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The biggest characteristic of the online advertising in compare with the offline advertising is for me the monopoly of Google with adwords in the sector. There is a lack of diversity in the web landscape due to this position. Offline advertising allows being more creative. Online advertising is more and more information only. When you are watching TV, commercials try to make laugh, to create an image of their mark to the consumers. People love Coca Cola Christmas commercial campaign. I can’t remember any really pleasant online ads.
Online and offline ads aren’t used the same way by the companies. In offline ads, advertisers can not measure the direct effectiveness of the ads. They can only see the impact on the level of the revenues of the following months. Online ads have so many tools to see the direct effectiveness of the campaign. They can use it for selling products and evaluate the ROI of the campaign. If they make ads only to promote their mark image, all these tools become useless.
There is one notable exception: when Felix Baumgartner establishes the world record of the highest jump back in 2012, millions were watching the “Red bull stratos” ads and wanted to see it. The specialists of the advertising found that one of the best ads ever made, and it was an online ads because people were watching it on youtube mostly. Red bull, don’t have a precise ROI of this event but knows precisely how many were watching and that each one wanted to see it. They used internet as a “buzz tool” for this special sort of advertising and it works in an impressive way. Almost every newscast in the world spoke about it this day. I think there is much more potential in online advertising that just buying keywords on adwords. However, information oriented online ads through the Google tool have pros too. Ads campaign seems to be short term oriented and having a precise rate of return please so the managers that I doubt that we will see more creative campaign in the near future in the online ad landscape, unfortunately.
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In this second comment, I will give my opinion concerning targeted advertising.
First I see and I have always seen targeted advertising as an invasion of my privacy. I use an ad-avoidance application namely ad block which is well known (and which I recommend). Targeted advertising tracks myself without my consent and this is why I block all advertising when I surf on the Internet (and when it is possible). Advertisers track myself by scanning my cookies, tracking my IP, looking about everything I have done on the web, opening popups without my consent, and so on. I see all these actions made by advertisers as a big intrusion in my privacy. Coupled with Facebook and mobile devices and you have the perfect tools to know everything on everyone. I didn’t know the existence of the do-not-track technology and this article is so useful for me to be more “untraceable”.
But generally, I don’t try to avoid advertising in free apps. Indeed, I recognize that for some services like Spotify for example, this could be acceptable because a well music library is offer for free. If a service improves my welfare, decreases my search cost and give me something which is very useful, advertising does not bother me. Indeed, I felt grateful for the service offered when it is well done and well though.
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Second comment:
As a Business Engineering student, I understand that advertising plays an important role in today’s economy and in every business model, but, as a costumer, I also understand that the misuse of advertising can greatly harm a brand. This happens because marketing has been misinterpreted and consumers are being overwhelmed with information to the point that it has become an annoyance.
As the author and former CEO of Hoffman/Lewis advertising, one of the West’s largest independent advertising agencies, points out in his blog http://adcontrarian.blogspot.be/2012/07/why-interactivity-makes-advertising.html:
“What marketers still refuse to comprehend is that, at best, advertising is a minor annoyance. It is pretty clear that most consumers are willing to go to substantial lengths to avoid it. Which makes the ability to interact with a medium the enemy of advertising. […] The lovely fantasy of advertising interactivity has been undermined by an unfortunate fact of nature — no one in his right mind volunteers for advertising. To put it succinctly, consumers are far more likely to utilize interactivity to avoid advertising than to engage with it.”
So, assuming that costumers tend to avoid advertising, it is very likely that targeted advertising will not be effective, because it won’t show the ads that the consumer would prefer, making the information about the consumers less precise.
However, I strongly believe that well applied marketing can be very effective. It’s the case of all the videos that have gone viral and the advertising that people remember throughout the years. When advertising is well achieved, it can really make an impact on the costumers. We can use the super bowl as an example, where people wait eagerly for the advertising space, either they like football or not, even knowing that they could change the channel to avoid them. We can also see this often in other important sports events and in the advertising of big brands like Coca Cola and Pepsi.
On the contrary, there are also many examples on how the advertising can go wrong, like it is the case of e-mails. The advertising blitz came to the point where the e-mail services had to create a special folder for the huge amount of spam that their customers receive daily, and they even had to develop smart systems to automatically detect the spam, so that the costumers will not even have to interact with it.
To summarize, I consider that the wrong use or administration of targeted advertising can become an invasion to privacy and can lead costumers to develop a feeling of resentment towards the brand, becoming more harmful than beneficial.
This is the reason why a lot of costumers and even myself, would make use of an “ad-avoidance” tool if we have the opportunity.
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First comment:
The online advertising or Internet advertising uses the Internet to deliver promotional marketing messages to consumers. It includes email marketing, search engine marketing, social media marketing, many types of display advertising (including web banner advertising), and mobile advertising. But, how is this any different from the traditional offline advertising? Well, offline advertising has less ways of reaching the costumer, but is has a bigger advantage because it can have a physical interaction with the costumers which make it harder to forget and more efficient. On the other hand, offline reach is too low compared to online advertising that can go all over the world, and you can’t calculate the performance of the campaign anytime, it’s a slow process and it takes time to get the result, very different from the online advertising where you can constantly check the performance of your campaigns. Also, online advertising has no time limits because it can be done 24 hours a day, the 7 days of the week, it can easily be customized as required and it costs less than offline advertising.
For measuring the effectiveness of an advertising campaign, you need to go through a number of steps. Firstly, you need to establish the goal of your advertising campaign. For many sites, this is an increase in sales, but that is not the only way. Second, you need to decide what metrics will be used to judge the effectiveness of your advertising, for example: Increase in web traffic, length of visit, page views, clicks or ad views. Then, you need to establish baselines for traffic, clicks, sales and current campaigns. After that, you need to invest in website tracking software that will work with your chosen metrics. The next thing you need to do is invest in creating landing pages, if you do not already do so. And finally you need to choose to advertise on sites that will keep track of analytics.
References:
http://www.wikihow.com/Measure-the-Effectiveness-of-Web-Advertising
http://en.wikipedia.org/wiki/Online_advertising
http://www.knowonlineadvertising.com/difference-between/online-and-offline-advertising/
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In my second comment, I will try to describe what internet advertising is in general, how does it differ from offline advertising, how to measure its effectiveness and what does targeting mean.
First of all, we can say that online advertising uses the Internet to deliver promotional marketing messages to consumers. It includes email marketing, search engine marketing, social media marketing, mobile advertising, pop up and many types of display advertising as banners and skyscrapers. The way of advertising has become an essential source of revenues because of people spends more and more time on the Internet compared to traditional media. Moreover, online advertising enables firms to decrease radically costs in terms of price per viewer. It also allows to facilitate the research and the collect of personal data’s. Companies can use it to known more about each customer and use targeted advertising.
The difference of the Internet advertising is that it offers more opportunities than traditional marketing. A website is very different from a billboard or a newspaper ad. This is mainly because of one thing: interactivity. First we need to understand that because online marketing is more accessible and easier than traditional marketing, the volume of advertisements has increased.
Marketing now cannot simply be promising something and hoping the consumers trust the advertisement. The business has to offer proof to the consumer to show that they are credible. It is precisely because online marketing is interactive, it allows the business to promote or offer something and then follow it up with proof that what they’re offering is true. The consumer is not stuck with one image or text and gets the chance to explore what the business is offering through the Internet.
This is where free trials and customer interaction are majorly significant. Anything that positively engages and interacts with the consumer is definitely desirable. These interactions could be the difference between keeping the consumer engaged and leading to a sale or having a consumer find your online presence lacking and ignore your business.
Furthermore, another difference is the potential target audience. Internet is used across the globe and that makes the advertisements potentially viewable by millions of people. It is not negligible for every kind of companies.
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Nowadays, people are more likely to do shopping online, because it is more convenient and time-saving. But when we browse some website, it will keep track, thus, it allow firms to do targeted advertising.
Absolutely, targeted advertising is an invasion of our privacy. When we buy something online, for example Amazon, it will record our shopping, then these websites will sell our information to those advertisers. In many occasion we want privacy, but it always have many targeted advertising to customers, in this case, we must want use ad-avoidance to keep away this “evils”. But for me, only if these targeted advertising do not bring many troubles to me, I will enjoy it. So in reality, I don’t use any ad-avoidance, because I think these advertising can help me to find right things in right time and also can reduce my search cost.
Targeted advertising is a good new to firms. By reducing the wastage created by sending advertising to consumers who are unlikely to buy, we might expect improved targeting to lead to lower advertising expenditures. Thus, the ability to target advertising increases the equilibrium profits of firms.
However, targeted advertising is also can bring some positive effect to customers. On the one hand, customers can use targeted advertising to find something they might like, so this can reduce search cost and save time. On the other hand, due to targeted advertising can bring competition of firms, may be firms will decrease their price to attract their rival’s loyal customers, thus, it will enable to customers to enjoy a lower price, even though maybe this price is just temporary.
http://groups.haas.berkeley.edu/marketing/PAPERS/VILLAS/tgtadv1_apr03.pdf
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In this comment, I will first explain how online advertising differs from offline advertising. I will then explain how to measure effectiveness of online ads. Finally, I will conclude by explaining the meaning of targeting.
Online advertising differs from offline advertising by the structure of online communications. Indeed, publishers and ad networks could gather a lot of information and learn more about online users than traditional media. For example, each online user has its own IP address which allows to know the location of the individual. Moreover, this IP address could be used to track sites a user have visited before. This allows a better matching with users’ preferences and the content of an advertisement. Information technology brings a lot of features to gather information from users of a website. These information could then be conveyed to a targeted audience (1). The quality of the match between the consumer and the advertisement message is thus improved (2). All of these possibilities are not possible with traditional media such as newspaper, radio …
Secondly, in order to assess the impact of online ads, advertisers must measure its effectiveness. According to a survey from PwC (3), customised measurement tools are required to effectively monitor online advertising. These indicators depend on the different objectives an online advertising campaign may have. To this purpose, nine categories of indicators are explained and a non-exhaustive lists of indicators for each of them are listed.
For example, if a company develops its brand awareness by an online advertising campaign and wants to measure its effectiveness, the light should be shed on indicators related to display. These indicators are the number of impression of an ad, the number of “visible” advertisements, the number of advertisements viewed, exposure time, and so on.
Moreover, an indicator is often suitable for measuring different objectives.
One indicator is widely used among advertisers: the clickthrough rate. This indicator allows to count the number of users that clicked on a particular ad. According to a survey conducted in March 2010 by eMarketer (4) in the USA, this method is used by 60% of advertisers to measure performance of their online marketing campaigns. But this method has its limits. The biggest ones is the lack of information on the kind of impact following the exposure of an advertising. Indeed, it is not possible to know if the exposed user will purchase the product or it does not give any information about the awareness of this exposed user.
Finally, targeting allows advertisers to segment their audience in a more accurately way. According to IAB France, there are six main types of targeting (5):
– Demographic: targeting is based on age, gender, socioeconomic category and family status
– Geographic: the location is the main factor of targeting here
– Time-based: this method of targeting is used for delivering messages at relevant periods of the year or on relevant days or times of day for a maximum impact
– Contextual: the goal here is to place an advertising next to related content on the host website
– Behavioural: here, targeting is based on the past browsing behaviour. Profiles are built based on interests, types of purchases and demographic criteria
– Retargeting/remessaging: this is an advertising to prospective customers who showed interest in a product or abandoned during purchase
(1) Evans, D.S. (2009). The Online Advertising Industry: Economics, Evolution, and Privacy.
