Under the Influence with Terry O'Reilly - S1E17 - Hypertargeting

Episode Date: April 28, 2012

"Hypertargeting" is the next frontier in 21st century marketing. Marketers are gleaning and buying more and more personal information about consumers online. People are also being tracked online, as marketers watch their buying habits. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling. Subscribe now and don't miss a single beat. BetMGM, authorized gaming partner of the NBA, has your back all season long. From tip-off to the final buzzer, you're always taken care of with the sportsbook Born in Vegas. That's a feeling you can only get with BetMGM.

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about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. From the Under the Influence digital box set, this episode

is from Season 1, 2012. You're not you when you're hungry. You're in good hands with all things. You're under the influence with Terry O'Reilly. I'm going to clean out every rotten spot I can find in this city. And, Blackie, I don't want to find you in one of them. And if you do? What do you think? You're going to give me everything I've got coming to me.

You're going to nail me every time I step on a line and sock me to the limit. You said it. And cockeyed as it all sounds, I'll be proud of you. You're listening to the movie John Dillinger went to see at the Biograph Theater in Chicago the night he was gunned down. It was called Manhattan Melodrama. Its theme song was Blue Moon, and it starred Clark Gable. But at that time, Dillinger was almost as famous as Gable.

He was a bank robber with a flair for the dramatic. Born in 1903, he got into a lot of trouble growing up. He was arrested for stealing a car at 19, then enlisted in the Navy. He deserted a few months later, and when he couldn't find a job, he planned a robbery with a friend. They stole $50 from a grocery store, but were tracked down and arrested soon after.

While in prison, Dillinger took the opportunity to study the finer points of bank robberies from seasoned criminals. When he was released in 1933 and couldn't find a job due to the Great Depression, he immediately robbed a bank in Ohio, but the police again tracked him down and locked him up. But Dillinger managed to escape and continued to pull off outrageous robberies.

In Indiana, he pretended to be a sales representative for a bank alarm company, then tested the alarm by carrying out a robbery. Another time, he pretended to be a film company scouting out a location for a bank robbery movie. As bystanders smiled and applauded, Dillinger actually robbed the bank and rode off waving. When he needed machine guns and bulletproof vests, he robbed police stations. Then, one day, he stole a sheriff's car and drove to Chicago. But by taking the stolen car across state lines, he suddenly came under the jurisdiction of the Bureau of Investigation.

A precursor to the FBI, the Bureau used superior fingerprinting technology that linked Dillinger to many robberies. It also plastered his face on bulletins, naming him the first public enemy number one. This notoriety made it harder for Dillinger to move around undetected. He tried black market plastic surgery to change his appearance. At that time, the surgery was primitive and very painful,

and it only slightly altered his features. But Dillinger was becoming increasingly wary of being silently tracked by the Bureau, and it was fingerprint evidence that worried him the most. No matter how he looked or what city he moved to, his fingerprints would always give him away. So, in an attempt to stop being tracked, he tried to burn off his fingerprints with acid. His fingers were utterly destroyed.

But when they healed, Dillinger was shocked to discover his fingerprints just grew back. It was only a matter of time before the agents tracked him down that fateful night at the Biograph Theater. Fingerprints are an interesting aspect of tracking. They are coded identification marks unique to each individual.

Being tracked via fingerprints is not something that is unique to the world of crime. It has an accomplice in 21st century marketing. The technology is leading edge, the information gathered is vast and secret, and it enables marketers to track you no matter where you go. And, like Dillinger, it involves a lot of money. It's called hyper-targeting, and it may surprise you to learn how much advertisers already know regarding your whereabouts.

You're under the influence. By the 1960s, media buying had become predictable. You could reach 80% of your target market by buying a handful of top television programs. The most popular newspapers and magazines were abundantly obvious. Therefore, the media buyer's skill was simply about negotiating price. That's why, in an agency, the superstars were in the creative department. Because, all things being equal, if advertisers were buying the same ad space in the same programs, then the only distinguishing feature was the creative quality of the ads themselves.

