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Tags containing: "privacy"

Advertising | Perspectives | Revenue

Building your sandcastle in the privacy sandbox

Last year we warned about the imminent approach of a new consent economy, born out of privacy regulations, that would completely reshape the ad tech ecosystem publishers have used to develop their monetization strategies. To no surprise, it has arrived with consent and first-party data as the new currency. The consumer now has a seat at the table and the ecosystem is experiencing a total rebuild of itself as we speak.

Now that the consumer has a louder voice, and with regulation forcing the issue, the major tech titans are at war with one another to emerge as the frontrunner in establishing privacy enablement. Each one is making attempts to change the game by leveraging their technology to align with the calls for privacy from regulators and consumers alike. Certainly, these concerns are legitimate. However, the outsized influence they have in the space allows them to take a favorable position. In particular, they can corral everyone in their ecosystems into their new privacy sandboxes. 

Apple’s sandbox

Applying Apple’s rules within their ecosystem isn’t new. They were making moves around privacy long before the other tech giants. Publishers felt the loss in monetization when Apple began blocking third-party cookies in Safari. With Apple’s eyes now aimed squarely on the Identifier for Advertisers (IDFA) and strict adherence to the terms of use around it, publishers must adapt to yet another rule change and monetization threat. By controlling a large percentage of a premium market, Apple has the power to make rules everyone will be forced to follow. 

If DSPs believe IDFA is the only and best buying signal, publishers and suppliers will need to prepare to support it to comply with advertiser demand and ensure inventory is eligible for DSPs to bid on. Yes, publishers can still monetize without the IDFA signal. But if a buyer wants to transact utilizing IDFA vs. a publisher’s own first-party data signal, what choice does a publisher really have? 

Google’s sandbox

Google, on the other hand, seemed to hope to ride out the waves of conversation around privacy and didn’t eliminate third-party cookies right away. When it became clear the issue was gaining traction and that regulation loomed, they introduced their own sandbox. Through the introduction of the Federated Learning of Cohorts (FLoC), Google is essentially proposing privacy policy that ends up favoring their ecosystem more than it already has given their existing ad tech stack dominance around the globe.

With Chrome currently accounting for 46% of browser share and Android accounting for 40% of the mobile operating system market share in the U.S., publishers will find themselves forced to play along yet again to a rule change that they had little influence in formulating. As of this writing, Google will be the one defining the FLoC cohorts (their version of IDFA) and allowing publishers the opportunity to feed their data into the respective cohorts. Peculiarly, they will be the only player able to do cross-site tracking and attribution, leaving publishers with little influence on garnering their fair share. 

As a result of these big tech players calling the shots and the rest of the industry trying to figure out how to play in this new world, other players have also begun building sandboxes. For example, The Trade Desk is working with independent industry organization Prebid.org to introduce a Unified ID 2.0 and Magnite introducing a PARROT proposal. Globally, there are many other ID initiatives also in development as the entire industry tries to figure out how to thrive in these new sandboxes. 

Build your sandcastle 

As with any change made by big tech, it is in the best interests of publishers to adopt an agnostic view in attempting to evolve strategies for each respective sandbox. Regardless of which sandbox you’re playing in, you must build and fortify your own sandcastle.

The first step in doing so is to remember that big tech needs the publisher in this equation. Why? Because the publisher is the one collecting user consent and in control of the first-party data, which are the key components of trade in this consent economy. This is why it’s critical to defend data at all costs and only use it as leverage for garnering a fair share of the transaction with advertisers. 

Creativity rules

With third-party cookies dead and gone, advertisers will still seek to trade around audience and context. With publisher first-party data the most critical and stable component to monetization, developing strategies for understanding and monetizing audiences in a cookieless world remains a priority. 

Publishers will need to leverage new offerings to provide advertiser options in scenarios of consented and non-consented traffic. For example, non-consented traffic can be supplemented by semantic data points or other valuable, non-identifiers. Industry inflection provides an opportunity for publishers and advertisers to come together to discuss how to best reach and speak to the consumer via varying deal types or placements.

Despite the flux around the ecosystem’s evolution, there’s no time to waste in beginning to build your castle to ensure you’re getting your fair share. By remaining engaged and being protective of your data and your partners, you can begin to lay a foundation for establishing your place in the sandbox. As the topic depends on the outcome of future decisions, it’s important to stay informed on its evolution and to ensure your castle is strong enough to withstand any future headwinds. 

Industry-Research

Consumers say they value their data privacy, but do little to protect it

Online data collection continues to dominate the digital industry’s dialogue. Rulings on data practices are evolving as more states propose and pass consumer data protection and privacy acts. Building a framework around privacy offers an opportunity for digital publishers to showcase their direct relationships with consumers. However, consumers need to be a part of the process. They need to understand the specifics of data practices and how to implement the necessary protocols.

Maintaining data privacy

Most consumers do not know how to take meaningful actions to prevent the collection and usage of their data online. Entrust, a data privacy company, conducted a study among 500 adults in the U.S. and U.K., to better understand consumer sentiment around this topic. The findings show that eight in 10 consumers (79%) are somewhat or highly concerned about their data privacy. Further, more than eight in 10 consumers report they are proactive in maintaining data privacy. However, consumers do very little to protect their data. 

Entrust’s survey results show that consumers mainly ignore general terms and data collection notifications of apps and services. Only 43% of consumers say that they carefully review the terms and conditions before downloading a new app or service. Another 28% do not read the terms and conditions because they know they will not understand them.

Research conducted by Digital Content Next (DCN) last year also confirms that consumers have a limited understanding of how to protect themselves from data collection practices. The DCN study shows that consumer knowledge and actions are limited in knowing how to opt out of data collection.

Consumer value exchange

Consumers report a willingness to share their data for personalization. Eight in 10 consumers (83%) are somewhat comfortable with using or storing biometric data with apps and services. Close to two-thirds of consumers (64%) are willing to share information with an app in exchange for more relevant, personalized, and convenient services. Further, 61% report that they are at least somewhat willing to share personal information with an app in exchange for more transparency and control over their data.

