Outlook Point of View, November 2008
Andy Zimmerman is the global managing director of Accenture Communications.
Greg Douglass is the global managing director for Accenture Media & Entertainment.
The growth of mobile communications over the past two decades has been nearly unprecedented. Wireless penetration, now approaching almost half of the world's population, has reshaped people's lives as well as entire industries. It is now ready to reshape the world of advertising.
Until fairly recently, the best that advertisers could do was to deliver ads—on TV, in newspapers or through other media—to an audience that, based on statistical analysis, gave them the highest probability of reaching their targeted demographic. It worked well enough, but with enormous waste.
Mobile devices offer a much more attractive value proposition: the chance to reach people wherever they are, with a fairly detailed knowledge of their buying, entertainment and communication habits. With GPS capabilities, companies can even (with consumers' permission) know where a person is at any given moment, and can send a location-based incentive. ("One of our stores is within walking distance; here's a coupon.")
The problem? Such targeted mobile advertising raises the specter of rather significant breaches of privacy. Because of previous mistakes in the Internet world in consumer and data security, companies have been moving cautiously when it comes to digital and mobile advertising.
Early attempts by Internet service providers (ISPs) to penetrate Web-based advertising were sometimes clumsy and other times legally questionable. Trials in the United States involving deep-packet filtering to target ads to ISP customers led eventually to congressional hearings. A European trial involving so-called behavioral targeting (delivering incentives based on knowledge of the particular viewing and buying behaviors of consumers) led the European Union commissioner to express concern that wiretapping laws may have been broken.
Recent Accenture research points to a possible way forward for companies that wish to leverage the significant opportunity of mobile advertising while not running afoul of consumers' privacy concerns and the patchwork of global laws and regulations. The answer: gaining the willing cooperation of consumers. Our research finds that significant percentages of consumers who are already heavy users of communications and data services are open to sharing their personal data in support of targeted advertising.
But there's a hitch: They want to be compensated appropriately for the use of their data.
Data Privacy Is a Serious Business
The Accenture research study examined the perceptions and usage of early adopters of technology devices and services—a group we term "tech forwards"—in the United States, Europe, Japan, Brazil, China and India. The survey was designed to gauge consumer awareness of, and interest in, a communications trend Accenture calls "trivergence"—the means by which consumers control an electronic device and its data over a ubiquitous network and a common platform. By making new and better types of devices and services available, trivergence will improve the capabilities of organizations, the offerings of businesses and the lives of consumers.
The common platform of a trivergent world also presents another interesting—and enormously profitable—possibility: playing a mediation role between the interests of consumers and advertisers.
We asked the consumers in our study a series of questions about their attitudes toward protection of their data. Might responsible use of that data by corporations actually improve their lives by enabling more personalized and targeted marketing and communications programs—services that are both relevant and timely?
First and foremost, it is clear that consumers take their data privacy interests very seriously. Asked if companies should be required to state exactly how they will use the personal information generated by the consumption of products and services, 91 percent of survey respondents agreed. Maintaining control and having opt-in options—exercising the right to agree to data usage or to deny such use—is important to consumers. Asked if "A company should be required to attain my permission to use my personal data for advertising purposes, even if it does not identify me by name," 87 percent agreed. In general, our study findings show consumers view the use of their data as a contractual matter and they demand a high level of transparency for the terms of use.
However, attitudes begin to change as consumers are presented with other options. For example, 68 percent of survey respondents agreed with the statement, "Companies that I do business with should be allowed to use the personal data they collect for their own purposes, but should not be allowed to share any data that identifies me with others." That is, if a consumer has a trusted relationship with a company and values its products and services, two-thirds of these consumers say it is acceptable for the company to make suggestions to them based on their buying or viewing habits. (This is a capability similar to how Amazon.com presents buying options to customers based on previous purchases).
Giving Consumers a Piece of the Action
The Accenture study also points to another promising way of dealing with advertising in a trivergent world: compensating consumers for the use of their data. In other words, give them a piece of the action. Eighty-three percent of the consumers we surveyed agreed with the statement, "If companies sell my personal information for advertising purposes, they should share the proceeds with me, even if they don’t identify me by name."
Two-thirds of tech-forward consumers agree with the statement, "I would be inclined to opt-in (agree to) to a program that sells my personal data to marketers if I were given a share of the proceeds and my full identity were not revealed." In fact, 48 percent agreed to this proposal even if their identities were revealed.
That 83 percent agree with sharing the proceeds (or savings) through targeted digital and mobile advertising is an extremely high buy-in rate and suggests the advent of a new business model: advertising that compensates the consumer.
Initial forays into targeted advertising that compensates consumers can already be found in the marketplace. Microsoft's "Cashback" program, for example, was announced in May 2008 to bolster use of the company's Live Search service. The service ranks merchants by price for searched items, and shoppers get an instant rebate (through PayPal) when they buy listed items. The merchant pays an advertising fee only when there is a purchase. To date, more than 700 merchants have signed on to the Cashback program, and Microsoft's recent acquisition of Greenfield Online added another 2,200.
Fresh Thinking, Bold New Players
Additional research from Accenture underscores the fact that in the world of advertising, different sets of capabilities will be necessary to succeed in the digital and mobile era. The 2008 Accenture Global Digital Advertising Study—which surveyed executives of startup and acquired digital media organizations, digital media divisions of traditional firms and digital media services companies—found a fairly startling presumption among executive respondents: traditionally dominant players in advertising are not necessarily the ones best equipped to achieve high performance in a new era.
Executives tend to believe that the future lies with the kinds of companies that are already dominating in terms of digital market share, not just overall share of the business.
Accenture believes that the ability to adopt the networks, infrastructure, billing platforms and analytics needed to create a mature advertising capability based on customer compensation will be crucial to the success of communications, media and technology companies. Consumers seem more than willing to participate in targeted advertising, provided that they maintain ultimate control and receive some sort of compensation as part of the deal.
In some respects, ISPs have built-in advantages in executing this business model. They have full access to the consumer “clickstream,” for example, giving them the record of what a customer clicks on while browsing the Web. They also have trusted and, in many cases, long-term customer relationships. And they already have in place the billing capability to both debit and credit customers.
That being said, targeted advertising in a trivergent world is an opportunity ready to be seized by everyone in the convergent world of communications, media and technology. With the right business model in place for compensating consumers for the use of their information, digital advertising can begin to fulfill its enormous potential.
Also contributing to this article was Emily O'Halloran, digital advertising lead for Accenture Media & Entertainment.
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