Well, it looks like the affiliate marketing industry just got the biggest possible endorsement and shot of adrenaline about the future viability and potential of affiliate marketing – Performics, long considered one of the top three traditional affiliate networks, will be changing it’s name to the Google Affiliate Network as part of the integration of the DoubleClick Performics brand(s) into Google.

I’m feeling pretty mixed emotionally about this announcement.

On the one hand, I believe that the name change is a positive for the broader affiliate marketing industry in as far as it recognizes Google’s believe in the power and viability of affiliate marketing.

On the other hand, Google’s resources are infinite, which makes it pretty difficult to compete with a company that apparently could control the world if it wanted to (or is that what they are in the process of doing anyway? – LOL).

For me personally, Google is so big that it becomes almost impossible to get too close to them. Yes, we all have to do business with them because they control the world (LOL), but I’m a strong believer in the power of relationships. It’s why I, as CEO, am here writing this post – I’m interested in getting to know you. To Pepperjam Network advertisers and affiliates you are not just a number – I think that’s one of the reasons why we’ve become the fastest growing affiliate network in the United States.

Yes, Google will capture a nice slice of the affiliate marketing industry – there is no doubt about that. However, I don’t believe they will be able to manage what Pepperjam Network believes are the two most important ingredients to successful affiliate marketing: (1) relationships (aka, communication), and (2) full and unfettered affiliate transparency.

I’m most curious about what advertisers and affiliates think about the idea of the Google Affiliate Network?

Do any of the other networks (like Pepperjam Network) even stand a chance?

What would an affiliate network based on a Google AdSense model look like? The Wild, Wild West…

Aaron Baker, Vice-President of Sales & Marketing, and his small army of Pepperjammers finally got back late last night from a successful trip to Internet Retailer Chicago.

Pepperjam exhibited at the event and according to Aaron and his team the event was an incredible success. Dozens of advertisers approached our exhibit booth and were prepared to sign contracts on the spot to launch affiliate programs on Pepperjam Network. Clearly, in addition to the natural buzz that has been circulating on Pepperjam Network being the fastest growing affiliate network in the United States (nobody else is close), there was quite a bit of chatter about our recent partnership with eBay. In short, Aaron wanted to pass on a special hello to the hundreds of people he and his team had an opportunity to meet while in Chicago.

I’m also proud to announce that the gang came home with the coveted “Haiku Championship” that was given out as part of the Haiku competition at the Pepperjam / Vintage Tub & Bath Internet Retailer VIP Dinner (Thanks to everyone who voted for us!). This is Pepperjam’s second “Haiku Championship” – the first was a Haiku I delivered at Search-Engine Strategies in Chicago a year or two back.

FYI – Haiku is a kind of Japanese poetry. The typical format of a Haiku is three unrhymed lines of five, seven, and five syllables, traditionally invoking an aspect of nature or the seasons.

Aaron delivered the winning Haiku, which I’m happy to share with you here…

Summer Sun Blazes
Pepperjam Network on Fire
CJ and Linkshare in Ashes

Writing credit goes to no other than our very own COO and GC – Michael C. Jones.

So now that you know what Behavioral Targeting is and how it is being regulated, has your opinion changed at all? Do you think that Behavioral advertising is a good thing – serving relevant ads to people who are likely “in market” for a particular product or service? Or a bad thing – an invasion of privacy of the highest degree?

As an “insider” or someone who actively uses and pitches Behavioral Advertising to our roster of Pepperjam clients, I think Behavioral Targeting is a great method of advertising across the internet. As a marketer our goal is to best serve our clients and provide for them the best possible ROI, and our use of behavioral targeting has given us a greater potential for achieving our clients’ goals. Having the ability to target our prospective consumer based on their past web surfing history, we can more accurately gauge what products or services this consumer would be “in market” for.

As a real world example, we have a client, Brigade QM, who specializes in products tailored to the military, government, police, and Special Forces. They also carry outdoor supplies and tactical goods that people in security can use. For the last three months we have been running a Behaviorally Targeted campaign for them on a large Behavioral Ad Network. We conveyed to our Behavioral Network that our goal was to back into a specified CPA goal. We targeted several verticals including Military, government, Men’s vertical, News and Reference, Sports, and Gaming – focusing in on users whose cookie history conveyed interests in military or security equipment. Since the beginning of the campaign in April, our client has received over 600 sales (having successfully backed into their CPA goal), and has generated nearly $7 dollars in revenue for every dollar ($1) they spent. WOW!