That thinking existed for over 40 years. Then, everything changed. Because today, the media people are becoming the superstars. Media departments have become a lure for highly paid software engineers, financial statisticians, numerical analysts, and data scientists. It's now the hot, sexy department. It's been a remarkable transition, and it all began in the 1990s. The Decade of the Internet When the number of TV channels exploded and the Internet arrived,

media buying became much more sophisticated. Audiences became highly fragmented. The World Wide Web was exciting, but it was also a complete mystery. Advertisers watched it from a distance. Later that year, browsers appeared. They were an incredibly important milestone in that they introduced the concept of websites to the public and they allowed photos, hyperlinks and ads to be seen immediately.

As the web evolved, several important things happened to shape it. Offline publishers, like newspapers and magazines, began to see people migrate online to find their news and stories. An erosion in their ad revenues began as advertisers started to withdraw their support. Yet, online publishers quickly realized that consumers refused to pay for digital content. It was a sticky catch-22. People were moving online in search of content, but they didn't want to pay for it. So, publishers with available online ad space did the only thing they could do. They looked to media buyers for survival.

They knew if they could figure out who was visiting their websites, that information could be sold to advertisers. So they began to hire companies that specialized in analyzing how many visitors were logging onto their sites, who they were, and where they were coming from. In his very insightful book titled The Daily You, author Joseph Turow cites 1994 as the beginning of the first decade of the commercialization of the Internet.

Companies started to sell their wares online. Then, a small problem occurred almost immediately. When someone was purchasing online using an electronic shopping cart, they would click on an item and put it in their cart. But if they put a second item in there, the website would treat that transaction as a new customer. It had no way of discerning if multiple purchases were coming from the same person.

When you went to check out, you were faced with numerous shopping carts. So, in 1994, a computer programmer at Netscape came up with the idea of using electronic cookies. Essentially, cookies were small text files that assigned an identification code to the visitor, like a fingerprint. It worked this way. The moment you logged on to a website, it automatically placed a cookie on your computer, and the next time you visited,

the website recognized that cookie. Therefore, when you put several items into your shopping cart, the website recognized all those purchases were being made by the same person. That cookie also gave the website other information, like where you had clicked previously, what you had put in the cart but not purchased, what pages you had viewed, and for how long. But the creators of the electronic cookie made one other important decision,

to place those cookies on people's computers without asking permission. That decision would have lasting ramifications. As advertisers started to tiptoe into the internet, they needed a way to buy online ads. So new online ad companies began to form website networks. They grouped sites into broad categories. But advertisers still demanded more detail. So companies like DoubleClick developed a way to use cookies to observe a visitor's behavior. As well, that technology could send the same person

more ads for the same product on other pages across its 3,000-plus website network. In other words, it could track consumers. Then came Google. It used SEO, or search engine optimization. When you type keywords into a search box, a list of relevant websites would appear, collected and ranked by Google's patented technology.

Google began selling relevant ads next to the search results. This was called paid search. Google's pitch to advertisers was that the keywords people used to search items were direct insights into their purchasing interests. Advertisers liked what they heard and began bidding on those keywords. The more desirable the search word, the more expensive it was. If keywords were a window

into the deepest purchasing desires of consumers, it only stood to reason that even more information could be gleaned from website visits. In order to begin collecting valuable information, many websites required registration of name and email address. For example, the New York Times requires registration just to be able to comment on an article. Websites soon realized that cross-referencing information, or cookie matching, led to more fully realized portraits of their customers. According to Joseph Turow, the New York Times, for example, has an arrangement with LinkedIn to match the NewYorkTimes.com registrants

to LinkedIn profiles. That enhanced information is transferred to the NewYorkTimes.com for use in its advertising. Many online companies share and purchase data about their registrants using third-party vendors. For example, an auto company might purchase information about you from an airline you've dealt with and learn your age, gender, marital status, ethnicity, profession, credit status, number of airline flights you've taken in the past 12 months, the number of kids you have, their age ranges, and the value of your home.

If you've made any medical purchases, health-related information about your allergies, arthritis, cholesterol, or diabetes could also be made available, all of which is done without your knowledge. And when that information is added to the past details you provided when you registered on their site, a robust behavioral profile is created for you. And with that, hyper-targeting begins. And we'll be right back. If you're looking for flexible workouts, Peloton's got you covered. Summer runs or playoff season meditations, whatever your vibe,

Peloton has thousands of classes built to push you. We know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power.