The Journal of Economic Perspectives, Vol. 23, No. 3 (Summer, 2009), pp. 37-60. Online http://www.jstor.org/stable/27740539
(2) Bergemann, D., & Bonatti, A. (2011). Targeting in advertising markets: implications for offline versus online media. The RAND Journal of Economics, Vol. 42, No. 3 (Fall 2011), pp. 417-443. Online http://www.jstor.org/stable/23046807
(3) PwC report address: https://www.pwc.com/en_GX/gx/entertainment-media/pdf/IAB_SRI_Online_Advertising_Effectiveness_v3.pdf
(4) eMarketer Is the Click Still King? | 2010 | accessed via the PwC report
(5) IAB France Ciblage publicitaire et respect de l’internaute | 2009 | accessed via the PwC report
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For my part, I find that behavioral advertising is not a violation of privacy. If companies know my desires and my habits, they have the opportunity to propose me products by which I might be really interested. It Increases the chance that I will be made aware of products that I like. Above all, I think that it is the consumer who must have a critical approach with regard to what is offered to him by companies whose legitimate purpose is to do business.
Furthermore, users often tend to forget that if they can attend free websites, it is largely thanks to the advertising which indirectly finances publications. I find that it is thus necessary to be able to accept it . Moreover, when it delivers personal data, the user must understand the risks and accept the consequences (such as spamming) .
Personally, I do not consider dangerous that a company aims at consumer’s profile as it does not directly know his full name. A user has the right to anonymity of his identity (as everywhere). Furthermore, as expressed by the Federal Trade Commission, consumers who feel oppressed, have the option via some browsers to block cookies not being spied without their knowledge. There are solutions for people who do not like the system. In my opinion, it belongs to the user to take the initiative if he will not be covered by advertisings.
But gather the information cannot be used to differentiate prices according to users. It would not be fair, and that could push users to lie/cheat on their information. That would not benefit anyone, users would be aimed by advertising based on a wrong profile and companies cannot reach their audience.
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Internet advertising in general
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The big difference between advertising on the internet and offline advertising is measurability of the effectiveness of the campaign. On the internet, people click on the advertising and visit your website. Then there are tools which allow to know what people search in priority but also to know other information about them. It is possible to collect data (regions, age, language, etc.) to determine a consumer profile that would then launch a general campaign offline effective.
The offline advertising, nevertheless more expensive, has less measurable effects for a company and do not allow to determine the number of people who have been affected and how. Furthermore, it also depends on other parameters, for example the person is perhaps not in the optimal conditions for receiving a message. On the internet via a CPM campaign, you only pay for the effectively reached (or affected) public.
Moreover, website visitors have the opportunity to share the pages they visit on social networks. Therefore, it provides free advertising, called viral advertising.
Internet advertising allows to know more precisely his customer but traditional advertising remains still important to build a brand image.
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Personally, I don’t consider targeted advertising as an attack on private life. But I think we have to make a slight difference between two kind of internet targeted advertising.
The first one, the placement-targeted advertising, concerns the ads that are displayed on specific sites in order to reach their usual users. Obviously, it’s about products which are linked with the domain of the specific site. This can’t be seen as an invasion of privacy but rather as an optimal way to advertise. People can’t be reluctant to that kind of advertising, they benefit from that mechanism because it make easier their research of specific products.
The second one is more subject to criticism. It is about the interest-based advertising. In this case, the advertisers use the data collected from social media or sites where the consumers browsed to reach them with ads adapted to their behaviours. This is those ones that create the debate about the private life. From my point of view, there is still an option for the consumers that are reluctant to those : just don’t put anything relevant on internet if you want to avoid the fact that firms collect and use your personal data.
As for me, I use the system in order to be reach by the more adapted ads, but I still pay attention to the information I give. I don’t consider myself as an “ads sensitive” and I don’t think that the interest-based ads urge me to buy some products. I prefer to see this mechanism as a “personal browser”, making easier or automatically the research I’m looking for. In the same way, I still don’t ad-avoidance or do-not-track technology.
On the other hand, I don’t think that an ads invasion has a good effect on the consumers. People become more and more suspicious about the ads they see on the internet. As for this topic, “raise the question is answer it”.
To conclude, I think that the interest-based advertising raises an other issue. If firms can collect such data and use it, what prevent internet users to be tracked for other purposes? Who and how can collect those data? And what about the government? This is that kind of ethical issues that frighten most the users.
References:
https://support.google.com/adsense/answer/140381?hl=en
http://jiad.org/article129.html
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Do you see targeted advertising as an invasion of your privacy? If yes, do you already use (or intend to use) some ad-avoidance or do-not-track technology? In contrast, do you consider it as something positive (as it increases the chance that you will be made aware of products that you like), or as a necessary evil (“I have to accept some invasion of my privacy to keep, e.g., Facebook free of charge”)?
Honestly, I have mixed feelings about targeted advertising. On one hand, I see it as a way to reduce my searching cost on the Internet and thanks to it, I sometimes find out new interesting things in agreement with my passions. But on the other hand, ad targeting is certainly an invasion on my privacy. I don’t understand how firm can easily and without our permission collect and use all personal information.
Moreover, I think that online advertising is too aggressive, omnipresent and so I use for a few year an ad-avoidance “Adblock”. I use this program especially because of the form of the ads companies use today. For instance, each video on Youtube begins with a commercial message. Furthermore, “Adblock” stops the “pop up”, ads which open a new window when we arrive on a website or click on a content. These new ways of advertising are very too intrusive. Technologies as “Adblock” allow me the surf easier and faster. It is very useful.
I have searched some reactions on the Internet and the online ad industry is by no means short of critics, with a “virtual army” of privacy organizations and consumer-advocacy groups decrying its methods. Most argue Internet users should have more control over how and why their data is being collected and used as they move around the Web, and users should be able to better protect their own privacy.
I understand why targeting online is important, and I don’t have anything intrinsically against targeting and segmentation. I have an issue with people not having any say about how their data is being used and why. I think that governments should have more control over these practices to protect the personal data’s.
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In my third comment I’ll comment briefly about Behavior-Based Price Discrimination.
Firms that have access to customer’s information of previous purchases could use this data to set a higher price (to discriminate) to those who are likely to pay this higher price.
According to Fudenberg & Villas-Boas (2005) this Behavior-Based Price Discrimination is going to increase drastically because nowadays it is easier for a firm to gather online purchase information about their customers through cookies for example.
An interesting question then arises; how does this BBPD affects us? With cookies firms can see if you are someone who buys early, thus value a product highly. If so through BBPD you could be charged a higher price on your next online purchase. Meaning your privacy violation does hurt you. If you are aware of BBPD practices this could change your behavior online, which on its turn will hurt firms.
This leads to the follow conclusion; firms prefer no-privacy when dealing with myopic customers, but prefer privacy if consumers can foresee and anticipate BBPD.
Reference:
Fudenberg, D. & Villas-Boas, M. (2006). Behavior-Based Price Discrimination and Customer Recognition. Hanbook on Economics and Information Systems, 377-436
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Internet advertising marked a change in the advertising history. The differences between this new way of advertise that is the internet and the older ones such as papers, radio or television could be seen at different levels.
The first and the most obvious one concerns the costs reducing. Businesses which try to reach a international target market can do it now at a fraction of the cost than with the traditional media. The internet allows the advertisers to reach a huge numbers of potential consumers at the same time whereas the old system implied to use different channels and different distributors to produce the same effect, inducing larger costs.
Secondly, the internet advertising target more effectively than the traditional way of communication. The older media allow targeting but this targeting matches with geographical zones or points of interest. For instance you can publish notices for a running in the local sports club. It will be seen by all the clubs subscribers who are potential targets but not specifically all the ones that are specifically interested in this running. In other words, the internet advertising allows to target specific individuals whereas traditional media target groups of individuals.
Thirdly, the internet advertising is more informative. Indeed, a potential consumer who is interested in a particular product can directly by a simple click been redirected towards the firm site and consult more information about this specific product. This effect should not be underestimated because sometimes ads are quite common in order to attract so much people as possible and could present a lack of information for the specialists.
Finally, the internet advertising could accelerate the purchase process thanks to online payments. It’s enough that the potential consumer being interesting in a product, see information and price, which is less that his willingness to pay, and decide to buy it directly thanks to pc banking. Therefore the firms can conclude sells faster and directly, without real point of sale, that is not negligible.
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From collecting customer’s information and depending on customer’s behavior, firms are much easier to target advertising to attract consumer’s attention and customer recognitions are becoming more and more important. After having information, the firm prefer to use this information to separate customers into different levels and offer different price and products depending on their different purchase histories. This can be called behavior- based price discrimination.
According to the paper written by Drew Fudenberg and J. Miguel Villas-Boas which discuss the relationship between customer’s situation and firm’s price discrimination. The author separated situation into monopoly and multiple firms’ situation. In monopoly situation, the author give the “ratchet effect” which as consumers realize that they would be hurt by revealing information so they incur costs to conceal their preferences. Customers’ view of fairness may against behavior-based pricing. If firm could offer long-term contracts, customer would prefer to preference a positive changing. Meanwhile, in multiple firms’ situation, more competitions will appear and there will be additional effect of firms poaching each other’s customers with special transactions.
Price discrimination may relate to symmetry information problem. The customers do not have a symmetry demand and they do not give symmetry information. It will provide ambitious information and lead firms make uncertain strategies. However, on another hand, firms could use this chance to identify loyalty customers.
Reference:
1. Leena Helminen (2011) Why do firms collect data on customers? A behavior-based price discrimination approach
2. Drew Fudenberg, J. Miguel Villas-Boas(2005) Behavior-Based Price Discrimination and Customer Recognition
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Each media develops a specific language, based on its capabilities and features. However, with the presence of new media, is common, at first, the crossing of references and “language”, until the new media finds its own language and function.
Television for example, whose content, in its beginnings, was produced by radio professionals, and gradually found his own variety of genres and formats.
With the web was no different. At first, the print media was the reference for the production of content. Gradually, depending also on the technological advances, occurred in the case of the internet with an impressive speed, became potential as interactivity, simultaneously the use of sounds and moving images. Gradually, their own formats for the internet began to be standardized, although now the possibilities assume endless formats like: banners, e-mail marketing and newsletter, skyscrapers, buttons, sponsoring, etc.
The Internet advertising conglomerates a significant number of people worldwide. When compared to other media, internet advertisement is very profitable. With respect to television advertising campaigns are very expensive to be aired.
The advantages of online advertising can be considered in a way to reach your target audience, but are noticeably presentable. The internet itself brings with it several advantages: the messages are addressed to a specific audience, it may identify the interests of the consumers, there is access in all parts of the world, works 24 hours per day and 365 days a year, so people from different countries can have access to that information. And there is something that makes a big difference: the campaign can be launched, updated and cancelled immediately.
Through its high communication power and its high data capacity, can reach virtually all levels of society, reaching any target audience. A well planned advertising program can provide the opportunity for an organization to increase the market share, sales, and record its name in memory of consumers – which is important for a brand not only want to survive in the market but also became preference. The internet proves to be a great venue for dissemination of new brands and ideas. The number of people accessing the network grows fast and brings into question many traditional media, such as television. Increasingly consumers go shopping in virtual stores, causing many companies start to advertise online.
In social media there is a great interaction between users and contents, which are disclosed and passed by all. Added to this that every day the number of people in a social network increases considerably and consequently also increases the traffic of all information. In other words, is to have people making advertising your product for free, so we can say that Web 2.0 is possible to advertise with almost zero cost of funds.