Consumer data concerns are growing. Six in 10 consumers (64%) report that their concerns about data privacy increased over the past 12 months. Sixty percent of consumers report the increased concerns are due to the news they hear about data breaches and cyberattacks. Almost half (48%) say their increased concerns stem from the growth of targeted ads based following them online.

Generation segmentation

Across multiple generations, we see an admission of defeat in efforts to maintain their data privacy online. More than half of Gen Z (54%) report it takes too much time to manage their data across apps and services. Over a third of Millennials (37%) report they do not think they have much control over their data. Another four in 10 Gen X consumers (42%) accept privacy terms and conditions as part of using apps. Baby Boomers (41%) report that they don’t know where to start in terms of maintaining their privacy online.

Consumers understand the need for websites and apps to collect online data. Importantly, there is also a willingness on their part to exchange their data in a transparent manner for better services and new products. However, the complexity of maintaining their data privacy is stressful. Consumers want an easy, seamless, and transparent process. Fulfilling this request leads to a more valuable, loyal and trusting audience.

Advertising | Perspectives

3 trends that will define media success in 2021

Covid-19 hit some sectors of the media industry hard (live sports, concerts and trade shows). The global entertainment and media industry saw its largest revenue decline in more than two decades. However, the pandemic has also presented an opportunity for companies embracing digital strategies that are aligned with consumer trends and expectations. 

Disney, for example, lost over $6 billion in revenue from the closure of its theme parks. But Disney+ reached 50 million subscribers worldwide two years ahead of schedule. In January, Fortune – once just a print magazine – announced its redesigned website, an immersive video hub, and other premium offerings. All of this strongly positioned them strongly to counteract the advertising slump that hit the industry last spring. In October, the company launched Connect, a membership community and online platform for purpose-driven, mid-career professionals. 

Here are three trends we’re likely to see this year: 

1. The relationship with the content consumer matters more than ever. 

Cookies were a convenient crutch. They were the building blocks for digital advertising and helped drive revenue for media companies as they transformed. Now that cookies are nearing their end, some companies are panicking while others are evolving. The ones that succeed will be the ones that focus on creating a continuing relationship with the consumer. This means engaging with them differently, through a soft or hard paywall, or as a curated member experience (e.g. Fortune Connect). This not only preserves advertising, which is a significant source of revenue, but opens the door to new, diversified revenue streams.

The ultimate death of the cookie will turn out to be a blessing for the media industry, even if it creates disruption in the short term. Necessity drives innovation. The cookie’s demise will revamp the way companies post content and interact with their consumers. In 2021, we will see even more innovative media business models that will define the coming decade. 

2. Pandemic-driven changes won’t revert. 

There is no going back, so let’s embrace the change. Let’s highlight some of those changes. In the first 28 days on Netflix, The Queen’s Gambit was watched by 62 million households. No, it didn’t reach M.A.S.H. season finale numbers of 106 million. However, M.A.S.H. aired on a major broadcast network at a time when there were only a few. 

We’ve seen an acceleration in media companies following in Netflix’s footsteps. Peacock is betting on a network show that first aired in 2005 – The Office – to drive premium subscriptions at $5 a month. Who is the largest audience for that show? People who aren’t old enough to have worked in an office. 

Just as the music industry needed to evolve and find new ways to engage and monetize consumers when streaming took off, so must media companies. Experiments bringing what would have been blockbuster movie releases like Mulan, Soul, and Wonder Woman 1984 to Disney+ and HBOMax will forever change, but not completely destroy, the theater industry. (Alamo Drafthouse-like experiences may well be the theater experience of the future). And let’s be clear, the definition of media is evolving. Consider Peloton: a fitness company? Sure. A hardware company? Maybe. A media company? Absolutely.

Successful media companies aren’t embracing a move to digital. They are disrupting their own legacy business models to become digital. Spectator events have become intimate digital experiences. (Think DJ D-Nice spinning to 120,000 live viewers including Diddy, President Joe Biden, and Janet Jackson on IG Live in the early days of the pandemic). 

Sporting events are better with fans in stands. However, sporting experiences can, and should be, complemented with connectivity to the players, drivers and coaches. Leagues have already embraced fantasy sports, but could they openly embrace sports betting? And are there opportunities to connect with online gaming to create a full-surround fan experience, digitally? 

It is critical to focus on the consumer and how they consume and where they consume and providing new ways to consume – directly. This will create new and stronger revenue opportunities.

3. Legacy media companies can succeed. But they have an uphill climb ahead. 

Legacy media companies have the most to gain from transformative change. However, they start at a massive disadvantage compared to new media companies like Complex Networks and Spotify. (Yes, Spotify particularly with the acquisition of podcast content companies such as Gimlet). 

These brands and what they represent have lasting value. However, they demand reinvention with a focus on digital channels, habit-forming digital products, multiple streams of monetization and libraries of content. When Maven bought Sports Illustrated last year, it did so with the intent of “revitalizing and strengthening” the publication for a new era by focusing on technology. 

Past the tipping point

A recent McKinsey report noted that Covid-19 has “pushed companies over the technology tipping point.” Media companies that want to succeed will have to rethink their digital business models in 2021. And they have no time to waste. 

While most software products were once developed on a 6-to-12-month timeline, the pace of change has accelerated. Consumer expectations are far more immediate. But with the right digital product strategy, the media industry could see a game-changing resurgence in 2021. 

About the author

Chris Hansen is senior vice president of 3Pillar Global’s media and information services client service vertical.

Featured Post | Perspectives | Policy

Why healthy competition would heal our big tech problems

Public policy debates over consumer privacy and platform liability will feature prominently in 2021. Some are even hopeful that policymakers can reach bipartisan agreement on solutions. These are two important issues that I want to explore. However, I wonder if they aren’t the byproduct of a bigger problem.