As you can see, Behavioral Targeting is effective in our industry. As it stands right now, Behavioral Targeting is not, in my opinion, a privacy concern. These Behavioral Ad Networks are not data mining users personal information, rather they are using a consumers nonpersonally identifiable cookies to determine what interests they might have and serve them ads accordingly. In many ways it is no different than receiving coupons for relevant items from the grocery store or CVS.

However, given the technology that does exist for these Behavioral Networks to collect, use and sell our personal identifiable information, it does give even us marketers pause for concern. Allowing Behavioral Networks access, without consent to this information is dangerous and yes, an invasion of privacy.

But I do not agree with the manner in which Assemblyman Richard Brodsky is approaching this concern. As it stands right now, the NAI, the IAB and the FTC are all in the process of either self regulating or formally regulating these practices. To implement Mr. Brodsky’s regulation on a state by state basis would be exasperating. The bill is far stricter than the IAB and FTC guidelines and would create an extensive regime of consumer notice and choice for Behavioral Ad Network tracking of different types of consumer online activity. The bill also calls for:

• Absent obtaining a consumer’s prior affirmative consent, Behavioral Ad Networks would be prohibited from collecting personally identifiable information online in some situations (when merged with certain other previously collected data).
• Consumers would have the right to opt-out of any online tracking involving non-personally identifiable information.
• The bill would require clear notice by advertising companies on their own sites of their profiling activities, the types of data they collect, how they use the data, the opt-out process, and the length of time the data is retained.
• The bill would require advertising companies to contractually require the sites to whom they provide services to include notice and opt-out options.

I believe that this sort of regulation puts far too much responsibility on the consumer and will make the user’s internet experience a negative one. Imagine for a second being a consumer and on every webpage that you visit having to consent or deny that site to collect your nonpersonal information and/or your personal information. Or prior to being directed to a desired website’s page having to first read what information of yours is being tracked and giving that person a chance to opt out. Your time spend on the internet could double just from this process alone!

Moreover, the biggest concern I have is the availability of free content on the internet. Many sites are able to afford being free content sites, like the New York Times, because they sell advertising. Take that option away from publisher sites and say goodbye to free content. “Consumers enjoy cost-free online content; competitive pricing and product comparisons; education and information gathering tools; communications, such as free email and telephone services; social networking environments and online safety tools all because of online advertising,” said Randall Rothenberg, president and CEO of the IAB. “Research shows consumers value free Internet services highly and prefer advertising that is relevant to their interests, but want guarantees that their personally identifiable information won’t be misused.”

I think the best outcome would be for the industry to keep self regulating itself, rather than having these strict regulations in place. People like their free content and ads that are relevant to their interests. I believe the bill pending in the New York State Assembly unnecessarily burdens the consumer with opt-ins or opt-ins, especially considering the headway the industry is making to alleviate privacy fears through proactive self regulation.

So now that I have given you a little background on Behavioral Targeting/Advertising (with the help of some comments from friends – thanks guys!), I think it is important to inform you on what regulations are currently in place and what further regulations are being proposed.

There has been much discussion in the industry and in government regulatory commissions about consumer’s privacy in regards to behavioral targeting. Many feel as though this sort of behavioral tracking is an invasion of a web user’s privacy because they have not expressly consented to having their online activity tracked. Other’s claim that because the cookies track only nonpersonally identifiable information that there is no breach of a consumer’s privacy.

During the last decade, the online advertising industry has attempted to proactively ease consumer’s privacy encroachment fears. In addition to the Network Advertising Initiative’s (NAI) self regulatory principles, the Internet Advertising Bureau (IAB) submitted new interactive advertising privacy guidelines to the Federal Trade Commission that are designed to ensure users’ control over the use of personal information by interactive media and advertisers while at the same time guaranteeing continued improvement in the delivery of relevant marketing communications to consumers.

Most Advertising Networks adhere to the IAB’s guidelines in addition to being a member of the NAI. While these networks are in the business of making money serving relevant and targeted ads to consumers, they also know that if they were to aggressively collect consumer’s data and use it in ways the consumer finds invasive there would be a massive outrage against all forms of online advertising. Therefore, these Ad Networks have tried to straddle line between serving relevant ads and not being invasive in so doing.

