Focusing on Customers with Smart Ads

Marketing firms are pinpointing ads by focusing on buying histories, Web-page visits and TV choices. David Freedman, who writes about the technology in Inc. magazine, says he doesn't feel our privacy is in jeopardy... yet.

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SCOTT SIMON, host:

The days of mass mailings and infomercials may be as dated as typewriters. People in advertising are beginning to think that advertisements have become so pervasive they are no longer persuasive. Marketing firms are looking for ways to narrow their pitches. That way they can reach people who are considered likeliest to be interested in a certain product. This industry sea change is known as smart advertising and it began online. It's now on the verge of moving into cell phones, video games, elevators, taxi cabs, even sidewalks. David Freedman writes about the new advertising techniques in his latest Inc. magazine technology column. He joins us from the studios of WBUR in Boston.

Thanks so much for being with us.

Mr. DAVID FREEDMAN (Inc. Magazine): Pleasure.

SIMON: And smart advertising because it can be guided like a laser missile to explode where it's most welcome?

Mr. FREEDMAN: That's certainly one way of putting it. It's a very powerful weapon.

SIMON: We know now if somebody buys, for example, a John le Carre book on Amazon, the next time they log in they're likely to be given the opportunity to purchase every book by John le Carre and maybe also the novels of Robert Little.

Mr. FREEDMAN: Most people...

SIMON: But what you're describing goes beyond that, though. It's like if you buy a novel by John le Carre, somebody thinks they know what kind of toothpaste you might use, too.

Mr. FREEDMAN: And there's been quite a lot of research to try to make these kinds of correlations. And obviously, they're not always going to work, but there's a lot of accuracy to that, and that's right. And the question becomes: Do we want this to happen? Do we want our privacy violated, as some people may see it, or are we happy about the fact that, therefore, we can get some recommendations about, for example, a book that we might like or a kind of toothpaste that we might like, because people who read the same kind of books use that same kind of toothpaste.

SIMON: Is there a point where all of this just becomes too creepy for the American public to accept?

Mr. FREEDMAN: I actually think it's going to become less creepy. I think right now we're almost at the maximum in being creeped out by this sort of stuff, because it's new. However, one of the things people are going to realize is that there are ways of collecting information about us that can't be correlated to a knowledge of who we actually are. And what I mean by that is right now advertisers can gather a lot of information about me on the Internet, but they don't actually know that this person they're tracking is David Freedman. They don't know my home address. They don't know my phone number. They don't know my e-mail address, and they have absolutely no way of getting it unless I give it to them. All they know is I'm some guy who seems to be in the market for a cheap fare to California or for a new car or a certain type of toothpaste. So I think as people get this, they're going to be a little bit less worried and a little more appreciative of how this can actually help them, and over time I think we'll cooperate more and more with advertisers in their efforts to give us less advertising but advertising that's more relevant, more compelling.

SIMON: Now there are taxis in New York where global positioning systems are used to change the ads that run on top of the taxis.

Mr. FREEDMAN: That's right, and these are another form of smart ads, and they're digital advertising right on top of the taxi. You could think of it as a TV screen on top of the taxi, essentially. And if you're near a McDonald's, then the ad might flash, `You are one block right now from McDonald's.' And if you're near a Wendy's, then they may be paid by Wendy's to flash that up. And the ad will change depending on where the taxi cab is. So the ads are what we call location-aware. And it can also gauge itself not only to where you are in relationship to the advertiser, but also in terms of who might be looking at the ad. So depending on what section of town the taxi cab is, it might flash an ad for an upscale restaurant, and somewhere else it may flash an ad for fast-food restaurants. So the ad is both appealing to the kind of people looking at it, as well as where it is compared to the store.

SIMON: Cell phones are becoming increasingly not just phones for a lot of people. And is this giving advertisers a wedge into literally our pockets and ears?

Mr. FREEDMAN: Boy, do they want that wedge. This is something that advertisers everywhere are drooling over. And if it weren't for the fact that cell phone companies, so far at least, have been religiously guarding our cell phone numbers, all of our phones would be ringing every five seconds with some sort of spam or telemarketing pitch. But the crack in the defenses here is that advertisers are figuring out there are ways, in fact, to bribe us to try to give them access to our cell phones. And a simple example might be saying that `If you dial this number, then we will send you a coupon for free doughnuts or free coffee.' And Dunkin' Donuts, for example, has done this, and people in record numbers have dialed up those numbers, text-messaged those numbers in, so to speak, and they get a coupon popping up on their cell phones. They have invited that advertisement into their cell phones. And now that people can get movie trailers, TV shows, all kinds of video and audio on their cell phones, we're really going to see that kind of thing explode.

SIMON: Are some of the new advertising techniques we're talking about easier to measure than the old ones in terms of the effectiveness they have?

Mr. FREEDMAN: Yes. If you click on it, well, we know you've looked at it. If you click on it, it brings you to a Web site and they can track whether or not you buy something. They can give you a cookie and maybe you'll buy it a week or a month later and they'll know it's you. So all of a sudden, we have very exact, specific figures about who is actually buying something based on the ad that they're shown. And the really interesting thing about that is that sort of ability is now jumping off of the Internet. For one thing, it's jumping to television because television is becoming interactive and, once again, we can start to exactly correlate an advertisement to who buys.

SIMON: David Freedman writes about technology for Inc. magazine, and his latest article is The Future of Advertising Is Here. Mr. Freedman, nice talking to you.

Mr. FREEDMAN: Oh, pleasure.

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