News and Ad Industries Eye Sweeping Realignment With Users (Part 2)

The “action call” by the Reynolds Journalism Institute in the spring of 2015 to build the Information Trust Exchange framework for a more transparent and mutually beneficial relationship among news publishers, their users and advertisers led to a crucial, crossroads meeting in Chicago. Following is part two of an initiative begun by RJI to ensure that news publishing, in the words of one participant, would be around “for the next hundred years.”

(NOTE: The first and subsequent down-to-business task-group meetings convened by RJI were not public. The author reconstructed what happened at them through on-the-record interviews with RJI officials and with confidential documents whose public release was approved by them.)

On May 7, 2015, some 27 of the invitees to the RJI “action call” assembled at 8:30 a.m. in a drab meeting room at the Chicago O’Hare Hilton. They were joined by Bill Densmore, the RJI fellow and longtime community news entrepreneur who championed the Information Trust Exchange, Randy Picht, executive director of RJI, and five advisers.

Participants came to the meeting fully briefed on Densmore’s case for the ITE, which included a 110-page paper called “From Persona to Payment” that outlined the big picture, but also got under the hood for a look at all the moving parts. There were probing questions covering everything from big issues to the technical details. The answers — from Densmore, Picht and the advisers — seemed to satisfy everyone. In mid-afternoon, Picht asked the group to decide what to do — to move forward on building an ITE prototype, or not. There was a unanimous decision to move forward.

Participants were reassembled in four task groups that totaled 44 members (counting participants who were on multiple groups).

Even before the first breakout meeting was held, the already strong sense of purpose was heightened by ex-Googler and Guardian, U.K., consultant David Gehring’s latest unsettling look into the future of publishing, made at a consultants’ meeting a week after the O’Hare session:

“…the situation that the news publishing industry is in right now is so dire, and so acutely dire, that things that were thought impossible, industry coalitions, are now on the table. The alternative is death.”

The first three task meetings, in Missouri, Massachusetts and Oregon, went relatively smoothly, The major problems and solutions to meet them were posted on the walls to keep participants focused on their challenges (see image below).

Members of meeting No. 4 were tasked with the most difficult challenge of all the breakout sessions: finding a balance between user privacy and giving advertisers and publishers access to user profiles and behavior data. If the ITE couldn’t give the advertisers what they wanted to improve the effectiveness of their targeted messages, they might just exit the deliberations and go back to old-way targeting tactics, hit-or-miss that they were.

It was against this tense backdrop that nine out of 12 members of the fourth working group assembled on Oct. 8 in a tiny, hot, glass-walled meeting room in a building in the Flatiron District near Madison Square in Lower Manhattan. But very quickly, it became apparent that the representatives from advertising at the meeting didn’t want to leave without an all-in effort to resolve what was becoming a major problem for the ad industry: ad blocking.

Ad blocking by users was not new, but Apple’s decision to allow ad-blocking apps with its new iOS 9 operating system the month before sent a strong shiver through the ad business, and among publishers as well, turning what had long been a nuisance issue into a near-crisis. An increasing number of users were resorting to ad blockers because their computers were freezing up from an overload of “cookies” and Java scripts that were necessary to target ads, especially video messages, to the right users. Industry fears that Apple’s decision allowing ad-blocking apps would bring immediate revenue losses did abate. But, as Densmore says, “The fact that users can block ads forces publishers to reinvent their relationship with their readers, and this require enormous change.” Like building the ITE.

RJI and its collaborators believe the ITE is a systematic, and entirely feasible, improvement over the present patchwork identity processes that are ruining relationships among news publishers, advertisers and users.

A double goal of ITE, says Densmore, has been to resolve the conflict between giving advertisers the information they need to better target their messages to users —  and doing so without sacrificing user privacy. In the present wild and woolly Web, those goals are often in conflict and, as a result, both targeting and privacy suffer. The result is a lose-lose-lose for advertisers, users and news publishers.

Densmore explains the mechanics of how ITE strategists think they can resolve the conflict in a detailed post this week on the Information Trust website.  The core insight appears to be an effort to avoid a permanent, massive database of personal data about users — what Google, Facebook, Amazon and others have and what ad-technology companies aspire to — in favor of distributed user data that gives marketers and advertisers the information they need for better targeting but without compromising user privacy.

How would ITE work in practice?

Imagine a financial services company that has begun a campaign for a new retirement package aimed at affluent householders who may be ready to take a second look at their current retirement plans. The campaign is targeting women because they are often the key decision makers in household financial planning. The women are at least 45 years of age, may or may not have their own careers and may have various attributes of identity and behavior that indicate they would be attracted to messages about a new financial plan promising to give them and their spouses better financial protection when they retire.

In this hypothetical example, the initial focus of the campaign is in Winnetka, a lakeshore suburb north of Chicago, and nearby communities that share the same demographics and where the financial services company plans to open a branch. The company wants to take its message to local women’s organizations, so membership in garden clubs and other such groups is part of the attribute information it is seeking in its queries to the shared database. Queries will also include which digital news publications, like the Chicago Tribune, the users read so the financial planner’s ad agency knows where to buy inventory. Queries could also include information pinpointing where each user is on her “customer journey” — from awareness to familiarity to consideration to purchase — so the right phased message can be sent her way.

The data acquired from the queries runs on the advertiser’s server. It doesn’t require the extensive coding for cookies and scripts that runs on and slows down users’ computers and smartphones. At the same time, all the information that the financial service company gets from its queries is used to target ad specific impressions just one time. The information does not end up on the Internet where it would be vulnerable to being picked up by third parties of questionable ethical behavior — which is what can happen with personal user information sitting exposed in cookies. The affluent women of Winnetka will shape the financial services company’s ad campaign, but they’ll keep their privacy.

The Flatiron District meeting concluded with a strong sense that the elusive balance between user privacy and what advertisers needed in user profile and behavior was achievable. As one participant at the meeting said: “It became clear that the idea behind the ITE — a coordinated, user-centric approach to privacy and identity — was at the heart of the solution.”

Emboldened by the progress made at all four working meetings since the initial “action call” at O’Hare in Chicago, RJI pressed forward with specific “draft” deadlines, ranging from “immediate” to 90 and 120 days and six months, to launch the prototype, recruit members, secure funding and have a fully functioning ITE “proof of concept” demonstration by mid- or late summer of this year.

I asked Densmore if he held his breath when he announced those deadlines to the task groups: “We all work best with deadlines. Without a specific time frame, it is too easy to focus on thinking rather than doing.”

The Information Trust Exchange, for all its new clarity and the confidence it’s winning in news publishing and advertising, still needs a lot of work before its concept can be declared proven. The priority right now is more detailed conversations, including with potential technology partners: “It’s important that we figure out how to take our best shot and enter the fray at the right time with the right idea,” said Picht. “I’m optimistic that we’re closer than we’ve ever been in doing just that.”

Click here to see Part 1 of this column.

Tom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of hyperlocal news network Local America, and is also working on a book about the history, present, and future of Charleston, S.C.