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The advertising always has to find new tactics in order to attract consumers. Nowadays large amounts of ads are diffused everywhere, and this amount is increasing every days. We can be exposed from 500 to 2000 ads’ messages in a single day (1), combining all the methods of advertisement. Advertisers have then to keep improve their methods in order to have a significant impact on our purchasing behaviors.
In my personal experience, I used to be really influenced by the ads and I really liked it before. But since now a couple of years, I arrived at saturation and cannot appreciate commercial as before. It is mainly linked to the internet that gives too many opportunities to be exposed. It has two different effects on my perceptions. First, as long as my research and data are tracked I perceive the manipulation of the advertiser. Secondly it alters with the real goal that you are looking for when you browse something on the computer, searching for information. All these ads can slow your connection and can also be really annoying.
The big difference with the offline advertising is the perception of manipulation and all the issues with life privacy. The goal of the advertiser is to understand us more and more in order to target as better as possible to fix the price as high as possible. But with ads on the internet, for my personal experience it is doing the exact opposite effect. I will have reticence for brands that are intrusive (2) and when I can perceive the manipulation.
This is why I’m using ad-block for now a couple of years. Even if they still have access to my information, I do not perceive the aggressiveness of the commercials and advertising. Fortunately, there are laws in order to protect the consumers (3). But what will be the effect on the future as long as the Internet is always in evolution. It is crucial that institutions adapt the law in function of this evolution in order to work for the safety of the consumer and the user.
(1) http://www.definitions-marketing.com/Definition-Pression-publicitaire
(2) http://consommationdigitale.com/2012/11/20/linfluence-de-lintrusion-percue-sur-les-comportements-de-resistance-a-la-publicite-sur-internet/
(3) http://economie.fgov.be/fr/consommateurs/Internet/droits_utilisateurs/
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Since now several years, I automatically install the “ad block plus” software on my internet browsers. The main reason wasn’t my privacy, a lot of ads were intrusive in the website and you didn’t gain access to the content only after seeing these ads. Ads use to slower the page and use internet broadband, which isn’t a problem anymore due to the evolution of the computing power and internet broadband. However, I keep using this software.
I didn’t know that tools as do-not-track software actually exist. As I don’t see any ads, I really don’t care of my privacy on the internet. They can have information on me, but they can’t use it. My first email account was a hotmail address (now belonging to Microsoft). At these times, I often receive spam but now that I use a Gmail account, the filtering is excellent and I don’t receive anyone anymore. In fact, when I have to register on some website, I use temporary mail address freely provided by website as yopmail.com or previously 0-mail.com (which is no longer in service). So I did use a do-not-track service but I didn’t see it as a tool for my privacy but just for not having spam. If I can be sure that I will not receive any unwanted mail from a website, giving my real mail is not a problem at all.
If you want to go further than just using tools as ad block or do-not-track to protect your privacy, you can use an open-source system as Tails (https://tails.boum.org/index.en.html) which is a complete operating system that really allows you to be anonymous on internet. It even circumvents censorship using the TOR network (https://www.torproject.org/).
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Internet advertising has several kinds format like Pop-up ads, banner ads, video ads and etc. Having different ways to advertise is one of positive side of online advertising. Offline ads are kinds of traditional advertising methods by using radio, television and even print. Online ads are less costly, faster processed, higher reached than offline ads, meanwhile, it can also be tracked if the ads have reached to users and count the times and content.
There are several ways to measure online effectiveness. The most traditional one is taking account of click which also called as PPC (Pay Per Click) ways to measure ads effectiveness of online ads. Google use this method to charge their advertisers and which works well on website visitors. The more advertisers paid, the higher their advertising locate on search result position. Conducting post-tests with consumer panel is also one way of measuring the performance of online advertising. Statistical model could also be used to measure the contribution of each online ads way to overall campaign which also to be determined.
From my point of view, targeting advertising can be considered from two sides. The first side is from advertisers’ point which can be understood the advertisers use targeting measure like sending emails, calling or send target letters to their potential customers. This measure sometimes work on consumers who have clear consume goal and do not easily changed. I always receive target email from Amazon which are very useful to me especial when it has discount or activities for eBooks or life essential goods. But for travelling and language training email advertising, I will ignore it or just pull them into blacklist.
Another side is from customer which a type of advertising depending on consumers’ behavioral, psychographic variables. In particular,” behavioral targeting uses information collected from an individual’s web-browsing behavior (e.g., the pages that they have visited or the searches they have conducted) to select advertisements to display”. When visitors return to a specific site or a network of sites using the same web browser, those profiles can be used to allow advertisers to position their online ads in front of those visitors who exhibit a greater level of interest and intent for the products and services being offered. This way can attract loyalty consumers and easier for sellers to make discrimination price.
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I have been using the Internet for many years now and I have to admit that the advertisement landscape has dramatically changed throughout the years. The traditional “image-plus-slogan” ad has moved from random pop-ups to more discrete targeted banners. Next to this traditional form, there has also been a sharp rise in the number of automatically-playing videos, games, or even full-screen ads. These new forms of advertising are also subject to targeting.
My feelings regarding targeted advertising are quite mixed. On the one hand I want to believe that it offers me better products, but on the other hand I feel like I am being constantly watched. Overall I do not actually feel like it has made my Internet experience more enjoyable. To be honest, most of the ads that are received are clearly targeted at a group of users but not mine. It is true that my siblings also use my computer during the weekends and it is certainly a source of bias. For example, I can tell you what video games or books my brother has been looking at on Amazon from the ads I get when I connect to it. As they analyze the websites I visited and their products, Ads often end up showing products that I have already bought. Advertising through email newsletter has also become a big deal. However I feel like information are not updated automatically, as they might be with online ads and the products they advertise are often no longer among my list of interest.
When I look at the quantity of advertising that I get from websites, it has radically increased. You now have pop-ups and videos everywhere. I do not mind to reveal some of my information in order to get better-targeted ads but it cannot serve as a mean to increase the number of ads. Having banner with slogans such as “You might also like…” is totally fine with me and as long as I am the sole user of my computer these are generally quite accurate. What I do not find tolerable are ads that engage you without asking your authorization. I do not really care what they are about I have taken up the habit to automatically turn them down. Therefore I believe that the issue is more about the quantity of ads that comes with a greater availability of consumers’ data rather than the potential privacy violation.
As a result I do use an ad-avoidance program. It is called Ad Block Plus and I have to admit that it works perfectly. It takes down all the video ads on YouTube or other media sharing platforms and it blocks all pop-ups. It is now running on all my devices and I could not do without. The great thing about it is that it does not block recommendations on shopping websites for example, and that is the side of targeting that I am actually interested by.
As a conclusion I would say that I do not look at targeted advertising as a dangerous thing and I am actually quite glad that it exists. However I believe that the technology is not yet advanced enough and targeting is not always as precise as it should be. In order to reach better rates of correct matching it would require a deeper availability of customer data. This is a step that a lot of people, including me, are not ready to make.
Jianqing Chen, Jan Stallaert, An Economic Analysis of Online Advertising Using Behavioral Targeting, retrieved from http://infosys.uncc.edu/CIST2011/Papers/cist2011_submission_41.pdf
https://adblockplus.org/fr/firefox
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In this first comment, I will try to describe what online advertising is really all about. Online advertising has become an increasingly important source of revenues due to changes in people’s lifestyle. Through the years people have started to spend more and more time on the Internet neglecting other more traditional media such as newspaper or magazines. Cost of hardware and subscription have decreased dramatically causing penetration rates to skyrocket reaching almost 80% of households in Belgium. And as online advertising is rather cheap – the only other form of advertising that is actually cheaper in terms of price per viewer is billboard advertising, it makes it within reach of most companies.
This is one of the differences of online advertising compared to more traditional offline advertising: the fact that the Internet is so widely used across the globe makes the advertisements potentially viewable by millions (or even billions) of people. The scale of the potential target audience has been increased dramatically. One could even ask if this is of any interest for companies unless you are a multinational with a worldwide presence. It also introduces a social aspect that was not available to advertisers earlier. Advertising can nowadays be used to trigger social movements that will reinforce the feeling of belonging to a community of its viewers. In a way that people will feel more concerned and directly spoken to. However these waves of social emotions have a major disadvantage: they disappear just as quickly as they appear. Speed is one of the main disadvantages of Internet advertising. People usually come across dozens of ads in a small period of time and thus spend less time looking at them. Furthermore a physical ad such as in a magazine or in a newspaper is arguably more engaging than an ad on a screen. Although the reach of online advertising is definitely larger one can discuss the “quality” of that reach. Finally one of the main advantages of online advertising is the possibility of analysis that it offers. It is rather straightforward to know how many people have actually looked at it, how many have been engaged by clicking on the link or even how many have actually bought the product that was advertised.
Indeed it is much easier to retrieve data from online advertising than it is from traditional forms. But which parameters do you have to look at? A survey realized by PWC a couple of years ago reveals that most advertisers still rely on the clickthrough rate as the main indicator of effectiveness of an advertising campaign. However many other metrics can be interesting to measure such as: lead generation (the process of initiating the buying process of the consumer), response rate, ROI, brand awareness or reputation, etc. Indeed the clickthrough rate has many limitations. It does not tell you anything about the attitude of people towards your brand or whether the ad actually initiated a buying approach.
For the advertisers, knowing all these metrics can reveal much about a consumer’s shopping habits. Ultimately it drives them to use what is currently known as one of the most advanced form of advertising: targeted advertising. They can now target the ads to the consumers’ characteristics such as demographics, behaviors, tastes, etc. The goal is to offer advertisement that will actually interest the potential consumer and therefore increase the impact of the campaigns. Such practices can raise some concerns about privacy issues. Where is the limit concerning which data the advertisers are allowed to retrieve from consumers’ behaviors?
http://www.express.be/sectors/fr/ict/78-des-menages-etablis-en-belgique-taient-connects-a-internet-en-2012/192265.htm
Measuring the effectiveness of online advertising, Study conducted by PwC for IAB France and the SRI, retrieved from: https://www.pwc.com/en_GX/gx/entertainment-media/pdf/IAB_SRI_Online_Advertising_Effectiveness_v3.pdf
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Behaviour-based price discrimination is something dat is done by more and more companies on the internet.
They increase the price of the products or services the customers are interested in.
Practicing that is very interesting for the company, because the customer will pay the product at a higher price and that, of course, increases the firm’s profits.
But obviously, it is something negative for the customer, because he will pay the product at a higher price than other customers, just because he already looked at it one or several times before.
This method can also be considered as an intrusion in the customer’s privacy, like with targeted advertising because the company is keeping data about the customer and nobody knows what else they do with this data.
But price discrimination can’t always be totally efficient, because the company doesn’t have all the informations about the customer. For example the company can’t know the maximal price the customer is willing to pay for the product. So if they increase the price to much, the customer will maybe not be interested anymore, or maybe the first price is already the maximal price for the customer.
It is also very difficult to differentiate the loyal customers who will buy even if there is a price rise, from the other customers who are very sensible to a price variation. If the company could easily see the difference between these to groups, the price discrimination would be even more efficient.
To conclude, price discrimination is a very interesting tool for firms, and it is easy to put in place on the internet. But the tool has to be developed to make it even more efficient and really increase the profits.
