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Policy

DCN submits comments on CCPA’s revised implementation regulations

Today DCN submitted the final version of comments regarding the proposed revised regulations for implementation of the California Consumer Privacy Act (CCPA) to the California Attorney General (AG). The comments were developed with input from the DCN membership. They are in response to the revised comments the California Department of Justice, Office of the Attorney General released on Friday, February 7, 2020 to address the feedback received on their first draft of regulations, originally published and noticed for public comment on October 11, 2019.

DCN is actively involved and tracking the regulations, created to provide guidance for businesses about what is required under the CCPA, to ensure they take into account the needs of our membership. We’ll continue to review any updates and make sure that our members are up-to-date.

For reference, here are the comments filed by DCN in December 2019 regarding the initial set of proposed regulations.

Advertising | Perspectives | Revenue

Say goodbye to the cookie and hello to contextual

Understanding consumers’ wants and needs is critical for advertising success. These days, having technology that enables these insights is not just nice to have – it is a must have. However, with January’s release of the California Consumer Privacy Act (CCPA), which favors consumer privacy rights and increases limitations on advertising targeting parameters, the ability to predict and target those “wants and needs” based on personal information is becoming increasingly difficult.

As a result, advertisers will undoubtedly need to adjust their strategy to accommodate new and emerging regulations. In January, for example, Google announced its plan to phase out support for third-party cookies in Chrome within the next two years. Rather than attempting to reach their target audience based on data collected from cookies, advertisers will need to delve deeper to define consumer preferences and behaviors. Pivoting media buying strategies toward contextual alignment and partnering closer with content creators will be paramount to reach consumers in the new data privacy regulated world.

At Integral Ad Science (IAS), we conduct an annual survey with agencies, advertisers, ad tech vendors, and publishers to get a sense of the common themes and challenges facing industry leaders in the upcoming year. In our 2020 Industry Pulse Report, data privacy legislation was understandably a point of concern for all parties. In fact, 82% of respondents listed contextual targeting as a key industry trend in the upcoming year.

Publishers have the advantage

This is where publishers are able to regain control. With new standards like the General Data Protection Regulation (GDPR) and CCPA already imposed (and Chrome’s looming 2022 deadline) a decreased ability to rely on cookies will undoubtedly take center stage globally. When it comes to reaching desired audiences, the industry shift toward an increased reliance on contextual and semantic capabilities will put publishers back on top. Not only do we foresee great power in first-party audience data and stronger than ever buyer-seller relationships, but there is also a greater opportunity for publishers to market the true value of their content.

The first step is for publishers to ask themselves: Am I monetizing all of my inventory, and how can I stand out from the crowd? Taking the time to understand their unique inventory landscape will help publishers smartly create packages with delivery guarantees that their advertisers actually want to buy. 

The media buy

According to one 2020 Industry Pulse Report publisher participant, “Data will be the single most important factor. People want to reach specific audiences and, as a publisher, we need to rely on our first party data that has been cleared from a GDPR and CCPA perspective to offer contextual and behavioral targeting for media specific buys.”

However, curating and selling these custom inventory packages by using first-party data is not as simple as it may sound. Publishers need to partner with an unbiased third-party to validate and optimize these custom packages, especially when trying to win back advertiser trust. Now more than ever, advertisers are relying on verification partners to ensure that their ads are placed in brand safe and suitable environments. When asked about the implications of data privacy regulations, a manager at a global media agency noted, “…Ensuring our media is presented in the way the brand intends is now more important than ever.”

And consumers agree: according to the IAS Ripple Effect study, consumers are 30% more likely to remember an ad found in a suitable environment. Publishers leveraging a third-party verification partner who both sits in the epicenter of the ecosystem and provides patented technology to analyze all page content will be one step ahead of the competition. 

The increasing impact of data privacy legislation means predicting and targeting consumer “wants and needs” will become increasingly difficult. Advertisers looking to reach the right consumers in the right context will need to lean heavier on publishers offering contextual and semantic solutions. Content is still king. So, publishers should continue to focus their efforts on creating quality content and then partnering with an established third-party to help intelligently package and promote it. 

