Every industry analyst reaches that point in time when he says to himself that he “really needs to get on top of _____ before it becomes unmanageable.” In an emerging market, it’s important to take an early position and set an agenda for market analysis. For example: the weather’s warm, and lemonade will be in demand. But without such a take on things, suddenly, there are companies coming in the door explaining about the new category of “summer refreshments” explaining how their lemonade is fundamentally different from its core components of water, lemon juice and sugar.

If you’ve ever owned a dog, it’s the same as that feeling of … I’m going to have to take the dog for a walk in the next hour, or the poor creature is going to explode. A sense of impending action that must be dealt with one way or the other.

I’ve been having that feeling for several months about targeted digital advertising. I first raised my concerns in February with my colleague Anette Schaefer. I mapped out the core of my systemic, industry-destructing argument and Anette then asked the obvious question – “do people really want targeted advertising? Or will they respond negatively?” We shelved the idea, because we had other things going on and really needed to build some internal consensus on what may be a strong position against accepted industry thinking.

So when mobile entertainment and advertising guru Linda Barrabee was working on her mobile advertising forecast, targeting reared its ugly head yet again. Linda had placeholders in her forecast to account for some form of revenue acceleration for mobile web display advertising…based upon improved ad performance because of targeting.

At that point, I again put forth the arguments for and against targeting. And I begged Linda to hold off until she and Anette and I could sit down and come to some level of consensus about where targeted digital advertising will go.

Because it’s not just about digital dollars. There are many other traditional types of advertising which offer some form of targeting, be it geographic, demographic, behavioral, psycho graphic or down to the individual and household.

The One, Two, Three Punch
If targeting is the first part of the argument, then there are two other pieces that speak directly to the same issue. And those are subscriber data and social networks.

2) Large network operators — such as cable networks, telecoms carriers, and mobile operators — have been suggesting that they’ll be able to package subscriber data into some form of information product that will be inherently far more valuable than the external data that Acxiom, Dun & Bradstreet, Equifax, Experian, InfoUSA, TransUnion and others provide to marketers each and every day.

The numbers in our analysis have yet to add up. Advertising is more than 30 times the size of the data business here in the US. Things start to look a little more favorable when we go to exclusively below-the-line advertising dollars, but there’s still a significant multiple at play. For now, we’re keeping an open mind.

3) Social networks have been wrestling with ways to monetize their memberships. Targeting has been proposed as a way to do that, though the value of on-site advertising impressions in comparison to off-site impressions has yet to be established. If not targeting, then perhaps re-targeting or maybe neither.

Targeting in Peer Review

So we’ve wanted to get ahead of targeting and formulate some meaningful analysis, but the inevitable has happened. While we were working on other research, webinars and traveling….the vendors have continued to brief our analysts.

Lately, I’ve been peer reviewing quite a number of publications coming from across Yankee Group. And targeting continues to pop up in the expected places. The day after I begged Linda Barrabee to hold off on the targeting discussion in her mobile advertising report, XJ Wang sent over a copy of his report on personalization technologies.

It was a clear argument that personalization engines could be an effective way to drive on-site targeted digital advertising. I took the time to give XJ’s report a thorough read and to think through what I wanted to say to him. Twenty-five comments later, and XJ and I were on the phone. He mapped out his argument about personalization engines. I listened and agreed with his conclusions. Then I explained what I thought we could and could not say in his report.

It was one of those conversations that we live for as analysts — the opportunity to work together to come to a consensus about what we think…and why. And after thirty minutes or so, XJ said something to me worth repeating here:

Oh! Now I understand our disagreement! I’ve written a report that says that personalization engines can enable ad targeting. And you’re saying that you don’t know if there’s even a future for targeting.

The give and take of being an analyst. Or more appropriately the difference between technology and the business of technology. We start thinking about what we can do and how we’d do it. And sometimes the primary constraint is the business and not the technology.

Epilogue

I could say that our peer review process works. I could say that I — like many of my colleagues here at Yankee Group — truly appreciate collaborating with my many-talented peers.

But that’s only part of the story. This is a extremely large dog that needs to be taken for a very long walk.