Advertising: Internet marketing without intrusive data gathering

In an ideal world, at least so far as consumers are concerned, internet advertisers would be in the same position as those who publish ads in magazines: they know how many people buy the magazine, therefore they can estimate how many people see the ad - but they have no data relating to those users other than the broad data relating to the target audience of the magazine.

But that's not what internet advertising technology does: it tracks, by the use of cookies, individual users. If those users are registered visitors to a site, it tracks their specific activity within that site. Some advertising companies use "persistent" cookies that track specific user's internet activity across many sites, building up a specific profile with the intention that closely targeted adverts will be delivered to that specific user: if the user regularly visits automotive sites, then he will see an increase in adverts relating to the automotive sector.

This level of intrusive information gathering is already beginning to cause governments to examine the impact of such practices with the supra-national European Commission going to far as to say that the investigation it recently launched may limit the effect of cookies served to EU consumers.

But ethical companies are also questioning whether they want their advertising campaigns to be delivered through platforms to which consumers are - or with increased awareness of the system will be - becoming concerned. In short, users will, if they think fit, soon begin to ad-block those delivery mechanisms that track their usage. Already there are plug-ins for most major browsers to allow that to happen. So far, the take up has been poor: but that is likely to change.

And that means that website publishers may consider moving away from advertisers whose ads are blocked because a blocked ad provides zero revenue whilst taking up valuable space on the page.

And so DataXu might just have moved into pole position when it comes to getting their ads served: the company's new DX2 platform presents what the company calls its "breakthrough, privacysafe approach to digital advertising that optimizes campaign performance through "audience discovery," without tracking consumer behaviour. "

To do this, it "discovers new audiences at scale by using impression-level decisioning across multiple parameters to build a data model that defines exactly how consumers behave in relation to a specific campaign. This unique algorithm, which DataXu calls a "Brand Genome," decides who, what, where, and when ad placements will generate the best performance."

The company says that the algorithms do not rely on user-level tracking, yet still achieve performance that is comparable to or better than more invasive targeting techniques. The real-time process is continuously optimized, maximizing consumer response post-ad exposure. The approach avoids the use of tracking cookies and consumer behavioural profiles, using cookies instead only to count ad placements and measure effectiveness."

For DataXu, the challenge will be to persuade advertisers who currently use Overture and Google, for example, to understand that they can get similar results without tracking cookies: after all, that's what the industry has been selling for a decade. Unless DataXu can persuade big advertisers to move, then big websites won't jump either: the reality is that users click on familiar brands more than on those they have never heard of. That makes sense: the internet is more about information and convenience than about product per se. And so a roster of B list advertisers won't develop the critical mass necessary to bring about change.

And for DataXu, it has to compete with the might of Google which admits that it offers special terms to large advertisers for exclusive deals: it has recently, for example, taken Priority Pass from another network. For website owners, Google Ads provides a less risky (and potentially less profitable) business model: pay per click not pay per sale. That has been a significant driver towards Google's display ads in recent months.

But DataXu points out that other companies may soon be forced to change the way they assess advertising responses - and the way they collect user data: "Using cookies to anonymously track on-line behaviour has been an effective approach in enabling digital advertisers to offer more personalised advertising."

However, according to Mike Baker, CEO at DataXu," with looming uncertainty regarding future regulatory requirements, advertisers will want to diversify their approach to ensure continued scalability and become less reliant on behavioural targeting."

DataXU is backed by private venture capital and, with MIT technologists running the product development, it is based in Boston, Massachusetts.