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Behavior-based price discrimination (BBPD):
In BBPD, there are two cases, the firm discriminates the new consumers or the older consumers. On the one hand, charging a lower price for new consumers imply that the consumer has the possibility to try the good and then if she will stay in the second period, the price will increase. On the other hand, the firms may choose to charge a lower price to the older consumer « to encourage repeat patronage and retain current customers » (1). This BBPD strategy aims to lock consumers in the second period.
With the BBPD, the firms attempt to charge different prices for buyers based on buying history. Some web sites charge different prices for the same good depending on whether shoppers had previously visited price-comparison sites, for instance, Amazon.com uses this strategy. Another example, « the antivirus software developer McAfee, which, in 2010, attempted to make some of its previous customers renew their subscriptions for $79.99, while it offered the same software to its new customers at $69.90 » (2). The firms take advantage from the previous purchases of the consumers while it is harmful for the consumers.
What annoys me the most with online advertising, it is the advertising that appears related to my search history especially when, it comes to a trip. I therefore have the impression that search engine wants to take choices on my place proposing different prices each day and some « miraculous promotion ». I don’t have any ad-avoidance. Most of the time, I ignore totally the advertising (except when I see everywhere the last trip that I booked or wanted to book).
References:
(1) Jing, B. (2011). Pricing Experience Goods: The Effects of Customer Recognition and Commitment. Journal Of Economics & Management Strategy, 20(2), 451-473. doi:10.1111/j.1530-9134.2011.00294.x
(2) De Nijs, R. (2013). Information provision and behaviour-based price discrimination. Information Economics & Policy, 25(1), 32-40. doi:10.1016/j.infoecopol.2013.01.003
Vinerean, S., Cetina, I., Dumitrescu, L., & Tichindelean, M. (2013). The effects of social media marketing on online consumer behavior. International Journal of Business and Management, 8(14), 66-79. Retrieved from http://search.proquest.com/docview/1419019569?accountid=12156
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How does online advertising differ from offline advertising? How to measure its effectiveness? What does targeting mean?
There are three types of advertising: « advertising can be persuasive, altering consumer tastes. It can be informative, reducing the cost of information acquisition by consumers. Or it can be complementary to the advertised product, increasing the consumption value of a product without altering underlying preferences » (1). It seems that these three types of advertising accommodate both online advertising and offline advertising. The mean difference between the two is the ability for an advertiser to target consumers. Targeting helps firms to avoid wasted advertising towards consumers that are not interested in the product. Furthermore, the offline advertising suffers from the local restrictions or regulations like in the case of alcohol advertising. Online advertising may circumvent the prohibitions and regulations.
With the online advertising firms have much more information about the consumer habit and can be present on the multitude of media channels that imply a reduction targeting cost. Nevertheless, if the switching costs of consumer are low that may probably reduce the profit of the advertiser. The advertiser revenues may also be reduced by the fact that consumers may be annoyed by the excessive advertising resulting from a high targeting system.
Related to effectiveness, the three types of online advertising have a different efficiency which results in the price that the advertiser is willing to pay. First, search advertising that appears at the same time that search results which price by an auction mechanism takes into account the number of clicks and the price is called « cost per click ». Second, classified advertising « appears on websites that do not provide other media content or algorithmic search» (1). Third, display advertising appears on the social media such Facebook. It is priced according to a diversity of mechanism and can combine different kind of pricing that represent a predominant part of revenue for advertisers. The numbers of clicks may assess the effectiveness of the ads. I think that the effectiveness of online advertising is difficult to measure because some people click randomly on the ads implying that does not predict actual purchase intent. Moreover, firms can reach people all around the world. However, through the social media, the consumer behaviors have changed, it is easier to share information about products and services. Following this, an error or fault of the firm may rapidly widespread among consumers.
Finally, in an international context, the effectiveness of online advertising depends also on the advertiser’s ability to display advertising taking into account the specificities of the regions in the world. « Understanding cultural differences are considered to be a precondition for successful international advertising » (2). That means that advertisers have to take into account the cultural characteristics of the consumers additionally to age, location and gender. That will help firms to target more precisely consumers that would be interested in their product.
References:
(1) Goldfarb, A. (2014). What is different about online advertising? Review of Industrial Organization, 44(2), 115-129. doi:http://dx.doi.org/10.1007/s11151-013-9399-3
(2) Ju, B. (2013). A proposed cross-cultural examination of online advertising effectiveness in china and the UK. International Journal of Business and Management, 8(6), 34-39. Retrieved from http://search.proquest.com/docview/1327703699?accountid=12156
Goldfarb, A., & Tucker, C. (2011). Advertising bans and the substitutability of online and offline advertising. JMR, Journal of Marketing Research, 48(2), 207. Retrieved from http://search.proquest.com/docview/862146628?accountid=12156
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Targeted Advertisement: Invasion or Positive innovation?
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Some people perceive targeted advertisement as an intrusion on their private life as it refers to data you weren’t expecting to be analyzed on. One might be scared of the extend to which some companies or technologies analyze what you do, where you go or how you do it. For other people, targeted advertisement is a way to increase the effectiveness of communicating companies’ offers to the market. I stand personally in between in the sense that I embrace the improvement of efficiency, however I tend to be turned off by the extend to which technologies manage to analyze your every move. I fear the day when targeted advertisement won’t be limited to efficiency of communication but will rather tend to manipulation.
And indeed, targeted advertisement allows companies to segment their markets more heavily and thus to capture a bigger share of the pie. By knowing their customer better, compagnies know which customer stay loyal and they lower their prices for those who they want to capture from the competitor. Price discrimination will therefore have a positive effect for those who first enter the market which those technologies and who will be able, as first, to segment and to target better tan the competitor. As (Dirk Bergemanny & Alessandro Bonattiz, 2011) say
Show lessHowever, the day these technologies become available for everyone and everyone knows its customers perfectly so that segmenting and targeting make perfect matches, price discrimination will bring competition to the point where everyone lowers it prices to a minimum. At that point, these technologies won’t bring added value anymore because everyone will target and segment perfectly and therefore competition will be at its fieriest level. Market will almost be perfect and in the end companies will not benefit from it at all. The only reason they will use these technologies is because if they don’t use it, they are lost. The social benefit will be a social loss. Prices will go so far down that discrimination will end up in a price competition driven to the lowest possible level and bringing every company to the minimal state of survival. So the only alternative becomes to manipulate the customer with these technologies and that is the threshold that can’t be trespassed.
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In 2009 online advertising accounted for only 9 percent of total media advertising in the US (David S. Evans 2009). As online applications and new technologies have been expanding exponentially over the past years, it is only logical that online ads have increased with the same trend, flipping the advertising market on its head. The decline of the news paper industry in favor if its virtual opponents has accentuated this trend. As (David S. Evans 2009) explains, the soar of multi-sided platforms has also brought a new variable in the advertisement sector. Matching and twisting of offers has created a total upheaval of offers on the internet and thus of the advertisement business. Not only has the internet brought new advertisement opportunities but everything extention that goes with it as well. New marketing techniques have come and gone with technologies. For example mobiles applications have revolutionized advertisement by putting it in your own pocket along with your smartphone and all the apps you downloaded on it. So, online advertisement brings a lot of new opportunities and also provides the opportunity to reach a far bigger mass at a far lower price.
The big difference with online advertisement is that it can directly be linked to your browsing history and therefore matches your online interest. Data can be gathered in many more ways than before which brings a whole lot more possibilities with it. However, targeted advertisement wasn’t born with online advertisement. Fidelity cards already used collected in order to send targeted brochures in your mail box and personalized discounts to your mail address. You might know the story of a man receiving advertisement about pregnancy healthcare and babyhood in his mailbox. It’s is only after while that we found out that the reason why the man received those targeted ads was because data had predicted the pregnancy of the man’s daughter according to the died change she had endured and subsequently the shifted buying behavior of her dad.
So data was available but the venue of the internet has increased data availability to the point that one might not even know what to do with it or how to interpret it. But throughout the past years this data collection has gone so far that it has started to raised some ethical questions.
So even though virtual advertisement seems to frame the future of the ad business, physical advertisement still has its place for the moment. As we have more and more ways to display virtual advertisement, we also have more and more ways to place and select it. ‘Hard’ ads however just stand along the road or on everyones clothes and can’t just be removed. Magazines, even if sold more and more electronically, are still read in paper version by many people. We can go on and on with examples stating that virtual advertisement has taken the advantage but hard advertisement hasn’t disappeared yet.
Show lessThis is an interesting link giving the distribution of marketing expenses per media in France in 2012:
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In my view, targeted advertising is a violation of privacy. But would like to explain why I use ADblock (program to avoid ads on Google Chrome) because it is not linked to this form of invasion.
First, targeted ads do not bother me. I prefer to have advertises linked to what I like. In a way, I think it diminish the number of ads. I feel that way because when companies have no information, they must invest more in marketing in order to be sure to give their message to targeted consumers. Therefore, with more information, it is easier to have an access to those consumers and the general amount of ads decreases. This is the first reason why this invasion is not a real problem for me.
Then, I use Adblock because of the form of the ads companies use today. For example, on youtube.com, almost each video begin with a commercial. I also think to the “pop up” ads which open a new window when we arrive on a website or click on a content. This is too intrusive and I think most of the people share my opinion about those “pop up”. The “usual” ads in a banner on the top or a column of the website is not as much disturbing but, only because of the two firsts types of ads, I use ADblock. It allows me the surf easier and faster.
What is the impact of targeted advertising and Adblock for companies? For targeted advertising, it is far more interesting for companies than “untargeted” marketing because studies show that customers have more incentive to buy the product ( http://www.marketingcharts.com/wp/online/consumers-say-that-targeted-ads-are-more-likely-to-influence-their-online-buying-behavior-38355/ ) In that view, the profit of companies is growing.
For ads avoider program as Adblock, I think it has no influence on the companies. It becomes to be more and more famous but still, the number of users represents a small percentage of the population. Then, we see that explorers are less used. Indeed, we see today large growth of the use of applications. For those applications, ad avoider program does not exist. Moreover, advertisers keep finding way to overpass those programs. Given those facts, companies still have incentive to use targeted marketing.
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The internet is a very useful tool for advertisers.
The main advantage of an online advertising strategy is that advertisers are able to target people easier than for example on the radio or in the streets. And when a company can advertise directly to its target, it is logical that the advertisement is more effective.
With targeted advertising a company can be sure that the customers that see the advertisement are the ones who could use the product or the service.
And the results of the advertisement can be calculated easier than with other methods.
Of course, these advertising methods are very intrusive, because the tools that are used are able to see all what a person does on the internet. As a customer, i think that these methods are a violation of my privacy, but today you don’t have many choices to escape them.
I personnaly use ad-avoidance methods in order not to receive to much advertising when i’m on the internet. But that is only to avoid the ads, it doesn’t stop the intrusion in our life’s.
I personally avoid online advertising as much as possible, but that doesn’t mean it doesn’t affect me, because marketeers know that when you are exposed several times to something you will retain
it and even prefer it when you have to make a choice. This effect is known as the mere-exposure effect.
Targeted advertising is even more efficient on social medias, for example on Facebook a company after creating a page can sponsor its publications and can choose which kind of people will see them by selecting, their country, their sex, their age ect.
That kind of advertising doesn’t cost to much for the company, the cost depends on the number of views they want the publication to have.
In a nutshell i think that online advertising and targeting are very interesting tools for companies and for marketeers, but for the customers, it is an intrusion in their private life and that only to show them advertising they maybe don’t want to see.
