As marketers seek alternatives to third-party cookies and electronic privacy issues continue to surface, the advertising industry must quickly come up with new solutions, writes Steven Roberts.
A recent report from the Information Commissioner’s Office (ICO) in the UK clearly indicates that the advertising and marketing sectors will continue to face significant data protection challenges in 2022.
The Commissioner’s opinion, published at the end of November 2021, underlined the UK Data Protection Authority’s ongoing concern about how individuals’ personal data is used for marketing purposes. He highlighted technologies such as real-time bidding, where users’ personal data is shared with thousands of potential advertisers. It called for “meaningful accountability”, describing a complex system that lacks the clarity and transparency required by the General Data Protection Regulation (GDPR).
The Belgian Data Protection Authority (BPA), on the other hand, seems ready to declare that the transparency and consent framework used by IAB Europe is not valid under the GDPR. This framework was put in place by the industry body in response to the settlement, with the ambition “to help publishers, technology providers, agencies and advertisers meet the [GDPR’s] requirements of transparency and user choice”.
Fraud issues and third-party cookies
There are also other factors at play. Experts such as Dr. Johnny Ryan and Dr. Augustine Fou have pointed to the extent of potential fraud in technologies such as programmatic advertising. A recent survey by the Association of National Advertisers found that 70% of online programmatic ad spending (about $140 billion out of $200 billion) doesn’t actually reach the consumer. It was lost due to various factors including “advertising costs, fraud, blind impressions…and unknown allocations”. A similar study of PwC in the UK showed that “for every pound spent by an advertiser through the programmatic ecosystem, around half of that amount… reached the end publisher”.
Web browsers including Firefox and Safari have taken notice, blocking the use of third-party cookies on their platforms. Another “knell” will sound when Google Chrome, the world’s dominant browser, institutes a similar policy in 2023. In this context, Google and other providers are looking for other ways to target consumers, without the need for third-party cookies. . Current proposals, such as FLoC, appear to be as complex and opaque as the systems they seek to replace. Meanwhile, major retailers are identifying opportunities to leverage their extensive proprietary databases, with Tesco and Boots having recently introduced platforms for advertisers.
Implications of the ICO advice
Irish marketers may rightly wonder what effect the ICO report will have, following the UK’s recent exit from the EU. Its impact is likely to be felt in the following ways:
- This puts additional pressure on the current advertising ecosystem of one of the largest advertising economies and markets in Europe.
- It maintains the momentum seen within European supervisory authorities to push for greater compliance in the way personal data is used for online advertising purposes.
- It is increasingly putting online advertising on the radar of compliance and legal teams, fueling concerns that their companies’ marketing activities are potentially in breach of GDPR and ePrivacy laws.
The last point is particularly noteworthy. While marketers have long known the need to find alternatives to third-party cookies, they have to some extent avoided scrutiny from compliance teams regarding online advertising. This is partly due to the complexity and opacity of programmatic technologies.
As 2022 approaches, it’s clear that the momentum for change within the advertising industry is set to accelerate. For operational reasons, marketers must find alternative strategies to the use of third-party cookies.
In addition, programmatic and real-time auctions will continue to come under scrutiny from European data protection authorities. As marketers look for other options, two emerging trends appear to be a return to context-based marketing and increased use of first-party data, the latter being bolstered by large retailers such as Tesco providing new platforms. -forms allowing advertisers to target their customers. When it comes to the third-party cookie, it remains to be seen if technology platforms can find a less complex replacement that delivers strong advertising results while addressing fraud and privacy concerns.
Steven Roberts is Head of Marketing at Griffith College. A Certified Data Protection Officer, Fellow of the Chartered Institute of Marketing and Vice Chair of the Compliance Institute’s Data Protection and Information Security Task Force, he is the author of Data protection for marketers: a practical guide.