Making online news sell

November 12, 2007

Very soon, here’s how it will work: You’ll open up a story from a news site and it will come with advertising. The ads aren’t random. They’re selected for you based on your interest in that story, on prior Internet activity — maybe another site you visited, something you bought or even a comment you e-mailed to a friend — and on other, offline information that the ad network associated with the news site has gathered about you.

You’re “served” with customized advertising that has an uncanny relation to your interests. Say you’ve clicked on a story about climate change, the ad network pulls down data on your Zip code, driver license, age and demographic cluster, and you end up with an ad for a Prius and an appeal to donate to Greenpeace. You read an article about pregnancy health and next time you log on you’re getting baby formula ads.

Thanks to the precision with which you’ve been sorted, sifted and targeted – which supposedly increases the chances that the ads will work – the publisher running the website can charge advertisers top dollar.

What’s more, suppose you’re a member of a social networking site such as the wildly popular Facebook and My Space. They are eagerly grooming themselves into advertising conduits so that your shopping preferences can be smoothly, even automatically, broadcast to people in your network as personal endorsements. Your choice of reading or viewing goes out to your friends, who also get promotions related to your brand choices. They find out what movie you just saw and get an ad for it to boot.

This is the next big thing. Everybody’s fitted with sandwich boards.

Such is the promise that Internet advertising holds out to the news business. It’s the promise that all news, features, commentary, analysis, whether in print, sound or pictures — in fact, the full range of topical fact and opinion that constitutes online journalism — will be minutely inventoried and laden with commercial pitches calibrated to specific individuals.

It’s the promise of journalism as a perfect selling machine.

Plainly, this requires a vast industry to monitor what we each do online, and that, to put it mildly, raises privacy issues. That’s why the Federal Trade Commission hosted a two-day workshop in Washington early this month on behavioral targeting.

The FTC has been looking at Internet privacy issues for nearly a decade. In a report to Congress last year it reiterated core principles related to online profiling: that people be told what data is being recorded, that they have some choice in the matter, that they get access to the information themselves, and that its security be safeguarded.
Does any of this bother ordinary people? “Most consumers are clueless,” wrote Seana Mulcahy, who runs the Online SPIN blog. In an article titled, “Do consumers care about online privacy?” Advertising Age decided the outrage wasn’t there yet, and until it was, marketers would proceed.
Some are almost defiant. Dave Morgan, head of Tacoda, a top behavioral targeting firm, writes: “Consumers understand that they have gotten something of a free content lunch for over a decade and have said in lots of studies that they’d rather see ads than pay for online content.”
Morgan’s Tacoda, it’s worth noting, sold in July for an estimated $275 million. The buyer was AOL, which is busily scrapping its reliance on subscription fees and moving to an ad-supported model. Other news sites have done the same – among them Slate, the pioneering online magazine launched as a subscription service in 1996, The Economist, and the New York Times, which had its commentators behind a subscription wall for a time. Even the Wall Street Journal, with 983,000 online subscribers, is near certain to scrap its fees and embrace advertising support.
With the reliance on ad support becoming nearly universal in online news, it is odd that apparently no news media spoke at the FTC sessions, which may yet yield rules restricting the reach and effectiveness of online advertising  and exert powerful influence over the entire future of the news business.
Nor was there much coverage. That enables Internet users to persist in the comfortable fiction that the information they’re getting is actually free, when it is, in fact, purchased at an extravagant price with the personal information they are unwittingly giving up.

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