YP Knows Everywhere You Go And Everything You Want
YP’s David Peterson is bringing a sharper focus to mobile advertising. His secret? He can track everywhere you go, right down to the aisle. And it’s all totally legal.
Like it or not, advertising is still a big deal when it comes to talking profit in the tech world. Even Google — who has long thought about how to break out of ad-based revenue — still relies on it for much of what they pull in. Last year, of their $59.8 billion annual revenue, 85 percent of that came from advertising.
So it only makes sense that the ad-sector has grown considerably smarter in order to keep up competition and demand.
Marketers, for years now, have sought out information from Facebook and Twitter to target users with more applicable ads. Apps like Foursquare took this one step further with location-based data.
For the most part, for any company to collect that information, that requires the user to actively opt-in. They have to actually open an app on their device and click “like” or “I’m at Quiznos” or tweet “Yo @Quiznos, I just ate your sandwich.”
“The places you go say a lot about who you are as a person.”
This kind of activity can get a bit clunky for even the most wired user (part of the philosophy behind leading tech concepts like Google Glass and the Internet of Things is to create a more passively wired life). Chances are, if you find actively updating information on the go semi-clunky, you aren’t updating at a constant rate. For advertisers, that’s a problem.
Meet David Peterson. Former chief executive officer of Sense Networks, a venture-backed New York company that analyzes data from millions of people to understand their behavior as consumers. As of January, Sense was bought out by YP, currently the largest purveyor of local ads in the U.S., and Peterson is now their vice president of mobile advertising.
Under YP, Sense looks beyond the type of information offered from active check-ins — and even beyond simple IP address data that gives away the city from where you are browsing or tweeting. Instead, they look at a constant stream of hyper-localized information.
If you spend a lot of time walking through Target, that goes into a profile captured by YP. Go to Dunkin’ Donuts, but not Starbucks, they’ll log it. Frequent the bars in the morning; eat fast food every once-in-a-while; sit on the couch a lot and YP will know. Industry insiders refer to this as “geofencing.”
“The places that you go,” Peterson explained, “say a lot about who you are as a person,” appearing on the NPR program On Point. “That’s very interesting for advertisers.”
When you opt-in to any app that analyzes location data points (and that means any — think Angry Birds), it is likely that information will be shared anonymously with YP’s advertising or a similar service.
“We look up every one of those data points and we say, ‘what does it say about you as a user?’” explained Peterson.
This type of location marketing builds user tags based on that data. If you frequent the airport on weekdays, YP will likely peg you as a businessperson. That information, in turn, will be used as a basis for the ads you receive.
“You are just a number…we don’t know who you are at all”
For some users, this level of knowledge can set off alarm bells. For others, not so much.
“Personally, I don’t find this kind of thing particularly disturbing,” says Hiawatha Bray, author of the new book, “You Are Here: From the Compass to GPS, the History and Future of How We Find Ourselves.”
“Companies like this are indeed trying to be careful about not revealing information about individuals,” Bray continued, also appearing on NPR, “but it does give them the ability to profile populations that they can sell to advertisers.”
Peterson agrees, but with one important note. “You are just a number,” he said, “we don’t know who you are at all.”
The company keeps track of special app-generated IDs that are both unique and persistent over time (formerly the UDID, before Apple rejected apps that use it). No names, no ages (notably, this was the same argument made by NSA chief Gen. Keith Alexander following the backlash over the agency’s bulk phone data collection).
Those profiles are retained by YP as a third-party between you and whatever company is looking to advertise to you. “We don’t actually sell the data,” said Peterson, “we have advertisers come to us who are interested in talking to users who do various things.”
Sense Networks has worked with apps like The Weather Channel, Text Now and Pandora to deliver the most relevant ads to users.
For Peterson, relevant is the name of the game and to achieve that, he is building deeper sense of context. Not just what interests a user, but what they will actually be more likely to buy. Advertising based on “vertical categories,” as he calls it.
But Peterson and YP are also paying a lot of attention to what one is more likely to buy in terms of price ranges.
“Alert someone to a half-price sale on soap at a nearby store and he might pop in,” writes Bray in his latest book, “but hardly anyone will pull off the highway and into the mall because his phone announces a half-price sale on flat-panel TVs.”
So, for YP, it’s up to David Peterson to figure out exactly how to find the happy medium.
Asked what the future holds, Peterson says he does not see a major increase in advertisement volume.
“We already see a reasonable number of ads,” he said. “What we’re really talking about is the difference between seeing ads that are useful or interesting to you, and ones that are not.”
Correction: An earlier version of this article misstated the form of tracking data as UDID. This was consistent with Sense Targeting until Apple released a replacement for the UDID to avoid privacy issues. YP (having aquired Sense) now uses a combination of data, including speical app-generated IDs.
