In September 2011, Facebook was hit with a viral storm of angry status updates from its users, protesting the social network’s proposed new monthly fee. It was a hoax, of course. Facebook never intended to charge its users, stating on their login page that Facebook is “free and always will be.” And it wasn’t even a new hoax. The same one spread in 2010, and resulted in 300,000 users signing a petition against the new fictional charge.
The lesson, though, for marketers is how little the average person understands about companies like Facebook and Google. As any marketer knows, the prime movers in the digital economy are not user fees: the real prize comes from the control and harvesting of data from vast audiences. In fact, 89 percent of Facebook’s $4.27 billion in revenue this year will come from selling access to their data so that advertisers can personalize and hyper-target their digital content.
Unfortunately, like their civilian counterparts, governments also have a limited understanding of digital marketing. And in 2012 the fast moving innovation of digital marketing is about to run into the slow arm of government regulation.
Here at Impact Radius we’ve been actively talking to our clients, and other digital marketers, and have some thoughts about our predicted challenges for the showdown between governments, users, and digital marketers in 2012.
Privacy, Power, and Lobbying
In 2011, Facebook, Google, and Netflix spent record amounts of lobbying, according to their third quarter filings with the U.S. Senate.
At the beginning of the year, Facebook successfully persuaded state legislators in Sacramento to vote against a bill that would have made more user information private on social networking websites. As we move into 2012, Facebook will continue to focus on policy issues such as Internet privacy, cyber security, and the tension between the privacy rights of users and what Facebook calls “the value of innovation to our economy”.
(Image source: BusinessInsider.com)
Likewise, Google’s lobbying expenditures increased 50% in 2011, focusing on issues such as advertising regulation, online privacy, and what they call “openness and competition in the online services market”. (source: Techcrunch.com)
In 2012, it is likely we will continue to see the trend of Internet giants strengthening their ties with Washington.
DO NOT TRACK ME!
New marketing technologies such as remarketing, behavior modeling, and data mining offer marketers truly innovative and effective ways to surgically acquire audiences. Unfortunately, the public and governmental agencies do not share the same enthusiasm. As the public becomes more aware of how marketers are tracking them online, regulations and public backlash remains inevitable.
In California, the “Do Not Track” bill, which is expected to deploy regulations by July 01, 2012, aims to force any business that uses, collects, or stores data online to offer the option of “a method to opt out of that collection, use, and storage of such data.” Read more here.
Added security in social networking and recently Google search will further reduce the amount of targeting data available to marketers. And as of last week, Google will no longer pass referring keyword data to Analytics for organic clicks originating from logged in users (we will cover this important change in more depth later).
If given the option to opt-out of tracking, it will be a hard sell for marketers to get the consumer’s buy-in. “Do you mind if we store your behavioral data so that we can follow you around the web with banner ads?” Especially since, as we have seen, the average user really doesn’t understand what privacy online means, or has much interest in helping marketers sell them more products.
In 2012, the challenge will be balancing fast-evolving technology with transparency.
New Laws and Digital Marketing Legislation
In July 2011, Danny Sullivan’s ‘An Open Letter to Jeff Bezos On Terminating the Amazon Affiliate Program in California’ went viral. The tension between affiliate partners, publishers, and the new affiliate tax law is unlikely to be resolved anytime soon.
(View the full infographic here)
In 2012, expect more irrational legislation, unstable affiliate programs, and the challenge of larger networks retaining loyal affiliate partners in a fluent industry.
To level the playing field, many feel the California law should be applied nationally if it’s to stick.
In 2011, the UK Advertising Standards Authority also expanded the Committee of Advertising Practice (CAP) into the digital arena. Whereas some user-generated content and SEO strategies are excluded from the new rules and the place of affiliate marketing is still being debated, PPC, display and websites themselves will be affected by expansion of the regulations.
The CAP means that pay-per-click (PPC) advertisers in the UK will be expected to manage their bids alongside their physical stock inventory. Once a product becomes unavailable then the PPC ads for that product on Bing, Google or elsewhere are expected to be withdrawn. Failure to do so may leave the advertiser or marketer open to an ASA investigation. This is particularly troubling to affiliates performance who often rely on product catalog data feeds that are often updated once per month. Some merchant data feeds are updated quarterly.
In fact, there are two CAPs – one for broadcast and one for everything else. This adds up to a tougher approval process for PPC & Display ads following ASA’s code of conduct launch.
Performance marketers will need to be careful of the competitive claims they make, ensure that quoted prices are inclusive of VAT and other added charges, provide limited stock warnings and cope with increased regulation around the health, medical, gambling and charity sectors.
Is it Privatization? Or Monopolization?
Last week, Google announced a significant change in how they share the search behavior data they collect with marketers.
Previously, Google would allow you to see basically every keyword that brought visitors to your website via organic search. However, now when you search (while signed into your Google profile) Google will encrypt your search data—and not share this openly with your analytics.
While Google is presenting this as way to provide “a more secure online experience” for its users, leading SEO companies have pointed out that the real move here is most likely a monopolization of search data. Competing ad networks will not be able to see search referral data from Google’s visitors—and Google’s own power to set the rules by which the rest of the industry is forced to play will increase.
As companies like Facebook and Google continue to grow, so does their ability to provide marketers with robust sources of data about their audiences. But, as Danny Sullivan from Search Engine Land points out, privacy is becoming a “pay-to-play” move by the giant players in the space.
To sum up, the debates around Internet privacy, data harvesting, affiliate laws, and digital marketing legislation are revealing the digital space is coming of age—it’s no longer just explosive new companies chasing innovation. Giants like Google, Facebook and Amazon have become the new corporate powers and are playing a direct role in shaping what privacy, security and an online economy looks like. And as a result, will begin to have complex and contradictory relationships with governments, laws, and consumers.
Privacy Versus Personalization Marketing Solutions Coming Soon
Impact Radius closely monitors digital marketing legislation, privacy laws, and changes to affiliate tax law. Subscribe to our RSS feed and stay tuned for our solutions report designed to help you overcome the challenges ahead in 2012.
In the meantime if you’d like to learn more about how Impact Radius can help you better manage your media partner relationships, or if you just want some free advice, message us on Twitter or drop us a note at email@example.com.