Consumer privacy: A policy patchwork

One could argue that the digital advertising industry has been “regulated” (even if enforcement was less than robust) since 2010 when the industry’s self-regulation group, the Digital Advertising Alliance (DAA), rolled out its AdChoices program. In 2018, Europe began enforcing the General Data Protection Regulation (GDPR). In 2020, the California Consumer Protection Act (CCPA) came online followed by the November passage of the GDPR-like California Privacy Rights Act (CPRA).

Against this alphabet soup of patchwork regulation, we may be reaching a tipping point. For one thing, more states are expected to pass consumer privacy laws in 2021. Even with pandemic-altered legislative calendars, 16 states nearly passed laws in 2020.

Additionally, Congress has held countless hearings over the last two years to investigate big tech’s massive data collection operations. Those hearings are sometimes painful to watch, but they are serving to educate members of Congress, who appear to be much more knowledgeable now than they were a few years ago. (Remember when one of them asked Mark Zuckerberg how Facebook makes money? Oy.)

As further evidence of an increasingly savvy Congress, there is a bipartisan group of Senators quietly negotiating to craft a national consumer privacy framework. From what I’ve seen and heard, their approach is fairly solid. With slim Democratic majorities in both houses of Congress, this kind of bipartisan approach is the only way that any meaningful privacy law can get passed. However, the deck may be stacked against them. It is difficult to move major legislation with slim majorities in the House and Senate because the margin for error is very small.

All that said, the California laws (CCPA and eventually CPRA) are likely to serve as the de facto national standard. Many companies already apply those laws nationwide, not just for California residents. Besides which, most of the big tech giants are based in California. While the CCPA was a strong first law designed to give consumers more control over how their data is collected and used, CPRA is directly targeted at curbing Google and Facebook’s massive data collection and profiling operations.

GDPR has a similar focus. However, Google and Facebook have employed creative compliance strategies that have allowed them to temporarily evade a direct hit to their businesses. The big question is whether European and California regulators can force big tech companies into finally complying with the spirit of these consumer privacy laws. Fines are fine. But the laws were actually intended to empower and protect consumers.

Section 230: A Tale of two parties

Often referred to as “The 26 Words That Created The Internet,” Section 230 became a target of both political parties in 2020. Prominent Republicans and Democrats — including each party’s Presidential nominee — have called for the elimination or massive overhaul of Section 230. And yet Congress is not all that close to resolving anything.

The problem is that each party’s concerns lead them to propose different solutions. Democrats and Republicans both agree that big tech platforms have too much market power. Hence, the flurry of antitrust lawsuits filed by a Republican Department of Justice (and likely to be carried forward by a Democratic Department of Justice) and a bipartisan flotilla of state attorneys general.

With regard to Section 230, however, Democrats criticize tech platforms for not taking action quickly enough to combat disinformation, harassment, and demagoguery. Republicans, on the other hand, allege that big tech companies use the legal shield of Section 230 to suppress conservative speech. Essentially, Democrats want tech companies to do more while Republicans want tech companies to do less. These fundamentally different viewpoints are likely to make it difficult for Congress to agree on any big changes to Section 230.

Big picture, bigger issue

What’s interesting to me is that the public policy debates around consumer privacy and Section 230 are largely driven by dominance and anticompetitive behavior of big tech companies. I wonder if we would even be having these debates if Google and Facebook faced meaningful competition.

The aforementioned alphabet soup of consumer privacy regulations was developed to address consumer concerns about the ubiquitous and non-transparent collection of consumer data for use in behaviorally targeted ads. The two most dominant players in the digital ad industry, Google and Facebook, have built massive ad targeting businesses (basically the digital equivalent of junk mail), which are fueled by the collection of consumer data across the web and our lives. The duopoly, as we have called Google and Facebook for years now, accounts for 70 to 80% of the growth in the digital advertising marketplace. Much of this advertising is delivered on their own properties regardless of where they mined the data.

With regard to Section 230, the original intent of the law was to incentivize companies for making “good faith” actions to clean up their services. However, without meaningful competition among digital platforms, those companies are merely incentivized to protect themselves against legal action as opposed to competing for consumer loyalty.

Anticompetitive by design

Imagine a world where Facebook and Instagram were separate companies competing for consumers. I think they would be vying to prove which company would be the best at snuffing out disinformation, stamping out illegal activity, and generally providing the most trustworthy service.

Significantly, when Facebook was first launched, it touted a super strong set of privacy protections and controls to differentiate from the established market players at the time. But not now. The “like” button was originally designed as a user signal to show content interests. It has become an opaque means to track people’s movement around the web. Facebook’s business model is so reliant on tracking users it ran a national ad campaign last month to publicly pressure Apple to blink on its plan to restrict the use of its advertising identifier (IDFA). And let’s not forget that Facebook only reluctantly and belatedly de-platforms hate groups and removes disinformation.

If there was meaningful competition, big tech platforms would behave very differently within the industry and for consumers. The latest bit of evidence that Google and Facebook agreed to cooperate rather than compete with each other was particularly appalling. The two dominant players in digital advertising decided to carve up the market for themselves while icing out everyone else. The fact that the agreement exists at all is quite amazing. Perhaps more amazing is that these two companies had enough chutzpah to even engage in the negotiation in the first place. In many ways merely confirmed what many industry insiders already suspected. It’s the Duopoly’s world and we’re just living in it.

While we engage in meaningful and important debates about consumer privacy and the responsibilities of companies in a digitally-dominated world, let’s not lose sight of the fact that the competitive landscape is heavily tilted in favor of the big tech companies. The antitrust lawsuits and regulatory scrutiny faced by Google and Facebook are hugely important for restoring a heathy dose of competition, which could alleviate some of the downstream public policy concerns.

