosses the line.

Privacy doesn’t get discussed much in the context of B2B data products in large part because it is an implicit customer expectation. But if pricing models such as this AT&T model proliferate, publishers that are serious about customer privacy will likely have a strong competitive advantage.

Take Action on Actionable Data

Actionable information has long been a  cornerstone of infocommerce, and recent stats from MediaRadar, a 2011 Model of Excellence company which will be featured again when DataContent moves to Miami as part of the all-new Business & Information Media Summit, provides a fine example, and in a way that hits home for many of us. Built on an understanding of advertising sales workflow, MediaRadar makes full use of its database to yield a highly valuable product. At core, MediaRadar provides sales leads to media companies by tracking who is advertising where. At a higher value, it offers benchmarking to its clients by allowing them to easily see how they are doing versus the competition. At the highest value, it creates an analytical layer, tapping into its data at an aggregate level to find trends and insights. Consider these recently released MediaRadar insights on email advertising:

• As annoying as everyone says email is, advertisers like it. Over a 12 month period, MediaRadar identified 19,915 distinct B2B advertisers who bought an email advertising program
• A third of advertisers buy only email advertising
• Those advertisers who buy via email rarely buy the full range of media options. For example, 54% of  advertisers buy print advertising with email ads,  and 47% of advertisers buy other digital advertising along with email ads
• In a remarkable trend, 44% of email advertising now being sent by B2B media companies are dedicated email blasts, and the trend appears to be increasing
• A lot of email-only advertisers fly under radar and are hard to identify
• Response rates vary significantly by market
• 30% of e-newsletters carry only a single ad; 66% carry from 1 to 3 ads, and 17% carry 5 or more ads

Most data products have this multi-dimensional potential, which can often open up new revenue and even new markets. Is your dataset working as hard for you as it can?

P.S. – Speaking of data and analytics, I would like to ask you to take just a few minutes to complete our new email benchmarking survey. It’s quick, and you’ll not only get a warm feeling of satisfaction from helping to make the entire industry smarter, you’ll also get a free executive summary and key data charts.

A Plug and Play Publishing Platform?

Dun & Bradstreet Credibility Corporation, an independent company with such an extensive relationship with Dun & Bradstreet that it was even granted use of the vaunted D&B name, has been targeting smaller businesses with not only traditional D&B credit products, but a beta offering of what might be called a “next generation credit rating,” a so-called credibility score that examines the company from a number of different non-financial perspectives, yielding a letter grade and presumably an online trust mark that companies can use to build confidence with both suppliers and customers. It’s a clever and ambitious concept. And there are some serious resources behind this venture: Boston-based private equity firm Great Hill Partners is backing the venture with in excess of $100 million. In an apparently related development, D&B Credibility recently announced the launch of the “Credibility Review Business Marketplace,” an innovative move to partner with publishers to extend the reach of its credibility ratings, by turning B2B data publishers into a sales channel. D&B Credibility indicates a number of publishers have already signed onto this program.

I’m still waiting to get full details on this program from the company, leaving me free to speculate wildly, a favorite pastime. Here’s what I picture:

D&B Credibility has licensed access to the full D&B business database, and this provides a content backbone to the initiative. When it emerges from beta, D&B Credibility will presumably move to aggressively sell credibility scores to smaller businesses. Each sale yields a richly detailed business profile (part of the score involves “transparency,” so participating companies are obliged to supply all sorts of useful information – smart!) that the participating company is highly motivated to keep current (yielding high leverage user-generated content). These enhanced listings are added to the basic listings in the content backbone.

To accelerate adoption of the credibility scores, D&B Credibility will partner with publishers on an intriguing offer: a self-maintaining database offering a growing number of credibility scores, that the publisher can access for free in exchange for selling credibility scores (and anything else it wants) to companies in its vertical market.

As I envision it, publishers would simply flag the companies they want to appear in their vertical market buying guides, getting in effect a customized view of the larger database. The publisher codes each company against its own vertical market taxonomy, and presto-whammo, it’s got a high quality database that costs almost nothing to build or maintain. All it has to do is sell the credibility scores and other advertising to companies that it has flagged. For trade magazine publishers in particular, selling ads is a true core competency, where database development and maintenance is not.

What’s in this for D&B Credibility? It gets a revenue cut from every credibility score a publisher sells. It gets all the company information being collected (everything goes into its backbone database), and it gets valuable help in building momentum and acceptance for its scores.

Is this a good deal for publishers? When it comes to vertical market buying guides, the majority of publishers have unevenly maintained databases with limited company information. This approach not only goes a long way to solving the twin issues of data quality and data depth, it also provides the ability to sell a new and useful offering – a B2B trust mark.

