Tony Hingston, Computer Services Group Manager, RMIT Business, Level 8, 239 Bourke Street, Melbourne, 3000. Email: hingston@rmit.edu.au
Stewart Adam, Senior Lecturer, School of Marketing, RMIT University, Level 14, 239 Bourke Street, Melbourne, 3000. Email: stewart.adam@rmit.edu.au
The knowledge media (Eisenstadt 1995) capabilities of the Web enables access to the profile of Website guests, as well as a glimpse of their wants and demands, and provides an unparalleled ability to gauge traffic through online business’ selected marketing channels. One data capture method employed today involves the use of banner advertisements which link to ‘forms’ and other means of gathering information, often under the guise of marketing research. Measuring the success of such click-throughs from the advertiser’s point of view is difficult if the online organisation merely records such information and fails to link this data to individual customers. This paper explores the use of click-throughs in the commercial setting as a strategic component of integrated marketing communication. The obstacles to effective and efficient commercial use of click-through data are also examined. Said obstacles range from the failure to use software to effectively analyse, or ‘mine’, the data, to issues associated with storing and maintaining it, and include growing concerns over privacy and consumer protection. It is suggested that how this data is acquired, by whom, and for what end purpose is of critical importance and worthy of examination and discussion.
The models of advertiser supported Websites put forward by Novak and Hoffman [HREF 1] include the click-through method of gaining value from the Web audience. Click-throughs are one way of developing a profile of Web users.
At issue is whether or not banner advertising and the use of click-throughs on the Web is a successful new approach to marketing communications. The size of the audience is certainly significant and most importantly, the audience is growing (ABS 1999). The medium may be relatively new in the commercial context, but as with traditional media, there exists the need to measure output associated with marketing effort input. The attributes of sample audiences are gathered and then extrapolated to the whole population so as to target marketing communications.
In the United States, (and to a lesser degree Australia), ACNielsen provides estimates of the size of, and demographic characteristics of, audiences at both the national and local levels. For national TV measurement in the United States an electronic measurement system called the ACNielsen People Meter is placed in a random sample of 5,000 households (approximately 13,000 persons). The meter measures two things - what program or channel is being tuned into and who is watching. The People Meter is used to collect audience estimates for broadcast and cable networks, nationally distributed syndicated programs and satellite distributors [HREF 2]. ACNielsen Media Research, in conjunction with partner NetRatings, issues weekly Internet ratings to industry. A daily summary of usage is available free at their website (ACNielsen.com) [HREF 3]. The data is collected from 5,000-6,000 PC users recruited by a random national phone survey (ACNeilsen) [HREF 4]. The survey technique involves loading proprietary software on the volunteers PC. Usage statistics are then accrued by ACNielsen. This method is superior to the traditional snapshot interview methods still used by such companies as Mediamark.com which conducts more than 26,000 personal interviews with consumers annually throughout the continental United States. The results are collated to produce syndicated reports now available via electronic access at Mediamark.com [HREF 5]. The need for reliable longitudinal data is important. How else can a shift in personal preference be established? Sampling does not address the need for effective and reliable longitudinal client management.
In the case of banner advertising on the Web, the sample is as large as the actual population as every hit is recorded. The value of some of these ‘hits’ may be circumspect, particularly in the case of users being paid to click, but ultimately such tainted data will always only represent a minute percentage of the total data collected. The click-through offers a means of profiling users easily, unobtrusively and once identified, permanently.
A click-through is an icon or ‘hot spot’ on the user’s current Website, usually represented as a banner advertisement, that when clicked will initiate transfer of information. The transfer may be two-way, from the user’s computer to the hosting site or a third party host or vice versa. In most cases the user is taken to the advertiser’s site via a third party site which is hidden from the user. The essential element of the click-through is that once selected, the user is recorded somewhere as having made that choice in the same way that the ‘people meter’ functions. The record may exist as a ‘cookie’ on their own computer or it may be recorded at the originating site, a third party relay site or at the target site or all these sites. The record may be as simple as a date and time stamp and the user’s IP number. Alternatively it can be as intrusive as unique machine identifier, complete browser profile, duration of current access, current and historical session activity and a complete list of all software available locally to the user. Any time the Web user ‘downloads’ a file, whether it be a train timetable, screensaver, share price analyser or any one of millions of free trial offers of software, the Web user voids the limited protection offered by ‘Java virtual machine’ coding intrinsic to the browser to prevent unauthorised access. This latter category of information gathering is not legal in America if it can be shown to constitute a destructive intention, but still remains legal in Australia where there is no general constitutional or common law right to privacy [HREF 6]. The Public Sector workplace is, however, expected to adhere to published privacy principles.