Advertising | Perspectives

To thrive in the post-cookie era, web publishers must act now

As we enter a new year, most tech departments look to create a product creation and upgrade schedule for the year, which then gets divided into two or three-week sprints. As publishers undertake that process this year, I have two overarching thoughts:

First, recent events continue to suggest  that Google will deprecate the third-party cookie by the end of this year. As a CTO, it seems to me that publishers must deploy minimal but real changes to code-on-page to take advantage of new identity marketing solutions.

Second, most publishers declare a “code freeze” in the fourth quarter due to heavy advertising volume. Indeed, with its lower ad volumes, the first quarter is when publishers typically implement new technical capabilities.

These two facts lead me to recommend that web publishers immediately begin to deploy the code associated with new identity resolution services. This will allow them to capture the highest revenues, avoid hectic scrambling, and minimize technical risk.

Will Google eliminate the third-party cookie on schedule?

Early last year, Google announced it would eliminate third-party cookies “within two years.” Subsequently, Google officials stated that this timetable might be delayed, mainly if the industry’s replacement solution was not in-place.

At BritePool, we believe Google will follow-through with its original timetable. At a recent PRAM (Partnership for Responsible Addressable Media) meeting, Stu Ingis, chairman of the Venable law firm, discussed the urgency of completing PRAM’s work (in conjunction with the IAB Tech Lab) to be prepared for the elimination of third-party cookies.

Similarly, eMarketer recently spoke with industry experts to review the changes confronting advertisers and publishers that will have “significant effects on how they do business.” This list prominently included “Google’s planned deprecation of third-party cookies in Chrome by early 2022.”

But won’t Google provide a lengthy notice period?

Google’s initial announcement included a schedule, with a two-year period, for the adtech ecosystem to prepare for the demise of third-party cookies. There is no reason to believe Google will provide an additional lengthy notice period before acting. It is easy to imagine that at the start of this year’s fourth quarter, Google will simply confirm that by the end of the year, it will eliminate third-party cookies, as planned.

How does this fit into privacy reform?

BritePool’s COO previously wrote that a Democratic election victory would lead to national privacy legislation. Now, Republican concerns associated with social media “censorship” mean a bipartisan consensus for legislative reform is developing.

In this firmament, we believe Google will conclude that it will benefit by following Apple with privacy-centric browser management. Moreover, Google officials who suggested the possibility of delay indicated Google would act when the industry is ready.

Now, multiple industry solutions are available.  For example, BritePool and LiveRamp have both demonstrated the viability of their cookieless identity resolution offerings. And PubMatic has launched its Identity Hub.

My advice? Act now

eMarketer concluded its review by stating, “It’s critical for advertisers to start testing approaches to targeting these types of users and measuring results now—while the traditional signals are still available for them to make comparisons.” My advice for web publishers is the same: It is critical to start implementing new cookieless targeting capabilities.

Acting now benefits publishers in multiple ways. It eliminates the high technical risk potentially associated with scrambling to adopt identity resolution services late this year. Publishers gain experience by running pilot campaigns with these new capabilities and can optimize their offerings for 2022. Finally, it increases the CPM’s for programmatic traffic throughout this year, in part by accessing the users of Safari and Firefox browsers, which currently block third-party cookies automatically.

Editor’s note: This article was submitted, and set for publication, before this week’s Wall Street Journal article confirming that Google would eliminate third-party cookies. This Journal reporting reinforces the significance of the related analyses in this article.
Advertising | Perspectives

Why cohorts is a privacy detour the media industry should avoid

With the end of cookies and Mobile Advertising ID’s fast approaching, there is no shortage of discussion about ways to maintain some form of user identification. We need to figure out how data-driven advertising will work within the scope of privacy regulations and technical possibilities. Lately, this debate has revolved around two very different strategic approaches: shared user IDs and cohorts.

Shared user IDs

Shared user IDs aim at solving three main issues related to third-party IDs (and their disappearance):

  • The inefficiencies related to cookie matching and the drop off between platforms using different identification framework. This renders up to 50% of web-based user data and inventory to be unusable.
  • The need for user IDs to be accessible to 3rd parties to the main web server. Instead, these will be replaced by a shared first-party ID, which the server itself provides.
  • The need for greater control around the usage of IDs and associated data, particularly concerning privacy preferences expressed by users.

On paper, shared user IDs are a very efficient and privacy compliant replacement for cookie-based IDs. Their main challenge is adoption by publishers and technology platforms as a scalable alternative to third-party identifiers. Like any currency, their value grows exponentially with usage. This implies a limited value to start with and a difficult take-off (the infamous “chicken and egg” challenge). The next few months will be critical for shared identification solutions to establish themselves as viable and scalable alternatives to third-party identifiers.

Cohorts

On the other hand “cohorts” approaches aim at grouping users into segments to avoid user-level data distribution. They have become a topic of discussion following Google Chrome’s Privacy Sandbox experiments. Cohorts have even been presented as the solution to privacy concerns. They are not.

Cohorts are merely a way to avoid the problem. The approach aggregates people’s data  to pretend that we are treating them as groups rather than individuals. However, no regulation prevents marketers and publishers from addressing individuals. Instead, it requires those individuals to be informed about the data that is collected on them, how it is processed, the purpose of that processing, and to say whether they are ok with it.

A personal approach

Is it better to harass a group of people who have seen a particular product on a website until they buy it? Or is it better to engage in conversation with a single person to understand whether they are truly interested in the product and should be shown the ad?

Personal data is not the problem; it is how we use it that matters. Circumventing privacy by grouping personal data into “cohorts” and pretending we’re off the hook is a way to trick the letter of the law. However, more importantly, it is a way to trick users from the transparency and choice they deserve. And also, maybe, this is a way to trick the Open Web into using suboptimal methods to identify people and leverage marketing data to power advertising investments.

Another critical issue is that this may provide an opening for the large platforms to – in all impunity and under the disguise of (forced) consent — to exploit the largest “personal data vacuums” ever created.

