Home News Opinion: Further Data Challenges Lie Ahead for the Advertising Industry

Opinion: Further Data Challenges Lie Ahead for the Advertising Industry

As marketers look to find alternatives to third-party cookies and issues relating to e-privacy continue to surface, the advertising industry needs to rapidly come up with new solutions, writes Steven Roberts.

 A recent report from the Information Commissioner’s Office (ICO) in the UK makes clear that the advertising and marketing industries will continue to face significant data protection challenges in 2022.

The Commissioner’s Opinion, released in late November 2021, outlined the UK data protection authority’s ongoing concern at how individuals’ personal data is used for marketing purposes. It highlighted technologies such as real time bidding, where users’ personal data are shared with thousands of potential advertisers. It called for ‘meaningful accountability’, describing a complex system that lacks the clarity and transparency required under the General Data Protection Regulation (GDPR).

These concerns are not new. Supervisory authorities such as the Commission Nationale de l’Informatique et des Libertés (CNIL) in France have long expressed similar issues with how individuals’ personal information is obtained, processed and shared under the current AdTech model. The CNIL has backed this with action, and in recent weeks has issued fines of €150 million and €60 million to Google and Facebook respectively. These penalties have been imposed because in the CNIL’s view the platforms do not allow individuals visiting their sites to ‘refuse cookies as easily as it is to accept them’. Website cookies could be accepted with one click, whilst to reject them required more actions to be taken.

The Belgian Data Protection Authority (BPA), meanwhile, looks set to rule that the Transparency and Consent Framework used by IAB Europe is invalid under GDPR. This framework was put in place by the industry body in response to the Regulation, with the ambition to ‘help publishers, technology vendors, agencies and advertisers meet the [GDPR’s] transparency and user choice requirements’.

Fraud concerns and Third Party Cookies

There are other factors in play too. Experts such as Dr Johnny Ryan and Dr Augustine Fou have highlighted the scale of potential fraud in technologies such as programmatic advertising. A recent survey by the Association of National Advertisers found that 70% of online programmatic advertising spend (approximately $140 billion of $200 billion) did not actually reach the consumer. It was lost due to a variety of factors including “ad fees, fraud, non-viewable impressions… and unknown allocations”.  A similar study by PwC in the UK showed that “for every £1 an advertiser spent via the programmatic ecosystem, around half that amount… made it to the end publisher.”

Web browsers including Firefox and Safari have taken note, blocking the use of third-party cookies on their platforms. A further ‘death knell’ will be sounded when Google Chrome, the dominant browser globally, institutes a similar policy in 2023. Against this background, Google and other suppliers are seeking alternative ways of targeting 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, large retailers are identifying opportunities to leverage their vast first-party databanks, with Tesco and Boots recently introducing platforms for advertisers.

Implications of the ICO’s Opinion

Irish marketers may rightly ask what effect the ICO’s report will have, following the UK’s recent exit from the EU. Its impact is likely to be felt in the following ways:

  1. It places further pressure on the current advertising ecosystem, from one of Europe’s largest economies and advertising markets.
  2. It maintains the momentum seen across European supervisory authorities to push for greater compliance in how personal data is used for online advertising purposes.
  3. It puts online advertising increasingly on the radar of compliance and legal teams, in turn fuelling concerns that their companies’ marketing activities are potentially in breach of GDPR and ePrivacy laws.

The last point is particularly noteworthy. Whilst marketers have long known the need to find alternatives to third party cookies, they have to some extent avoided significant scrutiny from compliance teams regarding online advertising. Partly this is due to the complexity and opacity of programmatic technologies.

As we move in to 2022, it is clear the momentum for change within the advertising sector is set to increase. For operational reasons, marketers need to find alternative strategies to the use of third-party cookies.

In addition, programmatic and real-time bidding will continue to come under considerable scrutiny from European data protection authorities. As marketers seek other options, two emerging trends appear to be a return to context-based marketing and an increased use of first party data, with the latter being reinforced by large retailers such as Tesco providing new platforms for advertisers to target their customer base. As for the third party cookie, it remains to be seen whether technology platforms can find a less complex replacement solution that delivers strong advertising results whilst 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 Chairperson of the Compliance Institute’s Data Protection and Information Security Working Group, he is the author of Data Protection for Marketers: A Practical Guide.