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As an internet user for a few years now, I had the possibility to observe the evolution of this market. When I used to freely access contents of my researches, I feel now frustrated to frequently click on “skip” buttons to finally get what I want. About a year now, I have been subject to what I reckon as the most significant example of “advertisement harassment” according to me. While trying to watch a video online, the regular ad started displaying before giving me access to the video itself. Used to this, I looked at something else waiting for the ad to finish. However, that time I noticed that the ad would run only if I remained on its web page. From that moment, I felt violated as I was forced to watch the ad to get what I wanted. The latter examples proves how online advertising can be intrusive compared to other types of ads.
I am convinced that many internet users share my opinion and feelings on the subject as the topic gets more and more related through media’s and forums. Indeed, the recent rising of blocking tools highlights the disutility people face when harassed while surfing the internet. For instance, the most popular one (AdBlock Plus) has been downloaded over 200 million times. Firms such as Google or Yahoo started to release pop-ups blocker programs and Microsoft will include a feature enabling to prevent pop-ups from appearing within in browser [1].
Therefore, I believe that the way agents act at the moment is not properly balanced which creates more sources of conflicts than being a win-win situation. Indeed, the more intrusive the ads, the more frustrated internet users get and adopt aggressive reactions against advertisers. Yet, those reactions such as downloading ad-blockers implies acting against all kinds of advertisers even though they might not all provide intrusive ads. Thus, it leads to situations such as the German newspaper “Der Spiegel” faced not long ago. The latter begged its customers to stop using ad blocking tools as 25% of their revenues comes from advertising which were plummeting as their customers would not watch them anymore [2].
According to Acquisti and Spiekermann (2011), the intuition mentioned above seems to hold. Based on their researches, they stated that customers’ willingness-to-pay for advertised items was decreasing with the intrusive character of ads. Yet, nowadays we can notice that a few alternatives giving more options to firms and internet users appear. However, the impact might differ between the options.
On the one hand, several websites now offer the possibility for users to choose whether they want to be subject to online advertising or not. Effectively, they might decide between accepting an advertising-based product or remove advertisement by paying a fixed fee. Thus, we could believe that it could be beneficial for consumers’ surplus as they have a choice. However, according to Tåg (2009), “consumer welfare decreases because consumers using free version see more advertisements, and consumers paying to remove pay a price that causes more disutility than what advertisements would have caused [if] the option to pay [had] not been available” [3]. Yet, this analyze was made in the situation where the market is covered by a monopolist. Thus, it would interesting to see results of such situation in the case of a market with several firms.
On the other hand, a recent move from AdBlock Plus may indicate a change of direction in the previous trend. The program recently enacted a new rule within its policy system with the creation of the “acceptable ads” status. In short, ads are considered as acceptable when they are statics, preferably literal, do not obstruct the page’s content, clearly identified as advertisement and are not integrated into hyperlinks [4]. Therefore, it opens a window where ads-blocker tools and online advertising firms can coexist and offer an equilibrium between firms and internet users’ expectations. Indeed, the aim of this action is to encourage firms to provide only non-intrusive ads and see the latter as an advantage. Seen that people are not reluctant to all types of advertisements (mainly to intrusive), ad-blocking tools might become “ads’ content moderators” who will decide which advertisements to authorize. Therefore, the better filtered the ads, the more value they will bring to customers. Then, internet users who trust their blocking tools would be paying more attention to ads that appear on their web page. In the end, it might show more efficiency for customers as well as for firms.
As an optimistic person, I believe that advertisements may be beneficial to people as they might be aware of products that fit their needs for which they wouldn’t have known if ads didn’t exist. Nevertheless, I think that the current situation offers too many intrusive ads which decrease customers’ utility and reduces dangerously firms’ profits for some of them. Yet, I am convinced that an equilibrium might be found by providing alternatives such as the latter proposition considered above by AdBlock Plus.
[1] Hansell, S., (2014), “As consumers revolt, a rush to block pop-up online ads”, http://www.nytimes.com/2004/01/19/technology/19popup.html?ex=1389848400&en=a1e69a566481d05e&ei=5007&partner=TECHDIRT, consulted on the 13th of May 2014.
[2] Der Spiegel, http://www.spiegel.de/dienste/spiegel-online-schalten-sie-den-adblocker-bitte-ab-a-888158.html, consulted on the 13th of May 2014.
[3] Tåg, J., (2009), Paying to remove advertisements, Research Institute of Industrial Economics, paper n°789, p.11.
[4] AdBlock Plus, https://adblockplus.org/fr/acceptable-ads, consulted on the 13th of May 2014
Acquisti, A. & Spiekermann, S., (2011), Do interruptions pay off? Effects of interruptive ads on consumers’ willingness to pay, Journal of interactive marketing, 25(4), pp. 226-240.
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Price discrimination can be a tool for firms to make more profit. The problem with price discrimination is that firms do not always have the needed information about customers to enable this price discrimination. The information asymmetry resulting from this problem generates extra costs for the company to know more about its clients. Well that was before it was possible to obtain information about customers through the Internet… In fact, “know thy customer!” can be used not only for targeted advertising but also for price discrimination. With the Internet as a tool, producers are able to know a lot more about their customers like their interests, tastes, etc. Therefore, firms can benefit from a decrease in information asymmetry.
The kind of price discrimination resulting from a decrease in information asymmetry thanks to the Internet cannot be seen in the same way as regular price discrimination. Regular price discrimination occurs offline as well as online and is for instance the result of charging a different price for cinema tickets depending on the age of the customer. In this example, producers haven’t violated the customer’s privacy by going through his web searches. A completely different example of price discrimination would be the following: selling the same book to two different people, the same day, but charging them different prices because, according to one person’s web searches, one is more interested in books than the other and has thus a higher willingness to pay. The person with the higher willingness to pay pays therefore a higher price for the same book bought the same day as another person. You can understand that the situation here is different because privacy is violated to make the price discrimination.
Whenever people are discriminated based on a violation of their privacy, they feel cheated. Moreover, providing sellers more information about customers can never be good for customers as it decreases their consumer surplus. And the more customers use the Internet, the easier it is for firms to extract more info about customers. This problematic is a controversial subject nowadays. Should firms continue to invade people’s privacy or should it be forbidden? I personally don’t have an answer to that question yet. To me, using the Internet is giving up a part of your privacy. But whether or not this information can be used for price discrimination depends on one’s moral and beliefs in ethics.
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Instead of considering offline and online advertising as two separate techniques to target a customer, why not combine them create a powerful tool? This is called Online-to-Offline commerce, O2O. That’s exactly what ‘Yub’ did by combining online clicks to offline purchases: yub.com “With its zero-integration technology, Yub enables retailers and restaurants to effortlessly track consumers from online clicks through to actual purchases, harnessing the power of the online affiliate model to drive in-store purchases on a massive scale.”
Restaurants and retailers don’t have any ways of tracking the effectiveness of their online marketing. In other words they can’t measure how much offline profit an online ad generates. That’s where Yub comes in; they offer an easy way to link an offline purchase to an online ad.
Alex Rampell, CEO and founder of Yub. “Yub provides businesses with a direct link between online advertising and offline revenue, improving the effectiveness of online campaigns.”
Yub actively drives customers from an online ad to the physical store. On their website they explain how it works in a short, interactive video. At first the customer has to add the offer he is interested in to his credit card by entering a given code (for example: ‘Get $1 when you spend $5 at Scoop use 567787 on Yub’). Next he has to use the same credit card to make his purchase. Finally he will receive his reward by e-mail. That’s how Yub convinces people to use its app, and how they link online ads to actual offline purchases.
It also works with social medias like Facebook, Google, Twitter … But to make it even easier people can just surf on the app for deals and use them without leaving Yub on their smartphone.
They currently (2013) have more than 10 000 online and mobile publisher parters.
According to Business Wire and Yub,
–> Increased Ability to Acquire New Customers: 90 percent of new customers indicated that they did not plan on shopping at the merchant before seeing the digital offer
–> Increased Customer Spend through Yub Promotions: Consumers have spent an average of 1.5-2x the required minimum of the online promotions
–> Incremental Email Leads: 45 percent of consumers clicking on a Yub promotion have opted-in to receive more information about additional offers
–> Improved Customer Loyalty and Purchase Motivation: 80 percent of consumers indicated they planned on shopping at the store of their promotion in the future
Personnaly at fist I was a bit skeptical, but after some research it looks like it’s working. I’m starting to find it a great idea and I think it could easily be launched in Belgium as well.
“Yub can tell you exactly which online click drove purchases in your shop! Gone are the days of paying for ad impressions and clicks with unknown results!”
References:
Yub launches world’s first offline affiliate network, tracking consumers from online clicks through to in-store purchases for retailers and restaurants. (2013, Nov 18). Business Wire
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Online advertising is growing increasingly every day and we can be the targets of it mostly everywhere. Indeed, due to new technologies, Internet network is available no matter where you are through your smart phones, tablets or computers, which permit you to have access to online platforms or websites you want to browse; but it also gives opportunities to firms to meet you with all kind of ads. Not only basic advertisings, but also well targeted ads that becomes more and more focused on the need of each consumer. At first sight, some users could enjoy this mark of attention and will respond favorably to these ads, but some others will quickly realize that these targeted ads are the price to pay to browse the Internet for free. Those who don’t want to let it go, will be able to find ways of protection against this intrusion into their privacy. From my point of view, targeted advertising will always have its advantages and disadvantages and it would be relevant to highlight these pros and cons.
On the one hand, people who don’t use any kind of plug-in to block adds and who never really thought about installing it on their computer, have to face targeted adds from the websites they visit. These websites remain some kind of information and personal data’s from users through cookies, for instance, to be able to track them as much as possible and in a more convenient way. It’s a famous strategy in online marketing known as Re-marketing. For example: let’s imagine you are strumming on the Internet, looking for a hostel in any given city. The website will remember you were looking for this hotel, and it will make sure to get it back the next time you go on the net. It wants to catch your attention with animated banners (horizontal ads you see on the top of a webpage) or skyscrapers (vertical ads you can see on the sides of a webpage) in order to manipulate your buying decision and purchasing power. In this way, allowing firms to be able to gather customer’s data they are interested, enable them not only to be sure that consumers are properly informed of deals they offer but also to have a higher return on their investments. However, numbers of people consider it as something positive that increase the chance they will be made aware of products they like and so, see targeted adds as a necessary evil to accept some invasion of their privacy and keep Internet websites free of charges…
On the other hand, like as said earlier, targeted ads become more and more invasive which forces more experimented users to protect their privacy form this intrusion. They’re tired of receiving irrelevant informations so, they take all the measures needed to block this phenomenon by setting special programs on their devices. Thus, they protect their confidential information and ensure they can not be tracked by improper advertising. Therefore, more and more firms propose their aptitudes to help people in need and to protect the consumers against every online intrusion in their privacy! Firms want to develop constantly their talents to address the needs of their clients properly, trying to gather as much information about their lifestyle. But consumers sometimes become sick of it and rely on specialists to be able to maintain a minimum level of privacy and confidentiality.
How this competition between firms and consumer will end? That’s another issue…
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Advertisement on the Internet has become a very common thing as most websites are financed through advertising. One of the most common forms of online advertising you can see on websites is banners. Most people don’t even look at them anymore, but even though we don’t look at them, we feel bothered by them. This is because, depending on the banner’s format and animation, we can memorise an ad without even having looked at it. The unconscious memorization of the advertisement overloads our brains whenever we surf on a webpage overcrowded by banners. This leads to a discomfort that hence leads to despising online advertising.