The road to a privacy-first shared user identification future is a bumpy one. Using cohorts may seem like a safe way to avoid the bumps on the road. But they are merely a detour. And as often, taking a detour is longer and less efficient. This is particularly true if that road is controlled by an entity that can raise the toll price at will.

Perspectives

How to survive in the consent economy

Our previous article outlining the birth of the consent economy warned that the initial waves of privacy regulation in the U.S. are growing stronger. The recent news that California voters passed Proposition 24 proves the point. It also elevates conversation around what the future may hold in terms of national regulation, especially given California’s large influence on the tech industry.

Proposition 24 is better known as the California Privacy Rights Act (CPRA) and builds upon the existing California Consumer Privacy Act (CCPA) passed in 2018. CCPA left room for interpretation, particularly around whether selling targeted ads qualified as selling California residents’ personal information. The CPRA goes one step further in expanding the rights of California’s citizens through new consent definitions among other things. 

While the CPRA won’t be enforceable until 2023, it could severely impact publisher revenue. The added uncertainty around any federal or additional state regulations coming out prior to the deadline makes immediate action a smart choice. If stricter federal regulation rolls out, it will be important to have set the groundwork that will give yourself a head start.

Anticipating what’s to come 

The European privacy regulation landscape offers parallels, that can and should be drawn from, as we face a similar trajectory.

The existing CCPA borrows heavily from the “right to be forgotten” principle enshrined in the European Union’s General Data Protection Regulation (GDPR). To make it easier for publishers to process first-party user data and to obtain consent in compliance with the rules laid down by GDPR, the IAB Europe created the Transparency & Consent Framework (TCF). 

As the shortcomings of TCF v 1.0 became apparent, TCF v 2.0 was introduced to clarify and strengthen the regulatory framework. This dialing up of control measures is exactly what we’re seeing play out in California with the passage of CPRA as an addendum to the CCPA.  

The CCPA limited “selling” data. However, the CPRA is closer in nature to the relationship between the GDPR and TCF by now including restrictions on sharing of personal information as well. Publishers will be required to allow citizens to opt-out and the CPRA. It requires that all third parties with whom a data owner may have sold or shared information be notified as well.   

This new regulation also establishes an enforcement arm. This would be the first agency dedicated to privacy rights enforcement in the U.S. The five-person board will appoint a Chief Privacy Auditor in a structure similar in nature to the GDPR’s European Data Protection Board. In this latest version, California will now have the authority to levy larger fines, which has already occurred with GDPR violations. 

The lessons learned from GDPR and CCPA can help anticipate the future. There’s no doubt that publishers are entering challenging territory with these regulatory demands and the concerns around ad blocking further compounding the path to protecting and growing revenue. Publishers should only be fearful if they are unprepared in their strategy for how to monetize both a consented and non-consented user.

Revenue diversification in the consent economy

The time is now to challenge old belief systems. With the passage and evolution of new regulations, one must begin taking the first steps in the inevitable long-term journey towards revenue diversification. The reality of garnering 100% consent has shown itself to be elusive, if not impossible. In European markets, depending on the country, we have seen anywhere from 50-80% consent adoption. With outcomes like this, having a proper plan in place will enable you to monetize both consented and non-consented traffic, starting with how your ad server is configured and building the initial infrastructure.

When a user provides consent, most of your current monetization partners and policies will be fine and won’t require additional changes. When user consent isn’t provided, a shift in tactics is required. You’ll need to work with partners that will still have the ability to serve ads when user consent is not present. And keep in mind that you should always beware any provider who requires access to your user data to do this. In these situations, contextual targeting and semantic targeting can serve as effective and compliant alternatives.

Even when ad supported situations are off the table, other options exist. A subscription-based limited- or ad free experience, as we’ve seen publishers like Business Insider and The New York Times create, offers additional revenue streams while still staying true to the essence of your brand. 

Another option is to consider ecommerce as it aligns with your brand and brand experience. Publishers like BuzzFeed, Hearst, and Meredith have taken this route through online stores, licensing agreements, and product development. These additional revenue streams increase the long-term value of your audience while still providing value. 

Welcome to the new frontier

This new frontier can be intimidating. However, publishers who successfully diversify revenue streams will be positioned best for long-term sustainability. With the user now occupying a seat at the table, the consent economy can also be seen as an opportunity for publishers. 

Respecting the wishes of the user always pays in garnering trust and attention. This balance between respecting data privacy and delivering on expectations for personalized interactions, not only protects existing revenue, but could also lead to revenue growth through new audiences. Taking the first step now sets you on the path to positioning yourself well for survival in this new consent economy. 

Advertising | Perspectives

To understand where the cookie is headed, let’s look at its history

Note: This is the first article in a two-part series.

Almost a year ago, Google announced that Chrome would sunset support for third-party cookies by the end of 2021. These days, the discussion of the replacement technologies for “life after cookies” dominates the digital media industry press. The IAB’s Project Rearc, Google via its Privacy Sandbox, and multiple companies (including BritePool) have all developed or pledged to create technologies that will power advertising in the cookieless future.

To develop a perspective on third-party cookies and what should replace them, this is a deep dive into the cookie’s history.

Cookies came from a virtual shopping cart

The cookie was created in June 1994 by Lou Montulli. He was a programmer working at what would become Netscape Communications Corp., best known for its once-dominant web browser. Montulli was working on an e-commerce app for Netscape client MCI, which had effectively asked for a virtual shopping cart (a novel idea at the time).

Montulli and his team devised a way for the Netscape browser to place small files on a website visitors’ computer that tracked what each visitor did on that site. This allowed the telecom giant to avoid placing the data on its servers.

Grand ambitions with inherent problems

In a 2001 interview with The New York Times, Montulli said that he designed cookies to be a flexible tool, with the potential to be “a next-generation communications system.” He said, ”We wanted people to be able to use it for other uses” besides shopping carts. That included ”things we hadn’t thought about.”

