July 29, 2008

Richard Waters recently reported a ground breaking deal (*). According to its terms, LinkedIn will tap its users' confidential personal information for the New York Times to target advertising on its own site. Neither the concept, targeted advertising, nor the context, flagrant disregard for user privacy, make this newsworthy. The event is that a leading newspaper, no less, chose to succumb to this temptation.

The fate of the newspaper industry is not our focus today. Nor is the unsavory nature of the deal itself. If companies like Google are allowed to do it, who will blame one in dire need of revenues (1) or one faced with declining profits, as detailed by Richard Pérez-Peña (**).

More striking is that I read the news in the Financial Times. If the New York Times printed anything about it, it surely failed to catch my attention. It would not be the first time a media under-report controversial news concerning itself. Such news misplacement is the mirror image of product placement, an advertising trend we examined last week. Both practices tend to merge news reporting with public relations, as made clear by Stephanie Clifford's analysis of product placement on KVVU TV news (***).

Flattery is valuable to those who deliver it, news is valuable to those who receive it. Unfortunately news quickly dissipates its value as it spreads. Insiders wrongfully corner what value there is ahead of the public and some media offer news alerts for pay. In general though, the intrinsic value of news is dwarfed by the advertising revenues it can generate.

To give it extrinsic value, one can either insert or embed advertising in information. Because content alone cannot reliably highlight information among advertisements, the distinction must be conveyed either by the context, such as special layout options for ad inserts, or the disclosure of authorship and sponsorship, for ad embeds. Doing otherwise is nothing short of counterfeiting.

Google became the current information platform leader partly because it clearly separated search results from inserted ads. Reading Saul Hansell (****) reminds us how brilliant Google formula really is. Limit the number of ads, an obvious good for the user, and you drive up auction prices, which is good for Google too. Going from one "perfect ad" to "no ads" at all is not in the cards though. One can have too much of a good thing.

Past the initial search phase, users find it increasingly easy to skip ad inserts. To counter this the trend is to embed advertising, whereby the brand takes partial ownership of information production. News however is a very special kind of information. Arts and science can flourish as of old at the court of enlightened maecenas. Entertainment can be freely offered by anyone rich enough to bear the expense. News alone cannot be sponsored without becoming flattery. Honest, if sponsors are disclosed as such, truthful, when facts do not hurt the sponsors' reputation, flattering nonetheless.

Words can change meaning overtime. Maybe the future of the media is to please rather than to break news, well drafted flattery becoming par in the process. To replace both KVVU and the New York Times, users will turn to YouTube, fed by legions of videophone toting individuals.

While embedded advertising influences authors and context, targeted advertising plays on readers and viewers' personal interests. Nothing in principle prevents one to embed targeted advertising. Today though targeting is mainly deployed to enhance ad insert relevance. This can be an insidious form of flattery as nothing distinguishes a targeted ad from non targeted ones. Coincidences happen. Hence, contrary to ad embeds, which can be safely disclosed before and after the production they influenced as a whole, each instance of a targeted ad insert ought to be flagged as such. In fact the user should also be allowed to check and correct the corresponding profile on the spot (2).

Brad Stone tells us (*****) how TiVo will let users order online on Amazon without missing on the TV program whose ads prompted the order in the first place. Coupled with targeted advertising, this development has obvious potential. With personalization fully disclosed, it becomes truly compelling. Surely users would also welcome the news that they could have all those benefits without having to compromise their privacy (2).

Investigative reporters could pry this amazing truth from ePrio. But would it be misplaced by the New York Times? Some news are too fit to print.

Philippe Coueignoux

• (*) ........... New York Times in social network site tie-up, by Richard Waters (Financial Times) - July 22, 2008
• (**) ......... The New York Times Company Reports a Decline in Profit, by Richard Pérez-Peña (New-York Times) - July 24, 2008
• (***) ....... A Product's Place Is on the Set, by Stephanie Clifford (New-York Times) - July 22, 2008
• (****) ..... Google's Quest For Ad Quality May Be Overdone, by Saul Hansell (New-York Times) - July 17, 2008
• (*****) .. TiVo and Amazon Team Up, by Brad Stone (New-York Times) - July 22, 2008
• (1) to check the valuation assigned to LinkedIn against its revenue forecast, see LinkedIn in the wikipedia
• (2) for more information, see ePrio's recommendations to the FTC