Web giant analyzes more than 200 million inboxes for clues about what products people might buy—a practice much of Silicon Valley has declared off-limits
The U.S. tech industry has largely declared it is off limits to scan emails for information to sell to advertisers. Yahoo AABA +0.24% still sees the practice as a potential gold mine.
Yahoo’s owner, the Oath unit of Verizon Communications Inc., VZ +0.20% has been pitching a service to advertisers that analyzes more than 200 million Yahoo Mail inboxes and the rich user data they contain, searching for clues about what products those users might buy, said people who have attended Oath’s presentations as well as current and former employees of the company.
Oath said the practice extends to AOL Mail, which it also owns. Together, they constitute the only major U.S. email provider that scans user inboxes for marketing purposes.
.. Yahoo’s practice began more than a decade ago and expanded over the years, said a person familiar with the matter. The company has increasingly looked for new ways to wring revenue out of its aging portfolio of web properties, which have stagnated in the era of smartphones and social networking.
.. When Verizon created Oath last year, it envisioned the new unit as a future advertising rival to Google and Facebook Inc. for its potential to marry data on Verizon’s vast pool of wireless subscribers with Yahoo’s highly trafficked online hubs, Verizon executives have said.
Oath owns dozens of popular websites, such as HuffPost and Yahoo Finance. It helps advertisers show messages on these sites as well as across the web, using a variety of ad-placement services.
.. Email scanning has become one of the company’s most effective methods for improving ad targeting, said Doug Sharp.. Mr. Sharp said that being served ads is part of the trade-off users make in exchange for free online services, and that Yahoo’s research shows they prefer ads that are relevant to them... Oath promises to give advertisers an edge by identifying groups of users who have bought certain products or services based on the receipts, travel itineraries and promotions in their inboxes.. Google said it stopped targeting ads based on Gmail data last year, saying it wanted users to “remain confident that Google will keep privacy and security paramount.”.. Google already collects so much data from its search engine that it no longer needed to rely on email data.. Oath’s email scanning appears to go a step further than Google’s former system, by creating interest profiles of users based on the data in their email and using that intelligence to target them elsewhere on the web... Yahoo Mail users who receive frequent emails about driving for Lyft Inc. are sometimes placed into a “self-employed” audience, Mr. Sharp said. Some people who bought several plane tickets in the past year are labeled frequent travelers.. Oath uses receipts in Yahoo Mail inboxes as proof that an ad campaign convinced a user to buy a product.. Oath’s new privacy policy prevents users from filing class-action suits and instead requires them to pursue their grievances through arbitration or small-claims court... In 2015, Amazon stopped including full itemized receipts in the emails it sends customers, partly because the company didn’t want Yahoo and others gathering that data for their own use
WhatsApp suggests a cure for virality
Other tech firms should watch and learn
Services such as Facebook and Twitter are built to maximise “virality”, making it irresistible to share, like and retweet things. They are getting better at it: fully half of the 40 most-retweeted tweets date from January last year.
.. Virality can cost lives. At least two dozen innocent people have been lynched in India this year after bogus rumours warning of child abductors went viral on WhatsApp, a messaging service owned by Facebook. WhatsApp has also been used by political operatives in India, its largest market, to stoke religious and nationalist fury.
.. Starting this month, however, users of WhatsApp will find it harder to spread content. They will no longer be able to forward messages to more than 20 others in one go, down from more than 100. In India the upper limit is just five and WhatsApp has removed the “quick forward” button from audio, video and images, adding an extra step to the process of sending content.
.. The goal is not to prevent people from sharing information—only to get users to think about what they are passing on. It is an idea other platforms should consider copying.
.. Sceptics point out that WhatsApp can afford to hinder the spread of information on its platform because it does not rely on the sale of advertisements to make money.
Slowing down sharing would be more damaging to social networks such as Facebook and Twitter, which make money by keeping users on their sites and showing them ads. Their shareholders would surely balk at anything that lessens engagement.
.. Facebook’s shares fell by 23% in after-hours trading this week, partly because Mark Zuckerberg, its boss, said that its priority would be to get users to interact more with each other, not to promote viral content. Yet the short-term pain caused by a decline in virality may be in the long-term interests of the social networks. Fake news and concerns about digital addiction, among other things, have already damaged the reputations of tech platforms. Moves to slow sharing could help see off draconian action by regulators and lawmakers.
