Data privacy-first advertising is here: Here are the winners and losers

By 2019-08-08News

Data privacy-first advertising is here: Here are the winners and losers originally published on Digiday

It’s a new dawn in digital advertising.

The drive for data privacy-first strategies has become more apparent, spurred by anti-tracking moves made by browsers as well as tighter data protection laws. The knock-on effect is that commercially available data will become less abundant in the years to come. While a considerable part of programmatic ad buying and selling remains reliant on third-party cookies, that’s set to change.

Like with any significant change, there are always winners and losers. Here’s a look at some of them.

Winners:

Contextual targeting
Contextual targeting has gotten a lot sexier again. Many ad executives still refer to Oracle’s $325 million acquisition of contextual ad tech company Grapeshot last spring as a solid indicator that this form of advertising was the future. After all, there weren’t many ad tech businesses selling for such desirable prices last year. In the initial wake of the General Data Protection Regulation’s arrival last May, publishers had enjoyed a bit of a windfall in contextual-targeting buys, as media agencies preferred to err on the side of caution and spend more on targeting methods that weren’t reliant on users’ personal data. But that caution was relatively short-lived for most. Fast-forward to today, and the search for sophisticated contextual targeting options that can mirror the effectiveness that audience targeting has that can be achieved at scale, has become an arms race. Publishers, media agencies and ad tech vendors will all want a slice of the pie.

Authenticated-consent ad buys
Inventory that has bona fide user consent attached will be gold dust. If a publisher has managed to obtain the consent without the need for third-party cookies, all the better. Some ad tech executive sources have predicted there will come a time when some ad tech vendors, to avoid flirting with GDPR fines, will begin to fence off the ability to buy and sell on inventory that has no user consent signal. In time, media agencies may be willing to pay a higher CPM to know it’s consented to.

Scaled log-in strategies
The third-party cookie is becoming a term synonymous with yesterday’s business model. The future is in first-party cookie-based models and other forms of measuring and tracking identity, in a data privacy law-compliant way. Subscriptions publishers are already well into their stride with this approach, having already established free registration as a way to warm up future potential subscribers. Meanwhile, publishers in Germany have formed log-in alliances with other businesses including domestic rivals as well as marketers.

Consumers
Just how much consumers care about their data privacy is a question that gets debated a lot. There is a strong contingent of privacy activists that care a great deal and have voiced their concerns to GDPR regulators over the misuse of their data within advertising. But as for the mass public, media industry opinion is divided over just how much they care, and how much more they may care if they truly understood how their data was used within the buying and trading of ads on the open exchange. But regardless, all this effort is to give consumers more choice and control over how their data is used, regardless of whether they decide to action that or not. There is growing evidence to show that they do care. High-profile scandals, like Cambridge Analytica, certainly help raise awareness, alongside mainstream press coverage of large fines to well-known brands like British Airways for leaking data and, therefore, violating GDPR.

Losers:

Real-time bidding
It may just be a mechanism to facilitate a form of targeting, but real-time bidding is losing its grip as the most effective method for delivering acute audience targeting. That’s largely because it’s under scrutiny by U.K. data protection regulator The Information Commissioner’s Office as a method of ad delivery that misuses personal data and, therefore, flouts GDPR. Privacy activists have likewise made RTB and its incompatibility with GDPR the crux of their argument when lodging complaints against ad tech businesses with regulators. Businesses cannot claim the legitimate interest GDPR clause for using personal data within RTB either, which puts the method under increased pressure.

Third-party cookie addicts
Thanks to Apple’s no-nonsense approach to third-party cookie tracking on its Safari browser, programmatic monetization on that browser is a dead dodo. Same goes for Firefox and Brave browsers which have the same policy. Google has given users the choice as to whether they want to switch off third-party cookie tracking, but there are all sorts of reasons why a consumer may never get round to that, particularly if it means they can’t use Google products in the same way. Time will tell if it has any kind of impact. Regardless, that browser-led trend combined with the challenges around using personal data for targeting thanks to GDPR and other data protection laws, is squeezing the amount of commercially available data for advertisers. Publishers are already dropping third-party cookie-based data management platforms like flies, in favor of ones that are first-party data-centric. Forms of targeting that aren’t reliant on personal user data and third-party cookies, will win out. But any business that sits back and doesn’t evolve and provide alternatives to the third-party cookie will struggle.

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