Advertising | Perspectives

Digital advertising trends that will dominate publishing in 2020

The digital advertising landscape is constantly—and rapidly—evolving. Both publishers and advertisers will continue to see shifts in their businesses in 2020 as new technologies gather increased market share. Those who can harness these innovations to forge stronger connections with customers will have an opportunity to stand out from the crowd and drive revenue.

Staying on top of industry trends is crucial for brands vying for consumers’ attention. However, it can be equally challenging and time-consuming. The team at Lineup Systems compiled a list of predictions for publishers to kick off the conversation. Here are a few of the key takeaways:

Publishers will optimize for voice search

As we gain clarity on which technologies and business models signal trends rather than fads, voice technology is first in line. Voice began generating buzz in the marketplace in 2019, and its growing popularity is undeniable.

“There’s a lot of potential surrounding voice technology, and how to monetize it is the next challenge,” says Sarah Hartland, marketing manager and editor of Lineup Systems’ industry blog, the Newsroom.

It’s clear that the next generation of consumers will search for and buy products primarily through voice technology. By 2022, 55% of households are expected to own smart speakers. And voice searches are estimated to make up half of all online searches. Voice is on track to become a $40-billion channel. This means publishers need to optimize their digital content for voice search to get ahead.

“It’s very positive that publishers are having discussions around voice even if they haven’t quite nailed down how it’s going to generate revenue,” Hartland says.

Publishers will get increasingly creative with subscription models

Subscription models will continue to be relevant in 2020 and present exciting opportunities to reach audiences. Publishers need only look at the profound impact the direct-to-consumer model has had on the retail industry for inspiration and motivation.

The impressive success of subscription models can be largely attributed to personalization. The curated nature of subscriptions helps alleviate the overwhelm that consumers often experience when faced with too many choices. As a result, people are willing to pay for personalized experiences that one-off purchases simply can’t deliver.

Publishers are taking cues from the subscription box model and creating their own offerings. The New York Times kids’ print subscription is one example of an effort to get children away from screens and build brand loyalty. The Seattle Times is one of several media outlets selling subscriptions on Groupon, while The Financial Times bundles its print and digital content for a set price.

Publishers who make the effort in 2020 to understand how their audience wants to consume their content will reap the benefits of the subscription model trend.

Data privacy regulations will benefit brands

Data privacy regulation is top of mind for advertisers and publishers alike due to the California Consumer Privacy Act (CCPA), effective on January 1, 2020. Compounded with Europe’s General Data Protection Regulation (GDPR) and ePrivacy Regulation, this new law signals that data privacy is an issue the digital advertising industry must continue to grapple with. Therefore, it’s time for publishers and advertisers to get creative.

“Because publishers can no longer rely on third-party data, they have to find or build new consent management platforms with first-party data in mind,” says Tiffany Kelly, digital product manager at Lineup Systems.

It’s crucial that publishers diversify their revenue streams and clearly articulate their value to consumers in exchange for opt-in consent. This will help mitigate the impact of consumer privacy laws on their businesses in 2020 and beyond.

Contextual targeting is part of the solution, because unlike audience-based targeting, it reduces the need to use personal data to reach people and has resulted in purchase intent increases of up to 63%.

“We have to recognize this shift as a positive thing,” says Hartland. “Nuances like double opt-ins and cookies can be a pain to figure out. But it will ultimately lead to some exciting long-term benefits around industry leadership, audience loyalty, and data quality.”

Getting in the game is the only way to win

It’s true that as new technology enters the marketplace, it brings challenges with it. However, brands that can adapt can make this work to their advantage in 2020. Publishers and advertisers who can find creative ways to harness the capabilities of new tech will have an opportunity to strengthen their relationships with consumers and drive revenue.

For seven more trends that will dominate 2020, plus a list of ways you can keep up throughout the year, check out Lineup Systems’ free white paper on digital advertising trends.
Industry-Research

Consumers are excited about 5G connectivity. Less so about escalating privacy concerns

Perhaps the word of the year for 2019 should be “connectivity.” According to Deloitte’s new report, 2019 Connectivity and Mobile Trends (CMT), the average household now has 11 connected devices, with seven different smart screens to view content. Smart home devices are also popular with more than a quarter of U.S. households (28%). Consumers are using connected thermostats, security, lights, and other connected products.