Getting connected is important to growing the marketplace and many obstacles to accessing the Internet are being alleviated. Direct marketer ‘Free-PC’ has given away 10,000 free PC’s with Internet connections. These new owners receive a constant procession of flashing ads on their computer monitor every time they log on to the Web and they are committed to this for the next 30 months. Twenty percent of the desktop space on these users’ computer monitors is devoted to advertisements which the user cannot disable. From the sales conversion perspective of the advertiser the data collected from the click-through is not yet encouraging, as very little actual purchasing activity is occurring [HREF 7]. However a detailed profile of the user is established through the PC give-away contract and this profile is probably the most valuable aspect of the exercise. The profile is not the exclusive property of the advertiser.
Attracting a greater audience can also be achieved by enticing subscribers with free Internet access time. These dialup users agree to have software loaded on their computer which both parades a constant stream of advertising banners and profiles subscriber activity. Examples of such sites are FreeNet.com, FreeOnline.com, GlobalFreeway.com and GoConnect.com.
It is acknowledged in this discussion on click-throughs that they are mainly used as a revenue source by navigation sites such as search engines and portals, and that their effectiveness is declining. Sutherland (1999) indicates that click-through rates in 1999 declined to around 0.5 percent, which is lower again than the 2 percent rate put forward by Hofacker and Murphy (1998) a year earlier.
The key to click-throughs is not the instantaneous counting of ‘hits’ on a site. Such hits are merely data. The essential value of the click-through is the information that can be stored and profiled. This is a time consuming task involving analysis of the types of data that need to be gathered, sorted and kept. The real value lies in future analysis. The precedent already exists for consumer profiling, but the Web makes the data so much easier to collect. The existence of American companies such as Experian (TRW), Equifax, Metromail, Donnelly Marketing and Trans Union indicates the value of consumer profiles to information brokers (infomediaries). These companies collect or buy public records, or use other investigative tools to collect personal data. There are also smaller companies on the Internet like DigDirt.com or SpyForU (only available for contact via email SpyForU@AOL.com). These companies are in business to sell somebody's unlisted phone number for $50, a salary for $100, a bank balance for $200, a 10-year medical history for $400 and credit card numbers for $450 [HREF 8], however in the case of DigDirt.com access to these services is restricted to national and international corporations, law firms, investigators, law enforcement agencies , and the United States government. The site SpyKing.com gives a review of what is available for surveillance of unsuspecting Web users. While these methods may be legal in some countries they are not strictly ethical due to the lack of consultation with the owner of the personal data.
Confidentiality and privacy is important to the information industry. Simply gathering information does not mean that it is automatically in the public domain. If it were deposited directly in the public domain it would carry little value for the information holder (holder in this sense rather than owner because ownership of the data is not clear). Ironically, the commercial value of such information is the only means of ensuring the confidentiality of the information. According to Crawford [HREF 8] some States in the United States can make as much as US$10 million a year selling motor vehicle records alone. The currency of these particular records explains the premium price.
The demand for profile data is strong and there are a number of schemes on the Web to encourage Website owners to host advertising banners which both increase the reach of an advertiser’s message and also aid in the collection of user profile data. The advertiser pays the information broker per ‘hit’, the broker pays the Website owner a percentage of such revenue and the broker has ownership of the profile data. To increase the advertiser’s ‘hits’ there are some schemes to pay third parties to ‘click’ on banners. This aspect is discussed further in later sections.
There are many companies which advertise their click-through services on the Web. These companies reward a Website owner for the privilege of placing an advertiser’s banner advertisement on that Website owner’s site. The banner that is placed on the Website does not point directly to the advertiser’s site. In order for the Information broker to control information, the click-through is redirected via the information broker’s computer system which records and maintains the traffic through the site. After this script is processed, the user is passed to the advertiser’s site. AdClix.com offer up to US$0.16 for each banner click generated on an owner’s Website. The immediate benefit to the advertiser is that they can spread their message quickly. The actual ‘hits’ are counted for them by the third party information broker which then sells the data along with accrued profile either to that advertiser or to others willing to pay for the information.
Another click-through scheme is to reward individual users for the number of banner advertisements that they click on. The information broker can guarantee, upon payment from an advertiser, a demonstrable increase in visits to their sites. The prices range from 1 US cent per click to 5 US cents per click. This simple scheme is unlikely to survive into the future due to the fact that the user profile derived from such visits to Websites is unconnected with real user preferences other than the preference to be paid for repetitive clicking. In the meantime the scheme does demonstrate to an advertiser that the banner they have paid for is generating activity.