But some don’t believe that these networks are doing enough to protect the consumer’s privacy. Namely, one Assemblyman from New York, Richard Brodsky. Mr. Brodsky proposed bill, Third Party Internet Advertising Consumers’ Bill of Rights (A. 9275), imposes a host of requirements on companies that monitor Web-surfing activity for marketing purposes. The most significant include the mandate that companies that use cookies to track people across the Web tell users about the practice and give them an opportunity to opt-out.
The bill is largely penned on a 7 year old voluntary standards initiative put in place by the Network Advertising Initiative (NAI). The guidelines, which many of the industry’s biggest players are a part of, prohibit Network Advertisers from merging personally identifiable information (name, age, address, etc) with nonpersonal identifiable information (IP address, sites you’ve visited, etc) without prior affirmative consent (opt-in). The collecting of nonpersonal information is widely used in the industry by many Online Ad Networks through the use of cookie based tracking, called behavioral targeting.
Proponents of the bill are calling for increased consumer notice standards to be put in place. Namely, advertisers would first have to obtain a consumer’s expressed affirmative consent (opt-in) prior to the ad network being able to collect personally identifiable information. Additionally, it asks that all ad networks require the sites they serve to include notice and opt out options.
Opponents of the bill argue that ad networks that belong to the NAI already promise to adhere to the law’s key portions and that a state-by-state approach to behavioral targeting would create huge implementation problems for online ad companies because it’s not always possible to know what state Web users are in when they log on. The better course of action would be to bring deceptive and unfair trade practices actions against companies who promise to do something and fail to do it.
It shouldn’t be too hard to figure out where I might stand on this issue… but if you care to find out for sure, I suggest you checking back tomorrow.

Part I in a Three Part Series:

There has been a lot interest in Behavioral Targeting as of late. Many consumers and internet marketing professionals are voicing their opinions about whether or not it is an invasion of privacy or just a more targeted approach to online marketing.

But in order to have an opinion on one side of the fence or the other, I think it is important to understand what exactly behavioral targeting is, how it works, and why consumers seemingly think its use is an invasion of their Privacy. So in this, a three part series, I will take a give an overview of Behavioral Targeting, the regulatory bodies who have taken a closer look at Behavioral Targeting’s proposed invasion of privacy and recommendations they have made to put the consumer at ease, and an insider’s opinion… i.e. Mine.

So what is Behavioral Targeting? Online behavioral targeting is the practice of tracking web users’ behavior and serving ads tailored to that behavior. The primary method is cookie-based, allowing Ad networks to track the web pages a user visits. This information often contains demographic data such as geographic location or search queries, to help further personalize advertisements, however this tracking usually is conducted anonymously with data collected linked only to a computer’s Internet Protocol (IP) address, not name or other personally identifiable information.

For instance, say user 12345 is interested in booking airline tickets for an upcoming business trip. User 12345 visits sites like Travelocity.com, Expedia.com, and UsAir.com. Each time this user visits one of these sites a cookie is placed on that user’s “profile.” As this user visits other non-travel related sites like Morningstar.com (s)he may be served ads for Tripadvisor.com based upon user 12345’s cookies. Simple, right?

It should be no surprise that there is a vast difference of opinion amongst the consumers and marketers: In a recent Harris poll, 60% of Americans (ie. average internet users) believe that Behavioral Targeting is, to some extent, an invasion of privacy and were uncomfortable with the idea of companies tracking personal information such as their search queries and using that information to target specific ads to them. On the other hand, most online marketers believe Behavioral Targeting to be a more efficient, effective, and cost effective way for clients to advertise to those consumers who are believed to be “in market.” Many marketers tout increased Click Thru Rates (CTR) and conversion rates and have stressed that behaviorally targeted ads can generate as much as 10 times (10x) the revenue compared to Run of Network based ads.

So what are your thoughts? Is Behavioral Targeting an invasion of privacy? What have those in the industry regulatory agencies done to curb networks from capitalizing on the consumer’s information? What more needs to be done, if anything?

Tomorrow we will take a closer look at these questions and more. Namely we’ll look at what the Federal Trade Commission has said about Behavioral Targeting, the fight one New York Assemblyman is waging against the use of Behavioral Targeting, and what the Internet Advertising Bureau (IAB) is doing to self regulate the industry.

Stay Tuned!