Consumers are also enthusiastic about 5th generation wireless networks (5G) and the promise of higher performance, greater reliability, and more cost-effective usage. Awareness is quite high with close to two-thirds of consumers reporting that they are familiar with 5G wireless networks. In fact, 28% of consumers say they are “very likely” to buy a compatible smartphone when the service is available in their area.

According to Deloitte’s findings, both Gen Z and Millennials plan to use 5G for its promise of speed and bandwidth for gaming and entertainment services like augmented reality and virtual reality (AR and VR). These services require high-speed, low-latency connections. Further, mobile gaming will also see a surge in usage. Nearly half of both Gen Z and Millennials familiar with 5G (49%), report that they will play more mobile video games using 5G connectivity.

Data collection

With consumers more connected than ever before, they are also more aware of the realities of the data economy including the collection of their personal data. Nearly three-quarters of consumers (72%) agree that they are more aware of how their data is collected and used than a year ago. Connected devices are a way of life. So too is the exchange of personal data for free digital services.

It appears that over half of consumers (52%), agree that the value they derive from digital services overrides their privacy and security. It’s important to note, this study did not differentiate between the data collection of publishers compared to social platforms or between first-party or third-party in its line of questioning.

Vulnerability is key here. More than half of consumers (58%) are “very” or “extremely” concerned about the privacy of their smartphone data, and 59% feel similar about its security. Consumers are also concerned about the privacy and security of smart phone speakers (73%) and about the privacy of home automation devices (72%). Importantly, 90% of consumers report that they should be able to see and delete data that companies collect about them. Further, 84% state that they want to be paid by companies that profit from their data.

Data protection

Consumers see platform and online services that collect their data as “most responsible” for protecting it (35%). This is followed by consumers themselves (26%), and the government (15%). Nearly two-thirds of consumers (61%) report that platforms and online services are making it harder for them to understand how their data is being used. A full 56% also state that they have less trust in these companies than they did a year ago. Interestingly, most consumers (84%) agree that the government should do more to regulate the way companies can collect and use data.

Consumers clearly welcome better connectivity and improved service performances. However, this comes with heightened awareness and concerns over their data privacy. While they value the online services they use, consumers want more control and transparency on the data collection, usage and a share in its monetization.

Advertising | Perspectives

Let’s celebrate the decline of the third-party cookie

The “death” of the third-party cookie is a popular narrative shaping the advertising industry today. But while the usual story is one of doom and gloom for publishers the reality is altogether more positive. This is a headline we should celebrate. 

Consider this: For more than a decade, third-party providers have aggregated publisher data, packaged it and sold it to advertisers. This revenue should – and will – be reclaimed by publishers in the months to come. 

Today, third-party cookies are at the heart of the digital advertising economy, which is built on data. Programmatic has enabled advertising to be transacted based on rich granular user data and is now used to fuel 85% of all digital advertising. 

The promise for advertisers is that they can hyper-target their perfect audience. It’s little wonder the third-party data market is now worth $19bn in the US alone. 

A privacy-first world

However, it’s an unsustainable model, and one that is already breaking. Browsers and regulators are enforcing privacy restrictions that will change the very foundations of the internet. Tomorrow’s web is moving to a privacy-first model, where third-party cookies are no longer available for advertising. There are also legal implications for businesses that do not comply with consumer data rights. 

Take both Firefox and Safari, which this year has made significant changes to their browsers including the routine blocking of third-party cookies. To media buyers, these users are invisible. They cannot be served targeted advertising. With the two browsers controlling up to 40% of overall traffic to publisher sites, it’s easy to see why the doomsday headlines are coming in thick and fast. 

Yet there is another way. One in which publishers which change their business models can survive and even thrive in a world without third-party cookies.

Be prepared 

Currently, publishers are in two camps. They’re either ignoring the coming cookie-apocalypse, hoping that industry ID solutions will be their salvation – or they’re being proactive, rebuilding their businesses around first-party data instead. Let’s take a look at what it takes to be proactive.

Instead of putting their destiny in yet another external company’s hands, every publisher should see this new world as an opportunity, in which they are the primary, and indeed only, online advertising data supplier. Let’s call it the data 2.0 opportunity. 