In April 1995, a working group was established to propose a set of standards for cookie usage. David M. Kristol, a scientist at Bell Laboratories, led the group. But the longer the group collaborated, the greater its concerns about how cookies might invade consumer privacy.

Original restrictions to protect consumer privacy

According to the Times, the engineers developing cookies sought to avoid “a privacy nightmare” by deciding “not [to] identify web users by name” and rejecting “an idea for creating a single ID number that a person’s browser would use in all Web explorations.” Montulli said, “We didn’t want cookies to be used as a general tracking mechanism.” Instead, protocols required that sites assign a unique ID number to a visitor’s computer, one that could only be read by the issuing site or a sister web property.

At the time, the ability for companies to circumvent this restriction was foreseeable. A Dutch member of the 1995 working group, scientist Koen Holtman, warned that companies could, by agreement, place cookies across a network of related sites. Those cookies would be able to track user activities at multiple sites across the web.

Advertising co-opted the cookie

Holtman proved prescient as companies began working to do what he predicted. Soon DoubleClick, Engage, and others were serving banner ads across thousands of websites, using a shared cookie that allowed the issuing company to recognize a visitor wherever he or she went on the web. This innovation allowed these companies to control users’ ads as they moved from one site to another.

In 1996, to potentially provide privacy protection, Netscape and Microsoft both altered their browsers to distinguish “cookies coming directly from the site being viewed from third-party cookies.” This initiative proved meaningless, as consumer browsers automatically accepted third-party cookies by default.

In 1997, in a last-ditch effort to protect consumer privacy, Kristol’s working group tried to thwart the use of cookies for advertising tracking, recommending that browsers automatically block third-party cookies. This effort failed as Netscape and Microsoft’s Internet Explorer embraced these so-called third-party cookies despite Montulli’s protests.

Montulli described the advent and ascendance of third-party cookies, for advertising tracking, as a surprise. ”That’s the one ‘gotcha’ we had,” he told The New York Times.

Similarly, Lawrence Lessig, a Standard Law School professor and leading expert on the Internet and public policy, made this observation: “Before cookies, the web was essentially private. After cookies, the web becomes a space capable of extraordinary monitoring.”

Lessons for today

This brief history suggests two takeaways for managing the next quarter-century of web advertising:

First, while most of the critical technologies for web operations reflect several generations of development, the cookie, a 1990’s technology, has remained the fulcrum for Web advertising delivery. In essence, outdated technology is now central to managing over $300 billion in global annual spending on digital advertising.

Second, the initial development of cookies raised privacy concerns, which led developers to deploy safeguards. Subsequently, ad management firms circumvented these restrictions. Hence, it was inevitable that the unchecked and unregulated expansion of web advertising would invade consumer privacy.

Next (Part II): Privacy Ascendant and Life After Cookies
About the author

Bruce Judson is Vice President of Communications at BritePool. His 1996 book, NetMarketing (Random House/Wolff), was a sleeper bestseller which accurately anticipated the rise of the web as a powerful vehicle for the direct sale and marketing of products and services.

Featured Post | Perspectives | Policy

Here are 3 big changes coming for digital media

In case you haven’t heard, there is an election coming up in a couple of weeks. Regardless of which party wins, the public policy landscape for digital media is likely to undergo some major shifts in the next couple of years. Let’s take a look at three big changes on the horizon:

Google and Facebook will pay for premium content

In 2019, the European Union approved the Copyright Directive and underlying publishers’ right, which gave news publishers legal leverage to demand better terms from platforms. Now, all eyes are on France where a court ruled earlier this year that Google must negotiate in good faith with publishers. Of course, Google will avail itself of all the legal channels to slow down any effort to force them to pay for content. However, it’s likely just a matter of when, not if.

On the other side of the globe, in 2019, the Australian Competition and Consumer Commission (ACCC) to develop a voluntary code to rebalance the relationship between news organizations and big tech platforms. As the latter predictably dragged their feet, the ACCC switched gears earlier this year and moved to the development of a mandatory code, which appears likely to be easily approved by the Australian parliament in 2021.

In response, Google and Facebook have threatened to drop news from their services and/or pull out of these markets altogether. However, we know these are empty threats. For one, there’s common sense. If Facebook’s news feed and Google’s search results were devoid of trusted news organizations, what kind of miserable consumer experience would that be?

Really, given the massive profit margins of these tech companies, and the political scrutiny they are facing on multiple fronts, it makes sense for them to simply buy their way out of this problem. Case in point: Earlier this month, Google launched Google News Showcase, which will pay out approximately $1 billion in licensing fees to a select group of news publishers. As News Corp’s CEO, Robert Thomson, noted, “…the principle and the precedent are now established.” My take: Google sees the writing on the wall and is trying to get ahead of regulators in an effort to set the market.

Also, earlier this month, the House Judiciary Committee issued a lengthy report that summarized their investigation into big tech platforms and laid out a host of legislative solutions. One of those proposals would allow news publishers to collectively negotiate terms with platforms like Google and Facebook. It’s pretty clear which way the wind is blowing. Platforms will pay for premium content in the not-to-distant future.

Consumer privacy laws will impact data collection and profiling, especially programmatic advertising

The EU’s General Data Protection Regulation (GDPR), which went on the books in 2018, was meant to give citizens new rights and protections over their data. Since then, the common narrative from big tech’s apologists has been that GDPR didn’t work. It only resulted in annoying pop-up notices while Google and Facebook cemented their dominance in digital advertising.

I dispute the narrative that GDPR didn’t work. It hasn’t been enforced…yet. The most significant enforcement action to date has been a French court ruling (currently under appeal) that Google improperly gained consent from consumers, which resulted in a $50 million fine. The resolution of that case could have huge implications for the entire industry, not just Google.

Meanwhile, Google, Facebook, Apple, and other companies claim Ireland as their European headquarters, which gives primary jurisdiction to Helen Dixon, Ireland’s Data Protection Commissioner (DPC). Last month, in response to a European court ruling, she announced that Facebook and other companies could not transfer data about European citizens back to the U.S. because the U.S. does not have equivalent privacy safeguards. In response, Facebook sued the DPC and declared that they might pull out of the European market if this ruling stands. (Sound familiar?)

