JR Smith – 2020: The Promise of Advertising in the Coming Age of Privacy

JR Smith, CEO, AVG Technology

As the eclipse of broadcast media by interactive media approaches totality, the effectiveness of display, banner, and pop-up advertising, all formats borrowed from the non-digital realm, nears an end. Just two years ago, it seemed certain that online behavioral advertising (OBA) would replace these non-targeted formats online. The Wall Street Journal reported in 2010 that the top fifty U.S. websites were each installing an average of sixty-four pieces of tracking technology on each computer that visited their sites. Yet, Internet Advertising Bureau figures reveal that only 15 percent of total ad industry revenue came from OBA in 2011. Although an important 2009 study showed that OBA increased click-through rates by as much as 670 percent over pop-up and other non-targeted formats, strong consumer resistance to online tracking, the increasing availability of do-not-track (DNT) software tools, DNT as a default for Microsoft’s Explorer 10, and the threat of government regulation (especially from the EU) seem to have blunted the ongoing adoption of OBA.

At this point, and going forward, the increasing prioritization of privacy by governments and among consumers is prompting advertisers to seek alternatives both to mass and to OBA approaches. These advertisers will continue expanding the use of social media to achieve engagement, in effect using it as a megaphone to amplify word-of-mouth, long recognized as the most effective advertising vehicle of all. Consumer engagement—creating loyal customers instead of settling for making sales—is a worthy objective, and, looking ahead, social media is the obvious platform for achieving it; however, Facebook and other social sites continue to confront their own privacy conflicts, both with consumers and regulators, which threaten the future of socially based targeting.

While social media will doubtless continue to loom large for advertisers in 2020 and beyond, privacy concerns are not only here to stay, but will become even more pervasive and intensive. This means that Internet users will have the desire, the cross-border legislative and regulator support, and the technological tools to actively choose with whom and with what to engage online. Today, the emphasis for Internet users is on defensive blocking and filtering tools, such as DNT. By 2020, more active, offensive tools will be in wide use.

The emerging technology of the personal data locker (PDL, also called “personal data service” and “personal data stores” [PDS]) will give Internet users a degree of control over their online personal data that may well transform it into “a kind of online currency.”  Already available in the UK, PDL is a cloud-based service analogous to a personal bank account. The user controls the account. No third party, not even the PDL provider, can access the stored data without the user’s permission. Moreover, the data a user chooses to share, called volunteered personal information (VPI), is shared only with PDL-enabled individuals, merchants, or organizations. And the individual user decides what VPI to share with what other PDS-enabled individuals and entities, when to share it, under what conditions to share it, and for what purposes to share it.

PDL and related technologies are bound to subdivide and compartmentalize the Internet. This might be compared to the way the late nineteenth-century invention and deployment of barbed-wire fencing “compartmentalized” the western American plains. It is, however, even more accurate to say that the coming compartmentalization will make the Internet more closely resemble a modern physical community rather than a Wild West “tamed” by fences. As in any “real-life” community, the emerging Internet will see a multiplication of doors—and a more and more of these will be securely locked.

2020? That’s barely eight years away, if you’re counting, so the time is now for advertisers to begin creating ways to persuade the owners of these digital doors to kindly open them. (Don’t waste time with technologies to batter them down. Doing so will not only alienate consumers, but will be against the law.)

The trouble is that nobody opens their digital door to receive an ad. They will, however, invite information across their threshold, provided that it promises to be of value to them. In 2020, the successful advertisers will be those who years ago—like, right now—stopped treating consumers as so many targets and marks. In an online universe populated by consumers armed with the desire, the regulatory support, and the technology to be aggressively selective in the choices they make, advertisers will be obliged to treat consumers as decision makers.

Overwhelmingly, the objective of advertising will be the creation of social word of mouth. Yet the social web will be a different place in 2020 than it is today. It will be shaped by the same concerns for privacy, selectivity, and compartmentalization that are about to transform the landscape of e-commerce. Looking ahead, the social web will be less a megaphone for word of mouth than a pass-the-word network of more personal, intimate, trusted connections. Call it peer-to-peer sales, and any advertisement that is admitted into this selective network, then passed along within it, becomes one highly potent ad.

In 2020, getting the first digital door to open will mean creating ads that do not sell anything. The ad of the coming Internet must not demand the consumer’s time and must not propose to take the consumer’s cash. Instead, it must freely offer value in the form of information the consumer needs, wants, and can use. Starting right now, the advertising business must reinvent itself as the information business, and the information it creates and purveys must be of great value to a particular person behind a particular door.  Furthermore, it must beabsolutely free, free of cost, free of strings, free, that is, of the privacy-violating connections the newly empowered consumer will choose to avoid every time.

What will advertising look like in 2020? It will look like information that tomorrow’s consumer finds both valuable and free of entangling obligation.