One of the strong points which Microsoft has been touting to anyone who will listen of late is that it’s latest browser IE10 is delivered by default with the Do Not Track (DNT) feature enabled. There has been concern for some time around how much of our online behavior is tracked by advertisers. The DNT initiative which was championed by the White House amongst others was supposed to address this.  The problem for advertisers like those signed on through Yahoo or Google is that with DNT turned on in a browser Yahoo or Google can’t offer the targeted campaigns focused on behavior or intent which they can offer with DNT disabled.

Yahoo has just announced that it will ignore DNT flags in IE10…so if you are an advertiser through Yahoo you will still be able to buy behaviorally targeted campaigns on IE 10. It’s an understandable commercially driven decision where Yahoo puts the interests of its advertisers ahead of privacy concerns. What’s fascinating is the convoluted argument Yahoo makes to justify its position. In short they argue that DNT should only apply when an end user explicitly sets the switch…not because it was set as a default by a browser. The vast majority of users never futz with settings and select the default DNT off installation. They also argue that ignoring DNT allows them to offer a wide range of non commercial content targeted on end user interest.  It’s a clever argument, but the corollary might be that popup and virus blockers should only apply when users explicitly choose to block those items. You could argue (and many do) that the default should be DNT in all cases with users having to enable tracking for it to apply. Google has already indicated that they will deliver Chrome with DNT functionality but off as default. Firefox and Safari also allows users to choose to enable DNT if they want to….but are also delivered with DNT off.

So it looks like DNT is pretty much dead in the water….or at least holed below the water line. Google says it will respect it where it finds on because the end user enabled it. In any event IE’s browser share is now down to about 22% which means DNT will not apply to roughly 78% of browsers minus the handful of end users who figure out how to turn it on minus the fraction of advertisers delivered by Yahoo….let’s call it a round 85% of advertisers who are effectively free to continue to track in a DNT world.

Tough Day In Google Town

The Germans have a word for it…and it’s Schadenfreude. Literally translated it means ‘shameful pleasure’…a more useful definition might be the pleasure one feels in watching a good friend fall off a roof. In case you missed the story, owing to a monumental blunder (which I have to imagine is going to cost somebody very dearly) Google inadvertently released their Q3 2012 numbers minus several important items in the middle of the stock trade day.  The less than stellar numbers caused the stock to plummet 9% and they suspended trade while they figured out the snafu. Not sure whether Curly, Larry (Page) or Mo hit the publish button but the error over shadowed their earlier blunder when they published info about their new Chrome tablet ahead of the actual announcement. Guys…was there a party I missed last night?

Leaving aside the inadvertent hilarity (funnier than Binders of Women IMHO) part of the market reaction was driven by the trend in their core Pay Per Click business. I have mentioned in multiple other posts that Google has seen a long term depression of the average cost per click over a good while. It’s driven in good part by the explosion of mobile traffic which typically commands a fraction of the price of desktop clicks. The other factor depressing the numbers is the cost to acquire the traffic; the money they pay their partners for their traffic.

At the risk of going out on a limb here I think part of the problem (ironically) is Google’s fanatical focus on owning as much of everything directly and its profound suspicion of the larger online ad market. There is an ocean of search out there and it’s growing every day. Billions of search driven clicks coming from an enormous array driven by desktop and mobile devices. A great deal of this traffic from all over is not monetized by Google at all. Google has always wanted to own as much search as possible and that’s entirely laudable. They have also been incredibly fierce in protecting their advertisers from poor quality traffic…again entirely laudable. The net of those drivers is that whilst they do have the majority of the highest value search and advertisers they are so conservative about adding new or different sources of traffic they are potentially missing out on a lot of the growth in less conventional search, not bad search just not as conventional. That is likely to keep their cost of acquisition higher than it needs to be and reduce their overall PPClick revenue.  I have no illusions that Google will take my advice for a moment, access to their super high value advertisers will remain a virtual impossibility…but trust me there are hundreds of millions of good clicks which would mean hundreds of millions of incremental dollars going dramatically under monetized….and after today those dollars could come in handy.

The Do Not Track Mess

Most of us either haven’t head of Do Not Track of if we have we probably think it’s something to do with an anti hunting group. In fact it’s the product of the White House led privacy initiatives of a year or so ago where browser manufactures committed to enabling a Do Not Track feature on their browsers which would mean that advertisers couldn’t follow them around the web serving ads based on user identified behavior. The classic use case is that I search for a Honda Civic on Google today and for the next week or two I see ads for Honda Civics where ever I go on the web. As someone who makes their living in digital advertising I love the idea, privacy advocates…not so much. I get that it feels a little creepy but really…how bad is it? I’m going to see ads whatever I do…it’s a Do Not Track feature not Do Not Advertise. Frankly, I’d rather see ads which I might actually be interested in rather than a random assortment of ads which have no relevance to me at all.

Others don’t share my sunny attitude so the browser manufacturers have been adding DNT features to their browsers over the past few months. Google has finally caved as last man standing and just released the feature in their latest developer release. That’s tough for Google because they make the vast majority of their money through advertising and this online stalking or “remarketing” feature has been a growing revenue stream for them for a while. This is the proverbial Turkey voting for Thanksgiving. The market is fairly closely divided with Chrome and IE pretty much tied at 33% each in the US with IE taking close to half the market worldwide. With DNT there is a difference between having it and having it turned on. Most users don’t tamper very much with their browser settings (which is why MSN still has any traffic at all) so if a browser is shipped with it turned off so that only the geeky can figure out how to turn it on it will remain pretty moot. Microsoft has said that they will ship their Windows 8 Browser with this enabled and others in the online world (like Apache) are attempting to stem the tide by say that they will ignore them. I think it’s a safe bet that Google will ship with this feature turned off in spite of the PR black eye that will no doubt deliver. In any event we can expect the Tracking controversy to remain a hot topic and will in good part control what ads we see over the next few years.