I find online advertisements that blend in well will the webpage and its content less annoying as it is a less aggressive form of online advertising. For example, advertisements on Google don’t tend to bother me whenever I make a search. Indeed, when I search something on Google, usually the 2 or 3 first search results are advertisements. Apart from the fact that they blend in with the webpage, another reason why they don’t bother me is because they are targeted. As they match my search, I tend to read them but I don’t necessarily click on them. This kind of targeted online advertisements benefit both users and advertisers as they don’t usually annoy users and as it is a rather cheap way for advertisers to advertise for a targeted group of people. The pay-per-click system makes it very interesting for advertisers ad they only pay when the ad is seen (has been clicked on) and as they have the possibility to enter a bid for the price they pay.
There is however a downside to targeted advertising. The fact that information about you is collected to enable targeted advertisements often puts people off. But the most common websites used for targeted adverts are social networks. It is therefore somehow paradoxical to be concerned about your privacy when you enter a social network. When you agree to use the Internet, you have to accept that some part of your privacy will be invaded.
As for ad-avoidance technology, I find them practical for websites like YouTube that force you to watch the ad. I have therefore downloaded AdBlock but I don’t find this solution to be optimal as some websites force you to deactivate AdBlock to continue surfing on their website.
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« Price discrimination involves charging different prices for the same product when sold to different customers. »1
Behavior-based price discrimination is something I already saw on different websites.
For example, with Ryanair, you can see a difference in the price from hour to hour for the same travel and the same category.
This is based on a price discrimination because the airline company would like to fill up the plane with passengers paying the most they are willing to pay and to minimize their consumer surplus.
In my opnion, this is a really unethical vision of a pricing strategy.
This is also interesting to read that some companies are sharing customer data informations with other companies to facilitate the price discrimination.
Is it really normal ? I don’t think so.
That’s why it is maybe a good idea to make new laws about the protection of the customers data and about the variability of the price.
Source :
1. Maxwell, S., & Garbarino, E., The identification of social norms of price discrimination on the internet, The Journal of Product and Brand Management 19.3 (2010): 218-224.
2. Pettinger, T., Airline price discrimination, (5 February 2014) : http://www.economicshelp.org/blog/7767/business/airline-price-discrimination/
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Firstly, I think that online advertising is a really good marketing tool for the companies.
For me, targeted advertising gives the possibilty to the companies to increase the chances that the consumer sees the right ad at the right time.
It is also important for a company to know their customers and to can adjust the product features and the ads.
Secondly, I personnaly see targeted advertising as an invasion of my privacy, because the companies know what kind of products we are searching on the Internet and they can use this data to target their advertising strategy.
It means that all the communications we have on the Internet can be used by others (like the companies for example) and I think it is not making safe.
According to Goldfarb, A. & Tucker, C. :
«
Advertisers use online customer data to target their marketing appeals.
This has heightened consumers’ privacy concerns, leading governments to pass laws designed to protect consumer privacy by restricting the use of data and by restricting online tracking techniques used by websites.
»
In a nutshell, I think that many people have the same point of vue as the mine because we can see that there are now new laws to protect the consumer privacy but, it is sure that targeted averting is an unprecedented tools for advertisers !
Sources :
David S. E., The Online Advertising Industry: Economics, Evolution, and Privacy, Journal of Economic Perspectives. Volume 23. P. 37–60. 2009.
Goldfarb, A. & Tucker, C., Privacy Regulation and Online Advertising, Management Science 57.1. P. 57-71. January 2011.
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I’m not fond of online advertisement, not because of a privacy issue but more because they can be very annoying at times. That’s, for me, a big difference between online and offline advertisement.
I don’t mind having targeted advertisement, even if it’s only possible through an invasion of my privacy. Because yes, I think keeping track of someone internet activity is like spying, thus invading his or her privacy.
Fortunately I’m not someone who really holds on to his privacy because I know it’s impossible nowadays and I don’t have anything to hide. As long as it doesn’t bother me I don’t mind being ‘spied’ on for advertisement purpose.
On the other hand targeted advertisement can be a good thing both for the seller and for the consumer. If ads are more targeted they are more interesting to consumers thus positive for him. And if the internet user is more interested the probability of him clicking on the ad is greater, thus also positive for the seller.
A popular way to advertise on the internet is on Google’s website with search engine advertisement or SEO. They use a bidding system to choose the chronology of ads. Through pay per click, or even better, through pay per acquisition companies can easily advertise and be sure to attract a lot of people to their website.
I don’t mind static banners on each page, because they are banal and I don’t even see them anymore. Dynamic banners, or ads you can’t seem to find that play some annoying music, really bother me. The worst kinds of course are those on YouTube. The ones you have to go through before being able to see the content are the ones that pushed me over the edge to install AdBlock. AdBlock is an open source, free, add-on on your web browser that blocks most of the ads on web pages. I’m using it for about 4 years now and now I can’t surf on the internet without it.
I wonder what will be the next move of advertisers when everybody is going block ads, even on smartphones, because this seems to be the new trend.
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Before any economic analysis, I would like to point out how the internet has appeared as a groundbreaking technology which is changing human activities in many ways. One of these is how the economy system interact with each of us from the traditional shops to the currently e-commerce. Because of this rapid development of internet, people are sometimes very wary about it, nevertheless the innovations have always stirred up suspiciousness along human history. It’s human nature to be distrustful and any society has embraced them welcomingly at first. During a transition period, some groups try to convince the social benefits of them and they attain this stepwise, even though some modifications are coming up so as to consider the whole society perspective. I consider this is happening right now between targeted ads and the consumers’ disutility.
Back to the economic scope, the ones which are making the initial move are the platforms that are using free content to overcome the chicken-and-egg problem. This great idea exploits the irrationality of consumers and it achieves to lure advertising side to be on board. After that, consumers realize they don’t like annoying and classic ads, as a result, the ads transforms into annoying and targeted ones which arouses security concerns, I admit no one would like that. I consider this as a clash of interests from the said evolutionary view.
Chellappa and Shivendu (2006) explain consumers now face a trade-off between personalised content or services and the value for privacy. For platforms, the trade-off is between value of information about consumers for ads and costs of producing content. The equilibrium could lead different equilibria in terms of social welfare desirability but the platforms will survive after all.
It’s said that regulatory authorities shouldn’t judge platform markets as traditional markets because platforms have to deal with all sides at once. Furthermore they shouldn’t be lobbied so easily by privacy advocates who would strike down indirectly all platforms that draw on the revenues from ads side. Instead of that, regulatory authorities should put attention in cases which multi-platforms firms as Google that collect information about consumers in one platform in order to gain advantage in other related markets (Network World Middle East, 2009). Another initiative about diminishing consumers’ concerns is the new option “do not track” in Internet Explorer 10, this has angered naturally the advertisers though (Korzeniowski, 2012). In my own opinion, authorities should also be aware of hackers or internet criminals who wreck the confidence of people in internet.
As Milton Friedman popularise the phrase: “There ain’t such thing as a free lunch”. Platforms and advertisers have a hard challenge which is convincing people there’s a price after all for the content. Governments have to establish modern rules in order to attain the best possible outcome in terms of social welfare. Consumers have to internalise these costs and use devices to block ads if they want. The innovative improvements should be more accepted in time. By the way, I don’t use devices and I find useful Amazon shows related books that I might like.
References:
Chellappa, R. & Shivendu S. (2006). A model of advertiser-portal contracts: Personalization strategies under privacy concerns. Information Technology and Management , 7-19. doi: http://0-dx.doi.org.millenium.itesm.mx/10.1007/s10799-006-5726-9
Google’s new OS raises privacy, antitrust concerns. (2009, Jul 09). Network World Middle East, Retrieved from http://search.proquest.com/docview/211163174?accountid=11643
Korzeniowski, P. (2012, Nov 14). Microsoft presses on with ‘do not track’ new browser’s default move aids privacy, but hindering targeted ads may hurt ‘free’ internet. Investor’s Business Daily Retrieved from http://search.proquest.com/docview/1151513833?accountid=11643
Eggerton, J. (2011). Online privacy regs may move into the open. Broadcasting & Cable, 141(36), 22. Retrieved from http://search.proquest.com/docview/894302188?accountid=11643
Targeted online advertising casts the shadow of privacy concerns. (2009). Marketing Week, , 13-n/a. Retrieved from http://search.proquest.com/docview/228237889?accountid=11643
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Personally I do not find targeted advertising as an invasion of my privacy, to the contrary I find it helpful to me and to the companies who use them. I can take for example my experience with YouTube, as we know YouTube started not so long ago putting commercials before you can watch your videos, some have the option of skipping them at a certain point and some of them you have to see them whether you like it or not. At first I was not a user of YouTube, this means that I had not an account, so the commercials were totally random and sometimes they were really boring, when I realized that having an account gave me some privileges I decided to do so, some days after creating and using my account I realized a changed in the commercials, they started to be more of my liking and bearable, when I came to Belgium the commercials started to be in French and about products in Belgium. For me this is not an invasion of my privacy since they really don’t know anything about me and my life, they just see me as a user who likes certain things and speaks certain languages, because the Internet user remains anonymous and unidentifiable. The data that this companies collect are not tied to your personal information, this means that they don’t have information like; your name, your home address, or your phone number. They just identify you by a random ID number that matches your interest and characteristics bases on your online activity; they normally infer your age group, ender and purchase interests.
There are a lot of risks that go with using modern communication technology, but you just need to be aware of the situation and know what to publish and what not to publish, you always have the option on what to share with this advertising companies and you can also always stop them. Each browser has their specific browser privacy tool to help you protect you from advertising companies if you wish to, this is called to opt-out. However it is important to understand that if you If you opt-out you will continue to see online ads and may even see online ads from companies from which you opted-out. Remember, opt-outs do not stop companies from showing you ads, they only stop companies from showing you targeted ads.
I find targeted ads actually helpful, I can say that this is an improved way of searching the web, it has actually help me with what I look to have the targeted advertising, there are some products that for sure I would’ve never heard of if it wasn’t for the advertising that came to me on the internet.
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In the globalized world that we live in right now, the information on the internet has grown and the amount of time people spend on it has grown also, so when researchers realized this it generated a new market, the internet advertising. The special thing about this is that companies have the opportunity to advertise to a specific market, it offers targeting methods that helps you ensure people who are more likely to buy your products will be the ones seeing your adds. This is one of the many advantages companies have by advertising on the internet, here are some other advantages: Reduced costs is one of this advantages, a recent infographic published by The Search Engine Journal notes that the same audience that can be reached with Super Bowl television ad campaigns can be acquired with digital marketing for 25% of the cost online. There’s also the option that charges you per clicks, so you can save money. It is easier to measure your effectiveness with online marketing, you should first decide what you’ll use to judge it, you could choose between: increase in web traffic, length of visit, page views, clicks, or ads views. After this, companies choose to invest in tracking software and landing pages, to collect and archive data form users, and run reports on your campaign. Companies also choose to advertise on pages that already keep track of this analytics. There is also the Google Analytics free traffic analysis tool, to calculate your return on investment. You can easily offer the best value to your clients by having an updated website, because you need to maintained positive brand awareness and client loyalty. . In the E-marketing field, trust has become very important, but with social media networks like Facebook, Twitter and LinkedIn you can give your clients the confidence they need by the word-of-mouth exposure, clients like to compare the products with reviews and opinions found on social media. Internet marketing also offers you real-time monitoring tools so you can constantly be aware of your campaign and where you are going wrong, That’s to this real-time results and thanks to the tracking tools you can test your strategy if it’s not bringing you the ROI that you desire, so you don’t risk it all by throwing a whole new campaigns as it is requires with most traditional marketing strategies. To do the maintenance of your strategy once your page is well known is relatively low cost. A lot of times when clients see a lot of ads in newspapers or magazines the are really not glad with it because they don’t want to be full of irrelevant ads, but with targeted advertising consumers will get the ads of products that you are specifically looking for or maybe you’ll be more interested on. And after you caught their attention you can encourage them to visit your web page and see your other products as well.