At the same time, there are hundreds of cases pending before the Irish DPC, any one of which could have wide-ranging ripple effects. Adding to the pressure for her to act, the Belgian data protection authority issued an initial finding just last week that the IAB Europe’s Transparency and Consent Framework (TCF) is not compliant with GDPR. While the IAB Europe is expected to push back on these findings, the ruling could have massive implications worldwide for programmatic advertising, in particular the real-time bidding systems for open exchanges.

According to the United Nations, 132 out of 194 countries have enacted some kind of data privacy law – many of which are modeled after GDPR. This November, California voters are likely to approve a ballot initiative called the California Privacy Rights Act (CPRA), which will align California’s privacy law much more closely with the GDPR.

Of course, Google and Facebook have enormous legal and lobbying budgets that they will leverage to forestall regulation and enforcement for a time. But, eventually, the same public pressure that led to the enactment of GDPR and other data privacy laws will lead to the enforcement of these laws, which are primarily targeted at limiting the ability of big tech platforms to collect data about consumers.

Platforms will soon face new responsibilities and liabilities

Policymakers on both sides of the Atlantic seem to be hell-bent to make platforms more accountable for what’s happening across their services. This morning, the U.S .Department of Justice, along with 11 state attorneys general, filed suit alleging anticompetitive practices by Google with regard to the search marketplace.

The suit does not lay out specific remedies but could include breaking up pieces of Google into separate companies and/or imposing new obligations on the company. While the suit is likely to take years to play out in the courts, it dramatically ramps up the pressure on Google while also ensuring the conversation will remain top of mind for policymakers. It’s also widely expected there will be additional suits filed by the bipartisan state attorneys general who have been investigating Google on a range of practices including digital advertising.

Meanwhile, members of both political parties in the U.S. have expressed grave concerns about the anti-competitive practices and dominance of the big tech platforms. Democrats have expressed additional concerns about the impact on democracy, news organizations and vulnerable segments of society. Republicans have lambasted the platforms for allegedly suppressing conservative speech.

Importantly, both parties agree that platforms’ algorithms should be transparent. They think regulators should have greater authority to oversee their actions and mergers. And both sides believe that that Section 230 protections should be significantly narrowed. The CEOs of Google, Facebook and Twitter will likely be walking into a political minefield next week as they testify to Senate Commerce on this sensitive topic under threat of subpoena.

In Europe this month, European Commission Vice President Margrethe Vestager announced plans to move forward by the end of this year with two major legislative initiatives designed to impose a whole new set of obligations on big tech platforms. These big tech companies used to be the darlings of innovation. Now they are nearly uniformly seen as impediments to economic growth and democracy.

What does all this mean for publishers?

Taken together, these three unfolding and inevitable changes should provide a unique opportunity for premium publishers. Obviously, public policy debates are messy. And lawmakers and regulators don’t have the best track record in terms of truly understanding tech.

But, as we’ve seen with enforcement action in Europe, investigations by various competition authorities and hearings before the US Congress, policymakers have gotten a lot savvier and are poised to act in bold, new ways. Going forward, companies that enjoy trusted, direct relationships with consumers and advertisers are likely best positioned to flourish in a world where premium content and contexts will have greater value.

Perspectives

Everyone’s talking about ID, but it’s consent that really matters

After years of intense adtech ecosystem development, we’re moving towards a more mature and controlled market, driven in part by rising concern around the use of personal data. From the privacy laws of Germany and France in the 1970s through to the IAB’s Transparency and Consent Framework (TCF) and GDPR in the EU, the scope of these regulations has grown along with the increasing levels of concern. 

Europe has led the way in implementing privacy regulations in the past. However, citizens everywhere want greater transparency, choice, and control over how their data is used. The waves of privacy are now crashing upon all shores. None of us can continue to operate with our heads buried in the sand. In the US, the floodgates have opened with the implementation of CCPA in California and the upcoming vote to expand it. 

In a 2019 Pew Research Center study, 79% of U.S. adults expressed concern around how companies use the data collected about them. Given that 57% also reported following privacy news very closely, it’s safe to say it won’t be long before the other 49 states follow California’s lead. The key to adapting quickly to current and future regulations without negatively impacting revenue lies in setting a solid foundation based upon respectfully addressing citizen privacy demands.  

The birth of the consent economy

With the introduction of each new set of regulations, it’s clear that we’re shifting towards a new era of consent. As third-party cookies disappear, consent will be required to counterbalance the loss of user ID to continue to target effectively. While most of the industry conversation has been focused on ID alternatives, the real value lies in consent and the power that it carries.

Average publisher revenue is estimated to decline by 52% without access to third-party cookies and expenditures on data management solutions increased by 9.8% last year. However, advertising depends on the delicate balance between the interests of the publisher, the advertiser and the citizen. This new economy aims to maintain the balance of the scales by establishing consent with data as the new currency.

To prevent revenue losses, strengthening relationships with your audiences by integrating privacy into your core operations is key. This, combined with regulation, serves as a catalyst for change. Standard consent permissions clear up confusion and maintain data integrity. Building an informed and fully-consented audience isn’t just the right thing to do, it helps increase the value of your audience.

How publishers regain control 

With the current lack of global industry-wide standards, navigating this stormy sea of tangled regulations can be a challenge. The need to add resources to manage compliance can be a pain point, but it’s clearly important to protect revenue. Choosing the best tech partner can help remove some of this burden from your internal teams and allow for better balance between business needs and regulatory compliance.

Consider the following questions: 

  1. Privacy and consent needs to be at the core of your monetization strategy. Is it currently?
    What consent management platform and framework are you using/adopting?
    Is your platform set up to handle the regions where your traffic originates?
    Are you ready to handle consent from all environments: display, in-app, video, CTV?
  1. Define your data processing and data privacy practices
    What are the practices you and your partners employ?
    What is your provider doing with the data it collects on your assets?
    Does that conform to your strategy and plan and do you trust they have your best interests at heart?