Peloton. Visit Peloton at onepeloton.ca. If you're enjoying this episode, why not dip into our archives? Available wherever you download your pods. Go to terryReilly dot CA for a master episode list hyper-targeting allows media planners to send perfectly tailored ads directly to individuals based on deep knowledge of that individual's personal life at the exact moment they are about to buy something. For example, say a car company has been quietly tracking you, and they see you've been on five different auto sites. It's obvious you're shopping for a new car.

Because they've bought access to your credit information, they know you have the financial resources to buy a car, and from your recent internet behavior, they know you are closing in on a decision. Then one day, they observe you visiting a vehicle financing site at 9.30 in the morning. At this point, the car company would take advantage of hyper-targeting and place an ad on that website at the very moment you are about to arrange financing and offer you a

discount on their car. That's hyper-targeting. Or say you were on Sears' website buying tools, but you abandon the shopping cart and surf to another website. A hyper-targeted ad would then appear on that other website, urging you to come back to Sears to get 10% off your tool purchase. Or how about this? In a recent mayoral election in Rapid City, South Dakota, a local candidate used hyper-targeted Facebook ads to successfully unseat an incumbent.

The sitting mayor had a much bigger advertising budget and ran a conventional campaign, heavy on TV ads, but ran the same ads to everyone equally for all to see. His underfunded opponent couldn't afford television, so he hired an interactive company to create 30 hyper-targeted concerns. That made the case why the two-term mayor should be unseated. The results were, quote, earth-shaking. While the election was close, the better-funded and well-liked incumbent mayor was defeated. But here's the interesting part.

The mayor probably never did see any of the ads that unseated him. They were sent directly to specific individuals. No ads were ever posted publicly. And get this. The hyper-targeted Facebook ads received almost

1.2 million web impressions. Total cost? $3,000. One of the most contentious subjects in Joseph Turow's book hinges on this very moment. He maintains that advertisers are increasingly using cookies

and databases to determine who is a worthy customer and who is not in other words who is a target and who is waste so if you were deemed a valuable target because you had a higher salary and I was deemed waste because I have more debt you would receive deeper discounts and more offers than me on the very same product, maybe on the very same website. It suggests, in no uncertain terms, that corporations are secretly grading customers. Most firms who sell personal information purport to strip actual names out of their data, serving

up specific but anonymous consumers to advertisers. But a healthy percentage of consumers willingly give away their names and email addresses in return for discounts or sweepstakes. And when that happens, the profile is complete. While it appears a Do Not Track Browser button is on the way, many people routinely block or erase cookies from their browsers because they don't like the idea of being tracked.

If you open your browser, click Privacy. Then, if you are on Safari, for example, click Details, and all the cookies that have been placed on your computer will appear. I was surprised to find that 2,389 cookies have been placed on my browser. In a recent experiment, the Wall Street Journal visited the dictionary.com website, a website I visit often, by the way, to get correct spellings or proper pronunciations. It's your everyday utilitarian website. a website I visit often, by the way, to get correct spellings or proper pronunciations. It's your everyday utilitarian website.

But when the Wall Street Journal later checked their privacy settings, it discovered Dictionary.com had downloaded 223 files onto its test computer, many of them for tracking purposes. New year, new me. Season is here and honestly, we're already over it. Enter Felix, the healthcare company helping Canadians take a different approach to weight loss this year. Weight loss is more than just diet and exercise. It can be about tackling genetics, hormones, metabolism. Felix gets it. They connect you with licensed healthcare practitioners online who'll create a personalized treatment plan that pairs your healthy lifestyle with a little help and a little extra support.

Start your visit today at Felix.ca. That's F-E-L-I-X dot C-A. Facebook has over 170 million users in North America at the time of this writing. Last year, Facebook's ad revenue was well over $3 billion, and it generated that by supplying personal user data to advertisers. Companies like Facebook are also able to monitor conversations to gather comments and insights from customers talking about brands. My wife was having a conversation with some girlfriends on Facebook about an upcoming wedding.

