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How marketers and agencies can address increasing privacy regulation

October 10, 2019 | By Maureen Morrison, Independent Marketing Consultant @maureenmorrison

Privacy has been in the spotlight more than ever before. Tech giants like Facebook and Google have been scrutinized in congressional hearings, fined, and are under investigation from the Department of Justice, dozens of states attorneys general, and the Federal Trade Commission.

Regulation has taken hold via GDPR. Now on the immediate horizon is the California Consumer Privacy Act, which is set to go into law Jan. 1, 2020. (And other state laws are on the horizon.) Though it is less comprehensive than GDPR, CCPA is the first significant data privacy law in the U.S. and will therefore set a precedent for how companies comply to privacy regulations stateside. It also effectively ends what has long been an environment of self-regulation.

These laws certainly impact how players outside the tech giants operate, including client-side marketers and agencies. Media buyers and sellers, for example, are left to make sense of how to handle the demands of reaching targeted audiences at scale while also not alienating potential customers by mishandling data or using it in a way that makes them uncomfortable.

Privacy is, unsurprisingly, among the top concerns for executives in the industry, given the potential to affect how they target their advertising. A survey from Marin Software polled marketers across categories and asked them what challenges will most impact their businesses in 2019. Atop the list was data privacy, tracking restrictions and ad blocking.

Legal fragmentation

CCPA allows people to know who is collecting their data, what is being collected, and with whom that data is being shared. Businesses of a certain size will be required to comply. As of now, the CCPA is not yet finalized, though approval of amendments are expected to finish this month.

What the ad industry wants is one national law. Four industry trade groups, including the ANA, formed a coalition called Privacy for America to lobby to “Congress to ensure federal online privacy legislation is less strict than a law scheduled to go into effect in California in 2020,” according to Reuters.

Dan Jaffe, group executive vice president of government relations for the Association of National Advertisers, said of the ANA’s problems with CCPA: “At the most fundamental level, it is that it is a single state law. We don’t think that privacy rules work on a state-by-state basis. The business has already gone through a substantial amount of fragmentation and that is only going to increase in 2020 unless there is a federal law passed that preempts state laws.”

Last year, tech giants like Google, Facebook, IBM, and Microsoft began lobbying the Trump Administration for a gentler federal law – one that would override CCPA. However, unless something major happens, it looks like the CCPA may set the tone for how online companies approach privacy in the U.S., at least in the near term. And the marketplace will have to respond quickly.

Privacy now

But despite cries for a federal law, CCPA will soon go into effect. So, what are agencies and marketers to do in the near term?

While companies have already had to make adjustments to comply with GDPR that can apply to CCPA, CCPA is  “still a bit of ‘wait and see,’ given that there are still negotiations taking place and amendments being made,” said Jon Taylor, SVP of Global Data Strategy at WPP media agency Essence.

However, the looming California regulation will almost certainly affect media buys and plans, according to Taylor. This could result in more contextual-based ads  (versus behavioral targeting based off cookies) and ads that are targeted to more general audiences. “Agencies and marketers need to be able to work more seamlessly across a spectrum of aggregated, normative data and granular, programmable data where it’s available. This may result in media plan that feature more generalized targeting options, but these are hopefully informed by more robust insights.”

For agencies, said Taylor, the challenge is around vendors and “predicting how these same new rules and regulations will affect partner offerings. For instance, the advent of GDPR saw some companies completely pivot their business models (Tapad), change the way data could be accessed and used (Google) or even exit the Eurozone completely (Verve).”

When agencies and marketers work together, Taylor says that “more marketers should bring their legal practitioners into discussions with their agencies around privacy issues” to ensure enforcement is happening everywhere along the supply chain. After all, “agencies have excellent points of view of these issues, and a broad market view, but are also not legal practices.”

First- and third-party data

Outside of agencies and marketers working together to ensure compliance, there is the issue of the growing importance of first party data. Tanya Forsheit, Partner and Chair of Privacy and Data Security Group, Frankfurt Kurnit Klein & Selz, told the Wall Street Journal that  transparency will be required, and that marketers and other companies like ad-techs, agencies, exchanges and intermediaries, will be among those held accountable. “Marketers will have to rely more on first-party data, the information they get from having a direct relationship with the consumer. They will rely less on third-party data that they don’t collect directly.”

Some, however, are concerned that the reliance on first party data resulting from privacy protections will only strengthen the hold that Facebook and Google have on the marketplace.  “It’s actually concentrating power and market leverage within the walled garden, because they have certain advantages, direct relations with consumers,” Adam Solomon, CMO of marketing technology platform Lotame, told Ad Age.

“The effects of regulation mean that the walls of the walled gardens only seem to get higher. But conversely, the likelihood that those platforms will ever share data between them – for the benefit of the marketer – only seems to get lower… In a sense, our industry is at an all-time low in terms of data portability,” said Taylor.

About the author

Maureen Morrison is a writer and consultant, working with agencies, startups, publishers and brands on editorial and communications strategies. She previously was a reporter and editor at Ad Age for 12 years, covering agencies, digital media and marketers.

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