.. Instagram, a photo-sharing social network also owned by Facebook, shows that you can be successful without resorting to virality. It offers no sharing options and does not allow links but boasts more than a billion monthly users. It has remained relatively free of political content and misinformation.
.. Move slow, don’t fake things
The need to curb virality is becoming ever more urgent. About half the world uses the internet today. The next 3.8bn users to go online will be poorer and less familiar with media. The examples of hoaxes, misinformation and violence in India suggest that the capacity to manipulate people online is even greater when they first gain access to digital communications.
Small changes can have big effects: social networks have become expert at making their services compulsive by tweaking shades of blue and the size of buttons. They have the knowledge and the tools to maximise the sharing of information. That gives them the power to limit its virality, too.
The Conference Call That Shook Investor Faith in Facebook
Chief Executive Mark Zuckerberg opened the call just after 5 p.m. Eastern time by saying the company had“a solid quarter.” He crowed about Instagram, calling it an “amazing success” and said he believed that the unit grew twice as quickly under Facebook than it would have solo. About 12 minutes into the call, Chief Operating Officer Sheryl Sandberg chimed in, providing her usual litany of examples of how advertisers were adopting its various ad tools.
There were few signs that anything major was amiss.
And then around 5:20 p.m., Chief Financial Officer Dave Wehner addressed analysts and dropped one bombshell after another, rattling investors and raising red flags about whether Facebook’s powerful moneymaking machine is starting to sputter.
First he said the advertising revenue growth slowed down more in Europe than anywhere else in the world partly because of new privacy laws there. That was a bit jarring, as most investors had come to believe the new law that went into effect in May would have minimal, if any, impact.
Then, he noted that the overall revenue growth rate wasn’t just slowing in the second quarter, but would continue to do so in the third and fourth. He partly blamed “currency headwinds” and new privacy options for users but also revealed that new ad formats such as those within Instagram Stories weren’t pulling in the same amount of money as ads shown in the Facebook and Instagram feeds.
Operating margins, Mr. Wehner added, would fall to the “mid-30s” from about 44% currently over the next few years, stemming in part from investments in security and safety.. Mr. Wehner and Ms. Sandberg noted that Facebook had yet to feel the full effects of the new European privacy laws. Mr. Wehner pointed out that Facebook would see a hit to revenue growth owing to changes to its products that would boost privacy.
“The question is will this monetize at the same rate as News Feed?” Ms. Sandberg replied to one question about the moneymaking potential of Stories. “And we honestly don’t know, we’ll have to see what happens.”
.. Ms. Sandberg replied: “I mean, even at decreasing growth rates, we are still growing and predicting growth at very healthy rates.”
.. they must grapple with the question of whether Facebook, too, has limits.
.. “While the company is still growing at a fast clip, the days of 30%+ growth are numbered.”
Thomas Middleditch of ‘Silicon Valley’ on Doing Verizon Ads and Flying His Own Plane
Awkwardly funny moments just seem to follow Mr. Middleditch, 35, a wide-eyed actor from the small Canadian city of Nelson, British Columbia, wherever he goes.
.. Richard Hendricks’s defining attribute may be his gracelessness. Do you share any of that with him?
Hey, man, I’m smooth. I’m cool as a cucumber, baby.
.. It’s not as if I’ve never been awkward myself. I’m a big gamer, so I’ve had access to that type of personality. I used to go to these LAN parties, that was before high-speed internet. The only way you could get lag-free gaming was to haul these huge computers to people’s houses. There was always some guy who was potentially on the spectrum, who knew everything about troubleshooting all the network issues and was crucial to the whole thing.
.. Ten, 15 years ago, if you were on a successful TV show or in a movie, and you did a commercial, everyone would go, “Oh, his career’s over.” But now, it’s the opposite. Studios look at it and go, this major corporation put a ton of money behind this person — he must be marketable. You get your sellout money and a nod from studios.
.. Can you text and fly?You can. Honestly, when everything is on autopilot, there’s nothing else to do. My writing partner and I took our script and got work done while we were flying.