To conclude I’ll like to put numerical examples as: Facebook that has over 1.1 billion users, this is three times the size of the United States and Google that reports over 3 billion searches a day. These are some of the reasons why it is not smart for companies not to invest on online marketing.
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Personally, I don’t find it annoying to received targeted advertising and I don’t think it’s an invasion of my privacy overall. Though like it has been proved by some researches that targeted advertising may lead to lower costumer surplus and higher profit level of firms, I do think it improves social welfare in many senses.
For example, most of us might do online shopping occasionally. Targeted ads might be from those similar online shopping websites, which may provide us with higher availability to compare shopping webs providing same goods with different prices and differentiated services. Another example is News websites. I’ve browsed BBC News website for several time. And it started to push Notifications for those newly updated News, which might interest me. I think it largely reduces searching costs and potentially save money and provide better match for consumers in the former online shopping case. In the latter case, tracking your browsing and analyzing your taste gives chance to better customer experience.
Furthermore, if we use techniques to avoid advertising, as it has been illustrated in the paper that avoiding targeting ads may shift the income of multisided platform from advertising to higher subscription fees.
For some off-line industry, like retail, accessing customers’ personal information also becomes more and more important. Tesco, one of the biggest retailers in United Kingdom, is able to provide more customized services, thanks to the highly developed consumer database.
However, I do have to admit that firms may develop some techniques to perform price discrimination, which will undoubtedly lower customer welfare. Since consumers’ utility is quasi-convex in the accuracy of targeting, the information should be limited to a certain level according to the gradations of information quality. On the other hand, competition now becomes fiercer than it was before, which may limit one firm’s bargaining power and the harm of price discrimination.
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I do not see targeted advertising as an invasion of my privacy.
Even though I find it more than annoying and I put everything in place to avoid it – I have Adblock installed on my computer and find it enough to avoid most of the online and targeted advertising – I reckon it is a so-called “necessary evil”.
First of all, let us look at the two main platforms on which we find online advertising: smartphone applications and free-to-use websites.
Most free smartphone applications are in a freemium business model, which means you can use a part of it for free, but have to pay if you want more, or if you want to use/buy special items if you take the example of a gaming app. Most of those apps – whether they ask you to pay for extra content or not – mostly have in-app advertisings planted that are either embedded on top or bottom of your screen or that pop up every now and then and the app often offers you to go for the paid version of the app in order to have an ad-free experience on the application (as well as to unlock the extra yet not always so attractive content). They thus use in-app advertising as an insurance of profit. Indeed, if a user does not pay for the application, they get paid by the advertiser – depending on the contract they have -, and if the user decides to pay for the app in order to get rid of the in-app ads, they gain profit from that purchase. From this point of view, we may thus consider that those apps are like multi-sided platform : in order to attract users, they need to have quality content, but in order to have quality content, they need money to pay (good) developers, and they can get that money from advertisers, but in order to get advertisers, they need users. And if they can attract more advertisers or charge their advertisers more by being able to offer them to the right users/targets by collecting data about their users or knowing what their typical user’s preferences are, why would they not do it ?
In such a case, it does not bother me at all to have in-app advertisings – whether they are targeted or not. I reckon it is a fair price to pay in order to be able to play fun games or to enjoy useful apps, as I would certainly not be willing to pay for them as long as free-to-use alternative apps will exist.
In the case of free-to-use websites, my opinion is pretty much the same.
Those websites – such as Google, Youtube or Facebook to name three of the probably best-known – have to handle an enormous amount of visitors at every moment, have to stock huge amounts of data … They thus have unimaginable costs! Therefore, and in order to be able to continue running for free, those websites often collect data from their users and sell them to advertisers, either by selling them pure data for market analysis or by offering them targeted advertising according to the user’s preferences.
In such cases, I also do not mind at all for those websites to use the data collected for profit purposes. As it was the case for free-to-use apps, I prefer not to pay to use a website and that they use my personal behaviors and information than to have to pay for it. As for targeted advertising, I block it because I prefer the design and the ease of use of those websites without and because I have the means to do so, but it does not really bother me beyond that, especially as it really is a “necessary evil” to keep to websites free of use.
To conclude my opinion, I have to say that, even though our generation mostly does not mind about the collecting and selling of personal data on free websites, I believe this business model will not last for decades, as the next generations’ awareness on data will certainly be different than ours.
http://stratablue.com/necessary-evil-targeted-ads-eliminate/
http://journalistsresource.org/studies/society/internet/online-display-advertising-targeting-obtrusiveness#
http://www.dom360.com/index.php/blog/84-facebook-advertising-a-necessary-evil-or-your-most-well-targeted-tool
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Targeted advertising…. Positive? Negative? Or just a necessary evil?
I think the answer is somewhat ambiguous, because, of course, the targeted advertising has your pros and cons but in the current competition situation, firms need to differentiate themselves and find a way to reach consumers and increase their sales, and the way is advertising.
Before i could realize how it worked the mechanism of targeted advertising, i did not understand how it was possible, to appear on pages that i was searching, some ads with things that i had previously seen and that interested me. Now i know that everything I do on the internet is tracked and advertising is an way to do business. The companies need people to buy their products and so they have to make costumers know about the product, through this way are able to reach a lot of consumers in the same time.
It could be a good point for the consumer to receive ads which interest him. In my case i prefer to have some advertising that can interest me rather than a random ad. Everyone has diferent interests and tastes so is good just see what we want and interest us. Furthermore, these ads can also become useful, because we do not have to check every time the same thing, just appears in some webpage that we search.
But this is only a good thing if they are not too intrusive. It is boring when appears advertisement for products that i do not care. Moreover, i rarely click on ads which appears on a webpage, just if really interest me. But anyway i do not make anything to avoid this kind of ads and i also think it is common to a lot of people. Indeed even if it bothers the consumers they do not make anything to prevent, so they are exposed to the ads and it can be positive for the firms. This is, we have the possibility to stop ad with some ad-avoidance or do-not-track technology, then we can choose if we want to see or not and because of that i do not think that targeted advertising is na invasion of private life.
On the other hand, when i see a lot of ads for the same thing everywhere, it is a bit obtrusive.
The obtrusive ads may lead consumers to infer that the advertiser is trying to manipulate them and have a negative effect on consumer perceptions of the product advertised and this affects negatively the visual effect of web pages as well. Other inconvenience is that some people tend to be unconfortable when it is about giving personal data without their knowledge to companies they do not know.
For conclusion, targeted advertising is a good thing if it is not too intursive, if just show what the people want to see. This way everyone can gain from it, the firms can increase their chances that the right person sees the right ad at the right time and the people do not be bored to see ads that they do not want to see.
References:
http://dspace.mit.edu/bitstream/handle/1721.1/44213/294909115.pdf?sequence=1
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A couple of years ago, when i first started noticing the fact that all ads seemed to be refering to something that i’ve done, read, or searched for on the internet, i started wondering what that was all about. After all, it’s not like they could actually KNOW what i care about, could they? But then, via research, i ended up discovering targeted advertising and how it worked more or less. I think that what was intrussive at first, because it just made me feel stalked, is now something that i’ve learned to live with but which i’m still not sure if i accept, with more or less contempt.
So then again, there is no clear response to what i feel about it. I understand the business profit out of it: I believe it has become kind of a necessary evil for every company to try to get as much information on every client as possible, after all, targeting a particular segment will prove much more profitable, but then again, i’m the one that when asked for my phone or email on any which store, i provide a fake one, just because i feel it as an invasion of my privacy.
But, does targeted advertising work all that well? Since i’ve arrived to Europe for my exchange, i’ve been booking flights, hostels, cars, or festivals every single week, at least a couple of times. Many of these searches have prooven useful, but many weren’t. And the fact is, for example, that after booking “Hotel Orfeo” on Amsterdam, every single time i open a webpage, the “Hotel Orfeo” banner from http://www.booking.com just keeps appearing on the top of my screen. Or, just to set another example, i’ve once checked for “Extrema Outdoor Festival” on Belgium, and it has already been two weeks since the only ad i see is the one dealing with this festival. And so where am i going with this point? I believe targeted advertising has resulted on a range of ads far too restricted for each viewer: it limits the offers to only a couple of interests of the client.
I’m not one to be much influenced by ads, but from time to time i have been interested on clicking a couple of them, and most of them prove not to be related to any of my past searches, or any of my current interests: it is something new, something innovative that really catches my attention, and not something that i already know exists and have been searching for for the last couple of weeks.
But this ultimately did not result in me trying any ad-avoidance apps. In turn, it resulted in me not paying any more attention to most ads, and just completely disregarding them. But why not using these apps? Because i believe that in the future, many, many more parameters for the targeted ads will be set, and thus more intelligent options will appear on my banners, disregarding , for example, purchases that i’ve clearly already made in the past and thus will no longer need, and presenting me with more ads based on implied interests out of my whole surfing experience (which, although it now exists, i believe should be more refined in the future).
Getting back to the discussion relating privacy, i am definitely at a dicotomy in this point. As i said before, i am the first not to give their real number or email because i believe in my privacy and wouldn’t want this data divulged. I am also one to be generally suspicious at the idea of being tracked or localized by my device mainly because i believe it’s the single most dangerous piece of data to get on the hands of the wrong people. But then again, i’m quite happy when most of my ads aren’t dealing with my home town in Buenos Aires, because, obviously, what’s the point of knowing about an offer over there, being that i’m living in Belgium?
I think the real matter in dispute over targeted ads is the fact that people over the last couple of years, with all that’s happening with, for example, the NSA spying scandal, and many other spying scandals, have grown a certain fear of losing their online privacy, of having all their data divulged and ultimately, targeted ads are the living proof that EVERYTHING they’re doing on the internet is being followed or tracked. Results of polls conducted support this view that privacy indeed is a great concern.(http://www.adweek.com/news/technology/consumers-fret-about-privacy-data-privacy-day-146841)
However, people indeed are “pretty savvy when it comes to understanding that ads make it possible for free content with 75 percent preferring the ad-supported Internet model”, (http://www.adweek.com/news/technology/poll-targeted-advertising-not-bogeyman-updated-148649), and , since “70 percent responding that they’d like at least some ads tailored directly to their interests”, we can see that it has come to a level of acceptance much higher than expected if we take into account all the privacy concerns.
On a final note, although i haven’t been exactly supportive of this model during my comment above, i am well aware that when i see a couple of things of my interest on an ad, and it proves to be something useful, i’m quite happy and amazed on how things are working out. I believe that once that we learn to trust the organisms regulating privacy and managing all our data, and after the parameters for targeted advertising have been really put to date and become more and more sophisticated, this will indeed be something favorable for costumers: No more changing channels when the ads begin!! Ultimately as well, i believe that data collecting and data sharing will become more and more easy with time, since tools for data collection will be more readily available for every company. I believe this will improve comepetition in the market and will result in lower prices to gain the majority of the audience, and, despite the fact that there might be some “surplus extracting effect”, the first effect will be more determinant.