Pay-per-sale (commission) is a method of reward which uses the data tracking software of the information broker in combination with sales data from the advertiser to arrive at monthly commission payments for the Website that hosts the banner advertisement. In this case the broker supplies the banner on the Website owner’s site. Any referral from the Website owner’s site who goes on to purchase online will mean a commission is paid to the Website owner’s account by the broker. As an example, the broker for 1stopflorists.com pays 12 percent of each sale referred by an advertising banner. What 1stopflorists pays the broker is not disclosed, but it is suggested here that the amount would be more than 12 percent, as the broker would be expected to have a ‘cut’. Remember too, that the broker keeps the profile. Pay-per-lead is similar. In this case a fixed payment is made for each referral. An example here is attorney.com which pays US $5.00 for each attorney who joins the Law Alliance as a result of being directed from the banner advertisement of the hosting Website.
Another scheme is Pay-per-view. As an example, the broker for UsedLapTops.com pays $1.00 per 1000 impressions (views rather than click-through) generated by the hosting Website. Note that this payment scheme works against the advertiser who may be charged for banner advertisements flashing away in the middle of the night when no-one is actually there to see them. DoubleClick.com also offers the advertiser a quota of ‘impressions’ or views of the advertisement. To protect the advertiser’s investment, DoubleClick maintains that they can target the banner advertisement directly to the user so as to maximise hits. The firm supports this contention by indicating that their software ages or discards banner advertisements which are not responded to by individual users after a set number ‘viewings’. In this scheme the advertiser is not paying for wasted ‘viewings’. DoubleClick CEO, Kevin O'Connor maintains that "Advertisers know that their ad budget is well spent. Websites get the money they need to survive. And users don't have to see the same ads over and over" [HREF 9]. What O'Connor fails to include in this symbiotic relationship is that DoubleClick get to control the user profile data.
A good review of the range of service providers in this area, though now out of date, is given by Novak and Hoffman [HREF 1].
Another scheme is to simply do it yourself [HREF 10]. The result might be good for reactive analysis and use by small and emerging business (SMEs), but larger firms need more comprehensive tools. Larger organisations often purchase a profile segment which helps answer questions about future trends and directions. Such data is only available from the information brokers who maintain extensive profiles across the whole market.
Click-through schemes are paying money. The problem is that the advertiser is not necessarily the beneficiary. Users are being paid for clicks. Affiliate programs offering 10 percent of new revenue ensure that more and more Website owners are signing up to allow advertiser’s banners to be placed on their pages. The information brokers who usually also own the banners and who contract these to advertisers are making money from the contract and the on-selling of profile data. The advertiser who contracts for the banner advertising space is also getting exposure. But who is actually getting paid? Reiter, Anupam and Mayer [HREF 11] indicate that there is a serious problem with ‘click shaving’. In this case the Website owner hosts a banner advertisement. The count of how many web users have selected the banner advertisement and been directed to the advertiser’s site is recorded at the information broker’s site. It is a matter of pure trust that the broker dutifully honours the real number of ‘hits’ and pays accordingly. The Website owner has no idea how many visitors actually utilised the advertiser’s banner.
Results of traffic counts through a host’s Website should be openly available to the host, not just the information broker or the site receiving a referred visit from an advertiser’s banner.
There are many companies offering Web banner advertising packages and the claims of increased audience reach are so unrealistic, and payments to Website owners so high, that the whole industry is suffering a credibility problem. This is a replay of the circumstances which led to the creation of the Audit Bureau of Circulations in 1932. This body was created to "audit publisher's circulation claims and to standardise, verify and disseminate circulation information" to publisher’s, advertisers and the public [HREF 12]. It is only a matter of time before the current fledgling Web watchdog organisations are collated into a body capable of bringing some reliability to the industry.
It is evident from the success of software such as WebWasher that Web users are not altogether happy with a barrage of advertiser’s banner pages. In the same way that email was subject to ‘spamming’ and some users began utilising filters against unsolicited email, banner advertising now has the potential by some to be viewed as tiresome noise. Banner advertisements can now be easily redirected automatically, thereby leaving the user in relative peace.