    A publisher’s first party data coupled with consent is their ultimate leverage point. You should protect it at all costs. Adtech companies’ interests must align with the publisher’s. Adtech should be your partner – not your competitor.
  1. How will you and your adtech provider manage opt out traffic? In the consent economy you will not receive 100% opt-in.
    Will your adserver be able to serve non-personalized ads when users have opted-out of sharing their data?
    How can semantic and contextual targeting help you develop valuable audience segments?
  2. Under GDPR you are legally responsible for managing consent choices. Are you clear on the policies and procedures of your adtech partners?
    Can you ensure control over how your audience data and consent is processed throughout every single one of your tech partner platforms? Or, will you be forced to share data at your own risk?

    Get this part wrong risks fines, which have gone into the billions of dollars.  

We are all aware global consumer consent regulations will continue to be adopted/adapted around the world. Being anchored from the start will help you chart the best course through the tides of this new consent economy for the short, medium, and long-term. 

Industry-Research

Consumers believe that data privacy is a human right

As we know, data monetization is big business for many companies in the digital ecosystem. It’s an integral and lucrative part of programmatic sales’ third-party ad targeting capabilities. However, most of this data is collected, sold, and used without consumer consent.

Given the steady increase in the value of data and data collection, consumers are growing ever more concerned about their privacy. In fact, a new study from KMPG, finds that nearly all U.S. consumers (97%) report that data privacy is a concern. The majority of consumers (87%) view data privacy as a human right. And, unsurprisingly, consumers worry about what companies are doing with their data (54%).

Seeking governance

In light of new regulations in place, General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the U.S., privacy is a critical focal point in digital media. Front and center are new data protection laws to guide the online data collection process.  

Consumers overwhelmingly align with the above legislation. More than 90% agree that the data privacy rights of the CCPA should extend to all Americans. Along these lines, four in five (84%) consumers say that they are open to state legislation giving consumers more control over their data.

Importantly, Americans want companies to be transparent in their data collection and usage. They seek regulations similar to GDPR. Nine in ten respondents (91%) agree they have the right to delete personal data and the right to know how their data is being used.

Paying closer attention to online data practices

While U.S. consumers are paying more attention to how brands use their data, they also need to take steps to secure their privacy. KMPG’s research shows that consumers engage in risky online behavior. Eight in ten consumers think it’s a risk to use the same password on multiple digital accounts (78%) or to use a credit card online while on public Wi-Fi (75). Yet, more than 40%, respectively, participate in both of these activities.

Covid 19’s impact on privacy practices

The Covid-19 pandemic also presents data privacy concerns. Three-quarters of Americans are thinking more about data privacy issues during Covid-19. However, a majority are willing to share their personal information to keep others safe and to return to work faster.

Strong willingness to share personal data to safeguards others against Covid-19:

  • 89% would allow places/employers to take their temperature.
  • 85% would share their COVID-19 diagnosis with their employer.
  • 67% would share their personal location data to help track COVID-19 cases.
  • 67% would share their lifestyle information as it contributes to COVID-19 exposure with their employer.

Ad tech companies collecting online data and advertisers using it must rethink the programmatic scenario. GDPR and CCPA are important industry reset buttons, even if forcibly, toward an ecosystem of transparency. It’s the right step to renewing consumers trust.

Advertising | DCN-Research

It’s time to align data practices with consumer expectations

From General Data Protection Regulation (GDPR) regulations in the Europe Union to the California Consumer Privacy Act (CCPA), consumer privacy is a focal point for digital media. These new data privacy and security laws speak to the need to reassess the collection and use of personal information in the digital media ecosystem. Importantly, it is time to review consumer expectations around current online data collection practices.

To better understand consumer expectations with online data collection practices, Digital Content Next (DCN) surveyed a nationally representative sample of adults in the U.S. Over the past few years, DCN has also queried consumers to better understand expectations for Google and Facebook, as public examination of tracking by major tech platforms became a critical focus.

Get personal

Overall, consumers expect websites and apps to collect data about them to personalize, protect and improve their experience. In sharp contrast, consumers do not expect outside vendors to collect data about them for reuse or sale.

When consumers are asked specifically about their expectations about the data practices of outside vendors, few are comfortable with the future reuse (38%) or the sales (24%) of their data. Interestingly, when consumers are provided with a clear explanation of how their data will be used and the benefit (i.e. such as collecting online data to identify consumers across devices), their expectations better align with the practice (47%).

Opt out

Understanding there is an option to be tracked shows low awareness. Only half of all U.S. adults (52%) report that they are aware of ways they can choose not to participate in online data collection.

Consumers also report a limited understanding of what it means to “opt out” or how to opt out of online data collection. Fewer consumers stated they opted out of online data collection or will in the next 30 days (40% combined) than those who do not know how to or do not understand what it means to opt out (44% combined).

How to

Unfortunately, the top consumer actions for opting out of online data collection are quite ineffective. Deleting cookies or turning them off often results in turning off both 1st and 3rd party cookies. First-party cookies offer consumers a seamless log-in and authentications process for subscriptions and memberships. Removing these cookies, can actually lead to a frustrating user experience. Regrettably, the “Do Not Track” signal is ignored by many tech companies. Also, consumer use of ad blockers penalizes the entire media ecosystem including the publishers and their advertisers.

Expectations

As an outcome of opting out of online data collection, most consumers expect more privacy, a better internet experience and enhanced security.

The research findings show the importance of aligning data collection practices with consumer expectations. Consumers do understand the need for websites and apps to collect online data. However, there’s a major disconnect with 3rd parties reusing in the future or selling this data. Importantly, it’s critical to understand what consumers demand, align expectations to those demands to help grow trust in our industry.

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