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A decade ago, you could somewhat avoid being overwhelmed by targeted advertising. These were mostly coming from different channels than the obvious ones of today, phone calls, mails, in-store ads, … Today though, most of what is discussed comes from online targeted advertising. It is a very difficult to go online today and not get a enormous amount of ads that are targetted at you.
So what about ad-blockers then ? These usually suffer from one or two problems.
First, they might not block all the ads which makes it difficult for a consumer to see the benefit of such a program. Second and most importantly, they might ruin your web browsing experience because they sometimes block actual content that you want to see, content which is mistaken for an advertising. In the end, you end up with an annoying web surfing experience either way. What you can actually choose is your prefered poison, ads or missing/displaced content.
I therefore tend to agree with what Justin P. Johnson states regarding how firms beneficiate from the increase in targeted advertising while consumers are the ones suffering from it.
I personally have used multiple ad-blocker softwares in the past and I have ended up filtering which ones to keep and which ones to discard. I am neither blocking all the ads nor blocking none of them. I block pop-ups and loading ads on Youtube for example but I’m not blocking standard ads disseminated across most websites. I block what bothers me most and I just disregard the rest. It is a matter of optimization between the two choices I talked about earlier.
Now, when it comes to the question of privacy, I do believe that this is an invasion of people’s privacy. Obviously, everyone has agreed to these insidious terms of agreement. Giving big companies like Facebook, Google and Apple access to your private information. I actually recently read a study from the Georgia Institue of Technology (http://www.chi.gatech.edu/2014/giving-it-away/) which studied the Terms of Service of the Top 30 social and Fan creation sites. In a nutshell, what they found was that an average TOS is written at a sophomore college reading level. Now that means that, not only do most people, in my opinion, do not read the TOS of all the website they register to, but they would also mostly be unable to understand what they would be agreeing to anyway. This, to me, is a scary problem. If we continue to give up our privacy rights that easily, these companies and others will keep pushing the limits of what they can do. I do not believe this kind of intrusion to be a necessary evil, although evil it is. However, I am pessimistic about the future and I unfortunately believe that this trend will more than likely continue. Obviously, the privacy issue goes far beyond the scope of targeted advertising.
And I must say that I do see the benefits of big data and its use in targeted advertising. The recommanded sections of websites like Amazon, iTunes, Youtube, … can be more than welcome and offer a way to discover content or products that we would have not otherwise come across.
The question then becomes, is there a way to get the best of both worlds, retaining privacy priveleges while gaining access to recommanded sections.
To conclude I will say this: if or when we do give up our privacy rights, there will be no coming back.
PS: I tested the Terms of Use of ipdigit (https://www.ipdigit.eu/terms-of-use/) using an adaptation of the Flesch–Kincaid test used in the paper of the Georgia Institue of Technology created by Kandel and Moles using this tool (http://www.standards-schmandards.com/exhibits/rix/index.php) (although they used the grade level formula rather than the reading ease one). What comes out is a score of 44 which is deemed as fairly difficult and understandable by high school/college users. Making it simpler than the average social network studied in the paper. I ended up reading the Terms of Use which had not done before.
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I don’t consider targeted advertising as an invasion to my privacy. Or in my opinion it doesn’t work very well after all. As an example of this I booked a hotel from hotels.com for a vacation in Barcelona. Lately I have been targeted with advertisements of hotels in Barcelona, however, I do not plan to go there again in the near future. Hence the targeted advertising does not work as it should as I am not a repeat customer in the case of vacations. This happened also when planning our wedding, I viewed wedding related advertisements also for a few months after the wedding, and you only get married once. Hence the lag-time for the information to end up in targeted ads has been too long to make the advertisements targeted. Another failure comes if you are a foreigner living abroad, but still following your home country’s media, as you would receive adds for your home country brick-and-mortar retailers, which are currently inaccessible. I believe I have never viewed a “Belgium resident targeted” add while surfing on a foreign news providers. But this might be because the traffic from outside the country is very limited, and hence the advertising is not targeted on their location, but based on other determining variables. Another issue is shared computers, as I share one with my wife, the ads are mixed, as she reads blogs for females and other female oriented websites, hence I sometimes also receive female cosmetics adds on websites, this problem is however not present in Facebook. So it seems that they (advertisers or internet “big Brother”) don’t know much about me after all as the advertisements are not that targeted.
I generally disregard advertisements, but have not used ad-avoidance software. I however do not let smart phone apps use my location, as I generally have my wifi and GPS off. I just don’t like the idea of telling my exact physical location to online providers, as it can be hacked. But as a consumer I prefer to have targeted ads, if it works well, as there is nothing more useless than viewing female cosmetic product adds on television or in a newspaper. I may end up paying more of the product I want, but at the same time, I will more likely buy the right products, increasing my utility. For instance the recommendation system on Amazon is great, as it uses my previous views and purchases to recommend similar things, which I might like, and have never heard of, which works well with regard to movies and books. I currently get most of my movie tips from Amazon and consider it a valuable part of my shopping experience. What was shocking to hear last week is how cheap advertising is on Facebook, that the cheapest new user costs, for the example app (the presentation in class, the name shall remain anonymous), only €0,50 by using targeted Facebook advertising. Hence the advantage for small firms (or niche products) is massive, and they reach their target consumers relatively easily. And as small enterprises are valuable in the economy I consider this a positive aspect.
On a more general note, what is private information nowadays when people post on facebook, linkedIn and twitter? Especially in the early days of social media (5+ years ago), when one wasn’t aware that telling everything to the internet might not be wise. Still politicians and famous people make mistakes on social media causing scandals. Also pretty much everything can be found out by hacking, even legally as in the following post: (http://pando.com/2013/10/26/i-challenged-hackers-to-investigate-me-and-what-they-found-out-is-chilling/). But I believe that I don’t have anything to hide except my money, and I can’t really do anything to safeguard them than to trust my bank and use protected wifi or even better, a cable, to use my online bank.
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Do I see targeted advertising as an invasion on my privacy? Or on the other hand do I consider it as a positive contribute, in the sense that it enables me to be more aware of products and services that are appealing to me, or simply do I see it as an inevitable and necessary evil?
Frankly, the perception is mixed and blurry. Before I started scribbling these lines, I turned on the internet, and by default the Google page popped up. At the bottom of the page, a discrete message indicated that the company used cookies, in order to provide its services and that the user agreed upon its utilization. A pop-up was available to learn “more” about the company´s policies. I pressed it for the first time in many, many years and somehow felt more comfortable; after all, my perception about Google is favorable and I value its services and reputation. I cannot imagine life without it. As a next step, after noticing that the discrete message had simply vanished and replaced by “terms and conditions”, I looked for the definition of Google. The Oxford online dictionary defined it (transitive verb) as the search for information about someone or something on the Internet using the search engine Google; the origin dates back to the 1990s, from the proprietary name of the search engine.
Subsequently I used Google Scholar and came across, among others, the two interesting articles mentioned in the blog, specifically by Simon Anderson and Joshua Gans (2011), and Justin Johnson (2013), which I perused. One of the articles that drew my attention was written by Avner Levin of Ryerson University in Canada (2012).
In this article, Avner Levin presents the results of a research project into privacy and social media concerns in the context of targeted online advertising. The purpose of this project, which relied on online surveys of some 1300 young university students, was to search for answers, from a threefold perspective:
• What are the attitudes, perceptions and concerns of consumers about online advertising as it relates to their personal information on social media?
• What is the behavior of consumers on social media and the internet as it relates to online advertising?
• What is the knowledge of consumers about privacy issues and threats related to online advertising?
In order to contextualize my perceptions to the issues raised in the very first paragraph above, I proceed by comparing my views with the results to some of the statements included in the survey.
Like the majority of the respondents (73%) I feel that I am entitled to online privacy, a right for which I should not have to pay, an apparent contradiction as I value, for instance, Google “free” services and acknowledge that the company needs revenue (advertising sales) in order to provide and maintain its quality. So, as the majority (60%) I am resigned to the existence of online advertising while being aware of the function of cookies and not intending to change the online behavior (66%) to avoid sites that collect data about users for targeted ads. Like the majority (83%) I would not pay to avoid targeted ads. So it appears that many of these students and I share a conundrum; on one hand, we want our privacy protected, but on the other hand we acknowledge the necessity for online advertising. A possible explanation for this contradiction is that only a third view targeted advertising as actually targeting the products and services that are of personal interest.
Curiously when considering the answers to statements regarding shopping online, privacy concerns (68%), and assurance that purchase data will not be retained for more than three months(57%) do not top issues like fraud and spam protection (81% and 77% respectively). Personally, I share these views, and actually shop online exclusively with reputable names, like Amazon. Again, like most respondents, I would not pay to avoid collection of personal information.
The attitudes and behaviors of consumers, according to this panel and my own perceptions, with respect to online advertising appear not to present a coherent picture, eventually because IT is evolving. Consumers purport to ignore and dislike all forms of advertisement, yet many believe that targeted ads are a fact of life and something they are willing to endure, an idea, actually shared by Frederik Borgesius in his article “Behavioral Targeting: A European Legal Perspective.” (2013).
Similarly, on the whole respondents and I display privacy concerns, while simultaneously not revealing seriously considering changing online activities in the face of data gathering and profiling, in spite of a firm belief that privacy is a right.
On the other hand, as targeting likely becomes more effective than respondents and I take it to be, disinterest in action suggests either a worrisome acceptance, at least to privacy advocates, of the commercial use of private information, or possibly an expectation for regulatory intervention. In this regard, it is interesting to read the article by Frederik Borgesius, mentioned above. Recall that the right to data protection is enshrined in the 2000 Charter of Fundamental Rights of the European Union, article 8. Moreover, data gathering and profiling is moving to bricks-and-mortar retailers, as advanced by the Economist in an article “Retail technology. We snoop to conquer”, published on February 9th, 2013.
I have to admit that sporadically I run Piriform’s Ccleaner program, which among other things eliminates cookies. I have actually just run it and then, while reading the Economist article, I was confronted with the following message: “Our cookie policy has changed. Review our cookies policy for more details and to change your cookie preferences. By continuing to browse this site you are agreeing to our use of cookies.”
References
Anderson, S., and J. Gans, 2011, “Platform Siphoning: Ad-Avoidance and Media Content.” American Economic Journal: Microeconomics, 3 (4)
Belleflamme, P., and M. Peitz, 2010, “Industrial Organization, Markets and Strategies.” Cambridge University Press.
Borgesius, F., 2013, “Behavioral Targeting: A European Legal Perspective.” http://ieeexplore.ieee.org/xpl/articleDetails.jsp?arnumber=6427813
Johnston, J., 2013, “Targeted Advertising and Advertising Avoidance.” Rand Journal of Economics 44 (1), Spring 2013.
Levin, A., 2011, “Privacy, Targeted Advertising & Social Media: How Big a Concern? Some Disconcerting Observations.” http://www.parl.gc.ca/Content/HOC/Committee/411/ETHI/WebDoc/WD5706433/411_ETHI_PSM_Briefs%5CLevinAvnerE.pdf
The Economist, 2013, “Retail Technology. We Snoop to Conquer.” February 9th Print Edition. http://www.economist.com/news/business/21571452-security-cameras-are-watching-honest-shoppers-too-we-snoop-conquer
Show lessThanks for sharing your opinion and for the excellent references that you provide.
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