Fascinating stuff, and well worth watching as the product rolls out from beta.

Perfectly Measurable

An interesting new study produced in cooperation with eBay and sporting the weighty title “Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment,” raises some interesting new questions about search engine marketing (SEM) effectiveness. The study involved eBay actually suspending various types of SEM on specific search engines, and then closely monitoring the results. The first big finding was that, at least for large companies, brand advertising via SEM (e.g. eBay buying the keyword “eBay”) was a waste of money. While it’s always good to see hard proof, at the same time, this finding strikes me as intuitively obvious. I see it all the time with big companies with strong brands: their paid ads appears directly above their organic listings. Drawn to the bold type and high positioning, consumers will often click on the paid click, enriching the search engines and yielding the advertiser a click they would have gotten anyway for free.

The second (and more controversial) finding is that SEM for non-branded keywords (i.e., products or services as opposed to company names) is also largely ineffective, because it tends to draw in far more existing customers than new customers, making SEM more of an alternate form of navigation than a true discovery mechanism. Indeed, the authors of the study go so far as to say, “Bluntly, search advertising only works if the consumer has no idea that the firm has the desired product.” In short, SEM only really works when you bring a user new information, such as the fact you sell a specific product, and the user didn’t know that information in advance.

The study is careful to limit its conclusions to large companies with big brands. And this notion of having to provide new information for SEM to prove effective would seem to be a perfect opportunity for smaller and less-known companies. Or would it?

While far less scientific, I have spoken with dozens of small B2B data publishers who have tried SEM and pronounced it a waste of money. While SEM reliably yields traffic (great if you are advertising-based), it doesn’t seem to dependably yield purchases (not so great if you are subscription-based). Yes, I know B2B is different, and site visitors often don’t purchase on their first visit. But my informal survey was of small publishers, who though they often lack sophisticated analytics, generally have a very good seat-of-the-pants sense of where their business is coming from. And for these publishers, they believe their business isn’t coming from paid search.

There’s no definitive answer here, but it does suggest we all take a much harder look at paid search efficacy, and consider the possibility we may be paying handsomely for clicks we would have gotten for free anyway.

SELLING CONTENT ONLINE

If you sell online subscriptions, you’ll want to consider attending our Subscription Site Summit in New York City on May 8-9. You’ll fill notebooks with good, actionable ideas and techniques from some of the most successful players in the business. You’ll also benefit from the intimate format of this event, designed to promote frank and open discussions. Take a look at the program and register today – attendance is strictly limited.

Google: Free Here; Paid There

Google may be a lot of things, but it's certainly not boring. Just this week in fact, it did several interesting revenue model back-flips, changing one product to free and making another one paid.

Let's start with Zagat. Zagat sells its content, in print and online. Not a revenue model Google knows anything about, but that didn't stop Google from snatching up Zagat for around $150 million in 2011. I predicted at the time that Google would make Zagat content free and dump in into Google Places (home of its user-generated business reviews). What happened? Google announced this week that it will make Zagat content free and dump it into Google Places. Google Places, in turn, will be dumped into Google Plus, as part of an initiative to shore up Google's faltering response to Facebook.

Google hasn't thrown away all of Zagat's revenue, at least not yet. You'll still be able to buy the print Zagat guides. Google will still charge for the Zagat iPad app. And my suspicion is that Zagat's real source of profit, gift copies of the guides imprinted with corporate logos, will continue. Make sense? If so, click here.

The biggest question for me is what happens when you mix Zagat's edited, witty, curated reviews with a much larger grab-bag of user generated reviews? Will Zagat reviews shine, or get lost in the sauce? Will people continue to submit reviews to Zagat when they can get immediate gratification (and reach the same audience) with a user-generated review? Sure, the Zagat brand is strong, but Google is sailing into uncharted waters, and I am not sensing a strong hand on the tiller.

This very same week, Google decided to rebrand its Google Product Search service as Google Shopping. And with the new name, Google decided a revenue model might be cool too. So the new Google Shopping service will be paid inclusion. Yes, Google Shopping is now a buying guide.

Charging for inclusion in the product directory (Google daintily calls this "a commercial relationship with merchants") is apparently the first time a Google-created service has gone from free to paid. Also, as you read Google's rationale for this shift, you realize that it has spent a lot of time and money to learn some basic truths about data publishing, for example:

• Even companies that do make the effort to submit product information in structured format are lousy about keeping their information current
• A smaller database of highly accurate data is more attractive to most users than a larger database of moderately accurate data
• Structured data permits far more powerful and precise searching of product information

So while I have historically been at a loss to figure out what Google is doing, it's getting easier these days as Google moves ever-closer to doing everything, all at once. Just don't try this strategy at home!