Q Thoughts

What the Wall Street Journal Got Right & Wrong

by Jay Habegger

The Wall Street Journal started a series this past Saturday entitled “What They Know” that explores the emerging industry of data-driven online advertising. The articles from Saturday, and the subsequent articles in the series, make positive contributions to the public discussion, but they have also served, unfortunately, to set that conversation back a few steps.

First, the good.

This is the first time I’ve seen the popular media accurately describe the mechanics, at a reasonable level of detail, of the new industry of data-driven online advertising. This new model of online advertising represents an important sea change in the way advertisers can think about their marketing spend and in how web properties can derive economic benefit from delivering popular services, such as help find online user manuals.

Similar to how marketers use data about consumers to decide who should receive an offer off-line via direct mail or other methods, online advertisers can now use data to decide who should see their online ads. This allows marketers to spend their budgets more efficiently, results in more relevant ads for consumers and allows web site operators to earn a living from producing quality content and services.

Now the bad.

Rather than taking a balanced view of the changes in online display advertising, the WSJ articles on Saturday, and every follow-up piece I’ve seen thus far, takes an unbalanced negative tone and resorts to fear mongering.

The interests that need to be balanced are a consumer’s desire to avoid unnecessary intrusion into their privacy through their use of web services, and the desire of a website operator to earn a living from all the work and effort it takes to run a quality content site and offer it up without charge. The latter interest doesn’t seem to count for much from the perspective of the WSJ.

Consumers deserve notification and choice.

Our philosophy at OwnerIQ – and I believe generally the point of view among other industry participants – is these two interests are best balanced by giving consumers notification and choice. For example, web users can read our Privacy Policy where we are pretty clear what information we are collecting and how we’re using it. Consumers that don’t want to participate can elect to opt out here.

In addition to the notification and choice provided by OwnerIQ and companies like us, the fear stoked by the WSJ is also unwarranted because the data collected through casual web browsing is usually not connected to personally identifiable information (PII). The Wall Street Journal’s reporters might know that a particular cookie is associated with Ashley Hayes-Beaty’s computer (to mention a particular individual used as an example in the article), but we certainly don’t; In the case of OwnerIQ we merely know that a particular computer looked at particular web page within the web site of one of our partners.

Secondly, unlike most offline data collection, the consumer always has full control over what data is shared and with whom as a consumer can delete selected cookies, or all of their cookies, at any time they elect to do so (although, doing so won’t stop cookies from being dropped again from a particular company unless you use the opt-out provided by the firm). Finally, a web user can also elect to use the different privacy modes supplied in the browser to restrict the sharing of data.

In short, there are far more tools to control your sharing of data online than exist to control distribution of personal data offline, including financial and health related information.

Supporting the free web.

Provided that consumers have notification and choice, the interest that seemed to be entirely left out of the WSJ’s calculus was the interest of web site operators in earning a living.

The market for data on website visitors also creates a new way for websites to support their efforts to bring quality content to consumers at no charge. Generally the sites that we use to fulfill a growing variety of everyday needs, such as Dictionary.com and OwnerIQ’s own property, ManualsOnline, are supported by advertising in a variety of forms. The emerging industry of data-driven online advertising allows these sites to earn more from their efforts in providing these services and thus allows the services to grow and improve.

Before data-driven online display advertising, websites too small to have a direct advertising sales force, had to content themselves with what they could earn on affiliate revenue from display keyword ads from Google and others, or low priced “Run of Site” ads. Now, the market for data on website visitors allows them another way to earn a living from creating high quality content that interests web users.

Over the last decade the web has been a powerful tool for communicating, social interaction and creating a wide diversity of opinion that is accessible to billions of consumers. Compare this environment to the stifled big-media World where a few powerful interests control most outlets. However, in order to preserve this wonderful diversity the people providing it have to be able to feed their families. Online advertising has by far been the most frequently used economic path to accomplish this.

Without online advertising the web would be a far less useful tool and likely a far more expensive on a day-to-day basis for a typical consumer. Even more important, eliminating ways for small web site operators to earn a living would lead to greatly reduced diversity and choice. The interest we all have in diversity and a vibrant web has to be part of the discussion. I hope the WSJ will reconsider their perspective to give this interest its due.

Categories:Posts from 2010


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