Why do we have a Cookies Directive? Back in 2012, digital marketers were asking that question in an agony of doubt. As enforcement drew nearer of the new requirement to gain consent before dropping a cookie onto a consumer’s device, it was feared that opt-in rates would collapse and online tracking would no longer be possible. Website publishers would be rendered blind because they couldn’t follow visitors without their consent.
As it turned out, consumers shrugged, clicked and carried on. The majority of sites comply with the requirement and notices at the point of entry have become just so much wallpaper. Yet consumers have been left with the sense that they are being followed and some find it creepy.
It was precisely because of behavioural targeting that the European Commission introduced an amendment to the Privacy in Electronic Communications Regulation that became known as the Cookies Directive. A now-defunct company called Phorm followed a segment of BT Internet customers without their consent in order to test ad targeting. Poor handling of this by all involved, including the UK Government, led directly to new European laws.
But as the cover story on the last DataIQ revealed, a growing number of consumers are choosing not to consent and prefer to remain anonymous. Combined with the difficulties of tracking mobile web users and the increasingly closed-wall world of apps, marketers are facing up to a new reality - find a new way of operating or risk going blind again.
James Collier, European managing director at AdTruth, believes his company may have the answer. “Everything we do has Privacy by Design built in - that is where we differ from other approaches. We don’t look at the individual, we collect no personally-identifiable information, including full IP address, and there is no hard identifier,” he says.
AdTruth’s solution has its origins in a market-leading fraud-mitigation solution developed by 41st Parameter which has since been re-engineered for marketing purposes. It operates by using device-level identifiers that track behaviour and usage, allowing the company to distinguish between a human user and a dumb handset being used to power a denial of service attack, for example. Since no cookie is dropped and the identifiers run within an on-premise solution, it sits outside of the Cookies Directive’s remit.
“We don’t store the ID on the consumer’s device and it leaves no data behind. It sits in the solution and can’t be detected by the consumer. We have done due diligence in every region, including with the ICO and even RIPA in the UK,” says Collier. The solution has gained TRUSTe’s data privacy seal, for example.
By focusing on the continuity within a user’s data stream, such as technical dimensions of the device like screen size, and maintaining a fixed set of data variables, the service yields a unique ID on that device, but not on the user, to a high, but not perfect standard - between 80 and 90 per cent. This is a critical distinction, says Collier: “We can’t differentiate between two IDs to 100 per cent accuracy, which means it is effectively anonymous.”
“The true currency of the new economy is data and gaining permission to use it. Consumers are much more aware, so we are seeing a change in our market,” he says. That is hardly surprising, given the 172 per cent rise in mobile brand ad spend in the second half of 2013. Facebook and Google split the majority of that between themselves, giving marketers every reason to want to be able to track consumers who click on content or ads within those sites. Collier notes that digital ads, especially those traded via online exchanges, are subject to high levels of fraud - up to 50 per cent of clicks may come from slave handsets of the sort AdTruth was created to detect.
Without an identifier or any ability to track the visitor, that means a lot of wastage. Fear of that has driven many advertisers towards other types of digital fingerprinting which do store some form of tracker on a consumer’s device and which are proving to be increasingly controversial. According to Forrester Research earlier this year, 62 per cent of marketers have chosen to duck behavioural targeting altogether because of fears about compliance issues. AdTruth’s approach and the potential to link to permissioned data ultimately drew the attentions of Experian, which bought 41st Parameter for $324 million in October 2013.
Tracking consumers online may be about to become harder if the Data Protection Regulation brings more data items under the classification of PII, hence the growing interest in all forms of digital fingerprinting. But there is one long-running gap in marketers’ knowledge that can now be filled, thanks to another solution that has been re-engineered from its original purpose.
“Marketers, especially the digital sort, in recent years have become very blinkered and believe everything is about digital,” says Bhavesh Vaghela, chief marketing officer for ResponseTap, who are headline sponsors of this year’s DataIQ Future Summit. “For them, the journey starts and ends online - but the customer journey doesn’t. Customers also go offline having researched online, so you need some data to help you understand that.”
The concept of customer experience has risen up the marketing agenda recently, but it presents a big challenge to this understanding. While marketers may be responsible for online advertising and micro-sites, a separate dot.com operation may handle the main site, while CRM and call centre operations own interactions by phone and email (and possibly in-store). “That’s why we go to senior management or the CMO because they can join the components together,” says Vaghela.
Started in 2008 by two UK students to optimise search for small and medium-sized businesses (including their own mothers’), the founders soon realised that they could track any behaviour online, but understood that many customers convert offline. “There was no way to track what marketing was doing to drive that, so they decided to build something,” he says.
Their initial campaign-level tracking solution generated unique telephone numbers for each channel to track effectiveness. “Clients wanted more granularity - what are customers doing, what ads are driving the desired behaviour? So now dynamic telephone numbers are generated that mean if there are two visitors to a website at the same time, they would each get a different phone number. That means you can connect every customer who buys back to the site and content which drove that call,” says Vaghela.
The company now has 1,600 clients in the UK and US and recently gained an additional £4 million in funding for this visitor-level call tracking. Users of the solution have been able to improve their cost per acquisition by 30 to 50 per cent, not least by improving the level of attribution to around 30 per cent of ads, whereas last click attribution typically only accounts for 2 per cent of activity.
“Aviva identified that prospects were searching for ‘pensions’, not ‘annuities’ which allowed it to improve its keywords and reduce cost per call by 53 per cent and increase the volume of sales calls by 121 per cent,” he says.
That is a big return from a new data point, but it reveals why digital marketers are working to join the dots. One way or another, those new connections will identify their visitors, anonymous or not.