Not long after, wedding-related ads started appearing on her homepage. While Facebook claims this monitoring is done by software, that no humans are reading your posts, it's still another example of what is called data scraping. Recently, Facebook started experimenting with monitoring conversations in real time. So, if you uttered the line, Boy, I could go for a pizza tonight, you would be served up a pizza ad or coupon instantly.

It's every advertiser's dream. Interesting aside, 20 to 30% of divorce petitions in the UK cite Facebook as a factor. All message records are kept and stored, and it appears that even deleted messages are retained by Facebook. As someone said recently, Facebook and Google may know more about you than your wife. Which brings us to privacy policy statements. Many policies are often long and confusing on purpose. CNIL, an independent privacy agency in France, which was investigating Google recently,

says most privacy policies are too vague and difficult to understand, even for, quote, trained privacy professionals. What people don't understand about privacy policies is that most don't really ensure your information will remain private, but rather outline how that company plans on using your private information. That's a big difference. There was a time when credit card companies were only interested in making sure you kept up with your payments.

But now, they seem to be judging you on your purchases. Credit card companies routinely monitor our spending to create profiles to determine credit worthiness. They look for signs of financial and personal distress. For example, if you begin using your credit card at second-hand stores or when charges start appearing for marriage therapy, the credit card company starts watching you more closely. If you log into your credit card balance at 1 in the morning, it might signal sleeplessness due to financial anxiety.

If you check your balance three times a day, it's a warning sign. By tracking your private purchases, companies create a profile for you and determine whether they should lower your credit limit or raise your interest rate. Charles Dewig, a business reporter with New York Times Magazine, published a fascinating article recently. He wrote that a math-loving analyst at Canadian Tire began to evaluate every piece of information

they had collected from its credit card transactions that year. The analyst determined that the brands we buy were windows to our soul. For example, people who bought

cheap generic motor oil were more likely to miss a credit card payment than those who bought the more motor oil were more likely to miss a credit card payment than those who bought the more expensive brand name oil. People who bought carbon monoxide detectors, premium bird seed, or felt pads for the bottom of furniture legs almost never missed payments. The reasoning? These people had a sense of responsibility toward the world and wanted to protect their belongings,

be it hardwood floors or credit ratings. On the other hand, people who bought chrome skull car accessories or mega thruster exhaust systems were credit risks. The analyst even determined that 47% of the people who used their Canadian Tire credit card at a very specific pool room bar in Montreal It's not surprising, then, that erosion of personal privacy was the number two concern in a recent survey of consumers, which ranked above terrorism. 80% of people don't want to be tracked online.

Yet, it's safe to say almost 100% of consumers are. The idea for this episode occurred to me of consumers are. The idea for this episode occurred to me when I was walking across my office parking lot one day. I bumped into Robin Heise, one of the top advertising creative directors in the country. We started chatting about hyper-targeting, and he wondered, out loud, if there would be any need for creative ad men like us in the future,

considering that with cookies and digital fingerprinting, advertisers can track customers, perfectly tailored ads can be served up, offering them exactly what they want, at the exact moment they want it. No waste, no guesswork, no creativity required to gain attention. It was a profound question. Hypertargeting is the new 21st century frontier in marketing because it delivers the two things advertisers have craved since the dawn of time, addressability and accountability.

And some people are fine with giving up personal information on the Internet. As one friend said to me, it's the price of a free Google and Facebook. But it's important not to be apathetic about your data. The more you understand how it all works and where it's heading, at least you can begin to exert your own influence on the software engineers, financial statisticians, numerical analysts, and data scientists who are tracking you. It's no longer the madmen you have to look out for.

It's the mathmen when you're under the influence. I'm Terry O'Reilly. Thank you. Hello Mr. Terry O'Reilly, this is Melon Chevrolet calling. We see you are shopping online for a new blue car. We'd like to offer you a $1,500 cashback offer on a blue car. Love the gray sweater you're wearing today. It matches your boxer shorts. Under the Influence was produced by Pirate Toronto and New York. Research for this episode was done by Myra L. Bayoumi.

See you next week.