AMS Colloquium: New Marketing Technique Changes Online Advertising

Flashy, sometimes aggressive advertisements bombard web-goers when they visit sites like Facebook, Hulu and even the Wall Street Journal, but how do companies know if their ads are effective? What does effective even mean in the context of online advertisement?

Datalogix, a data analysis company based in Westminister, CO, strives to answer these questions and help companies determine the effectiveness of their advertisements both online and offline.
Don Hussen, Head Measurement Analyst at Datalogix, visited Colorado School of Mines as a part of the Applied Mathematics and Statistics (AMS) Colloquium series in order to speak about Datalogix and its approach to connecting advertisers to top consumers.

Hussen noted that although consumers spend 35 percent of their time online, they spend 93 percent of their money offline. Datalogix collects data as to what advertisements consumers see from sites like Facebook. They also collect transaction data from loyalty cards or phone numbers used at stores. Hussen explained how that data is linked. “I am sure you have a loyalty card on your keys or you provide a phone number when you go into a King Soopers,” Hussen said. “That information can then tie that transaction and the products to that particular ID. That ID then becomes available to do a third party match. So that’s where that third party transaction data can be linked. You bring in the advertising activity and the purchasing activity from web, retail, and phone and you pull that into the Datalogix database.”

Clear laws, however, prevent companies like Datalogix from storing sensitive data such as credit history or social security. Any type of sensitive information cannot be located with the data Datalogix collects. “All of (the data collection) is being done on what is called hash IDs. There’s not a John Smith who comes through here and a John Smith who comes through there,” Hussen said. “All the information is resolved into a 16 digit or 24 digit character that comes through, and there is a way to link that information. All of that personal, identifiable information is stored elsewhere and cannot be linked. “When we work with this data, we are working with household ID 1234567 got this ad and shopped at this particular location.”

Mining information about people, no matter what the information pertains to, raises concerns especially after information about NSA surveillance of private citizens leaked last May. However, much of the reason Datalogix is in business and able to mine data is due to the nature of the Internet.

“Why is the internet free? Why are consumers able to go and get all of this great content and be able to search around? It is because advertisers are paying for it,” Hussen said. “As part of that, advertisers are asking for better measurement, better ability to be able to understand whether their media is effective or not. So when you scrub your cookies or use your loyalty card, those are mechanisms being used to give you free content.” Datalogix gives consumers the option to opt-out of tracking.

“You actually have the option on our site to opt-out of measurement,” Hussen said. “A lot of [consumers opt out because] they do not quite understand what we are doing with the data.” Consumers who choose to not opt-out, however, will likely experience a more personalized add experience online, as advertisements will be tailored to fit individual taste.