More sophisticated avoidance measures are available to users who subscribe to ‘free Internet access’ schemes. As noted previously, these schemes enable users to receive unlimited Web access for free but require users to acquiesce to a constant stream of advertising banners. By using a cheap second-hand PC and such products as Wingate, which allow for multiple computer connections to one phone line, it is possible to redirect the advertisements only to the old PC and not cause the termination of the free access. This can also be achieved by reducing the bandwidth on the telephone line to throttle the information broker’s advertising traffic to a trickle but leaving user selected traffic to proceed at high speed.
To assume a large reach for banner advertising by virtue of a captive audience on the Internet is misdirected. Only the actual clicks can indicate increased reach and even then a percentage of those are generated by users seeking payment.
The choice of information broker is crucial to maximising value from the data supplied. Establishing a secure long term relationship with the information broker is the key to leveraging the most out of the marketing opportunities that the Web has to offer.
A good broker will have the resources to keep the data long enough to generate a coherent profile of users. This data can be extremely voluminous, but not necessarily expensive to keep. Assuming that every person in Australia clicked on 100 banner advertisements per day for a year, and that the only details collected were their IP number, date/time hit and site visited, the total data storage cost for a year would be in the order of $2000 with today’s technology. Where the data cannot be held as source data, there must be a well documented method of summarising data for storage and later use.
The larger the broker the more likelihood that actual user profiles encompass more than one market segment. Web traffic can reveal when users are at home or work (source IP) and over time establish patterns of behaviour. The more banners that the broker owns, the more likely the profile is to be accurate. The key is identifying individual users.
The easiest form of identification to collect is host name and email address. Email address is a useful key to gauging the particular preferences that a user may have. Such preferences are often indicated on chat rooms, listservers and news groups. An automatic scan of these net resources will reveal whether a particular email address is ‘active’ on the net thereby enabling a simple first pass categorisation by political preference, gender, likely age group and income bracket according to the lists that the address is subscribed to. Over their lives these users will move house, marry, change football teams and divorce but will nevertheless essentially stay the same user. Software, such as SGI’s MineSet, is available to pattern match and correlate mountains of data to establish levels of probability that user x and new user y are one and the same person. The software is not the problem, the challenge is the acquisition and maintenance of the data over as long a time as possible.
The large information brokers ‘mine’ this data both for established clients and fee-for-service in the same way that stock brokers currently grow the wealth of their clients.
Fred Davis puts the issue succinctly when he states "As someone who loves the Internet, it is dismaying to see the Net becoming the worst of all places for unwholesome invasions of peoples' privacy and massive societal identity theft" [HREF 13]. What he proposes is that Web users be given a "superWallet" and a "superProfile", with a "superPassword" to control access. Such tools will let a Web user control and update personal information, including which marketers get to what parts of it, how much those firms are allowed to see, or if they can see it at all. Davis, CEO of Lumeria, a company committed to supplying the "Superwallet", believes that the owners of personal information should participate in the process when that information is sold.
The privacy issue may be resolved through the marketplace rather than any legislative measures, but only if industry is proactive (Anon 2000). The owner of the information will be able to sell those parts of their profile that they are comfortable releasing. It will be the consumer who will be asked to put a tangible value on their own privacy. The value of their personal information is likely to be compensated more handsomely than an occasional free plane ride as is currently dangled by ‘FlyBuys’ for personal consumer data. Citizens of the United States may finally get to share in a market for profile data estimated for the year 2000 to be between US$5 billion [HREF 9] and US$74 billion [HREF 13].
Web use by so many firms and industries now means that profile data generated by click-throughs
is available to many more industry channel members. A major economic value-added by banner
advertisements is the acquisition of user preferences and the ability of the online
business to meet these preferences and ultimately calculate the lifetime value of
individual customers. The number of schemes that aim to get users to click on an
advertisement will probably stabilise to a smaller number of automatic, reliable and
independently audited systems which acknowledge the consent of the owner of the data
(opt-in) and which compensates the owner for the release of the data.
Profile information will continue to be gathered, but privacy will tangibly be
acknowledged to have a price. The price of privacy may well be governed by the marketplace
if current moves in Australia are anything to go by (Adam and Clark 2000).
Tony Hingston and Stewart Adam © 2000. The authors assign to Southern Cross University and other educational and non-profit institutions a non-exclusive licence to use this document for personal use and in courses of instruction provided that the article is used in full and this copyright statement is reproduced. The authors also grant a non-exclusive licence to Southern Cross University to publish this document in full on the World Wide Web and on CD-ROM and in printed form with the conference papers and for the document to be published on mirrors on the World Wide Web.
[ Proceedings ]