Less is more: How much data is needed for an ROI driven online campaign?

Back in March, I wrote an article for AdExchanger.com suggesting that the advertising industry should focus more on intelligently using data rather than simply collecting more of it. The strategy of adding layer upon layer of data and technology to manipulate it just doesn’t yield strong results.

Then over the weekend comes a striking article from the Wall Street Journal, which outlines how companies collect and use data on consumer behavior. The article points to certain technologies such as flash cookies and keystroke tracking. Not only do these collection methods give the industry a negative reputation, but they continue to draw the attention of the press and help justify a greater push toward legislation to regulate consumer privacy practices versus allowing the industry to monitor itself.

Readers’ comments to the WSJ article ranged from ambivalent to alarmist; a few asked whether this technology could be used to access passwords to their online bank accounts. The alarmist responses are not surprising, as consumer education on the issue of privacy is non-existent. So, when the average consumer reads an article like this, he assumes his privacy is being compromised in the worst ways possible.

Keeping in mind these sensitive issues, advertisers should look to strike a balance between the data they have theoretical access to and the data they need to make smart decisions.

At Media6Degrees, we make protecting consumer privacy one of our three core value propositions, and have built a business that uses the least amount of individual data in the market, including no personally identifiable information. Unlike other companies — who use pixels and beacons to analyze and store all types of information that is then used to target ads — our pixels see only the URL addresses that our clients and partners share. We anonymize these URLs so that we have only a unique identifying number. We then look to identify browsers that visit these same URLs. When browsers visit the same URL, we look to estimate the “closeness” or “connectedness” between cookies, an approach that has consistently yielded superior ROI driven campaigns.  And all of this is done without knowing anything about the browser (name, age, gender, other demographics, interests, “friends,” location) or tracking the specific sites a browser visited.

This approach of collecting less data, and being smarter about how it is used is, however, just the first step in gaining the confidence of consumers. The industry as a whole needs to be more transparent, to better educate consumers, and to give them a choice about whether and how they are targeted. The NAI and other groups are doing a great job leading the way. Initiatives such as the “Power I” covered in The New York Times will dramatically improve the transparency of data being collected and provide a more accessible method for consumers to set preferences on ad targeting.

In addition, it is incumbent upon advertisers to weigh the effectiveness of data-intensive campaigns and think about methods that use not just less data but less intrusive data, and use it much more intelligently.