BLOG STARTUPS, VENTURE AND THE TECH BUSINESS

“Do Not Track” – Some Predictions to Guide Investment

Congress has proposed an opt-out capability for user tracking.  Much has been written about Do Not Track, and I won’t rehash all of that.  I will simply say I think it is a good idea, and in general expecting that any industry will effectively police itself is naive.

What has not been widely discussed is:  what does this mean for startups who are improving targeting with data?  They are out there in droves.  There are third party data aggregators, there are internal data optimization engines, there are data marketplace vendors, demand side platforms assume data as inputs.  The goal is to mash sparse and disperse data sets to find “intenders.”  In other words, infer from what you click on or look at or search for that you might be in the market for a car, a tennis racket, or a vacation.

And it works!  Typical lift claims from data-driving ad optimization startups I encounter are 2x – 5x, and that can really impact the cost of a campaign.  And believe it or not, the world is a better place for everyone when we only need to see a fraction of the ads we are bombarded with today.  Or more realistically, when the ads we do encounter are for things we might someday purchase.

But if consumers all choose to slam the door on this tracking via an act of Congress, should we stop investing here?  That requires some predictions, which I will now make:

  1. Do Not Track will be enacted and will be popular.  In a WSJ poll, more than 90% of respondents said they would sign up for such a service.  That said, ad blockers and private browsing is already available and nobody uses it.  But if it is a simple one-button interface and widely publicized, it will be widely adopted.
  2. Do Not Track will take three years to implement, at least.
  3. Do Not Track will have all kinds of loopholes not possible in Do Not Call, which is binary.  So it won’t work very well.  For example, if you arrive at my site from eBay, and I see what zip code you are browsing from, and I notice you are near a Groupon merchant, and Groupon will pay me a lot to show you an ad for that merchant, am I tracking?  Nope?  Am I using data to serve and ad that feels icky?  Yup.
  4. Do Not Track will cause innovators to incorporate this technology into great new startups.

This last point is the most important.  Innovators will find a way to turn lead into gold, and Do Not Track is no exception.  Helping companies comply with such a law will be a lucrative business, as will enticing consumers to allow tracking with interesting incentives.  I look forward to the feast, and a world that is just a bit closer to my personal data nirvana.

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