Unlike third parties, publishers have the technical and legal right to process user data. That’s because they have a direct relationship with consumers. This opens the door to a huge $19bn opportunity for publishers, in the US alone. As third-party data disappears, advertisers will look to publishers to access targeted audiences. Below is some advice for publishers to succeed and take advantage.

Own your own data

The relationship that a publisher has with its audience via subscriptions and behavioral data is becoming much more valuable. But publishers must  shift their mindset and stop needlessly giving away their data. They must protect their advertising revenue by building a first-party data strategy to reduce their reliance on third-party cookies. 

Understand your users 

Third-parties have spent over ten years building and telling audience “stories”. Want to find a sports enthusiast? They could once build you an entire back story about these users, and allow you to target them all over the web. Not anymore, thanks to Safari and Firefox. By using third-party data today, advertisers have no differentiation between a CNN.com, and a NYTimes.com sports enthusiastic and have significant challenges with scale. Luckily, publishers are in a great position to start building their own audience “stories” with rich first party data, not relying on third-party data to do this work for them.

The best place for an advertiser to find and understand a sports enthusiast is directly from a relevant publisher. 

Educate your sales teams

Adapting to a first-party data strategy requires expertise in an area that some publishers may be neglecting. It requires marketing their strengths and repositioning their offering to media buyers. They will need new skills that mirror what adtech companies have been doing so well over the last ten years. If you prepare your sales force to sell with accurate first-party data, you will eliminate any gaps between audience creation and how this data is sold in the market.

Privacy-first = on-device

Chrome, Apple, Brave, and many other tech companies have recently discussed moving data-processing to the device, using ‘edge computing’. They suggest that in order to better protect user privacy, the amount of data leaving a device should be limited. As soon as any user data leaves the device (and is sent to the cloud), a user’s privacy is at risk of breach by a third-party.

It is critical to keep data on-device in the data 2.0 world because your method of processing data is scrutinized.

First-party audiences

There has been a lot of press recently about the rise of context. Instead of relying on profiling individual users, Advertisers are increasingly looking to leverage the context around what a user is reading and their behavior on-site as a replacement of third-party data. 

As third-party cookies decline publishers hold the richest data sets on the web. We support initiatives like IAB Data Labels which begins to explore a common taxonomy around audiences, and not cookies. An advertiser can find their audience in a unified way. 

There is a better way

A recent study showed that publishers stand to lose around 52% of their revenue if Chrome also restricts third-party cookies. This should be a wake-up call to publishers to act now.

The proposed solution is not theoretical. This year we have seen publishers monetize their Safari traffic that lacks third-party cookies. Publisher Immediate Media has seen a 135% increase in revenue year-on-year, Stylist has doubled its advertising yield and Entrepreneur has recorded a 7.6x increase in targetable inventory which resulted in a dramatic boost in their revenue. 

Each is in control of their own destiny, unlocking audiences through their first-party data and monetizing it effectively – even when third-party cookies are unavailable. They are ready for the demise of the cookie. Are you?

About the author

Kristy Schafer works with publishers and top talent to grow US revenues for the industry’s only publisher-focused DMP. With deep expertise in advertising, data and analytics, Schafer spends the majority of her time understanding how changes in ad-tech, browser updates, and privacy impact publishers. She is helping to lead an evolution in the ad industry.

Advertising | Perspectives

How publishers are rethinking audience in a user-first world

On September 25, Vox Media acquired New York Media — the company behind my former employer, New York Magazine. Vice Media acquired Refinery29 on October 2. And five days after that, news broke that digital media company Group Nine had reached an agreement to acquire publisher PopSugar.

The long-expected digital consolidation is finally upon us. Media companies, it’s clear, are looking to survive by getting bigger in an effort to increase revenue and better compete by way of sheer scale. By expanding their audiences, they hope they’ll be able to build a more sustainable revenue model.

But is that necessarily true?

There’s nothing wrong with chasing scale or growing your business through intelligent mergers. (Piano recently took that route too, acquiring Cxense.) However, for media companies, growing overall audience doesn’t necessarily mean increased engagement or enhanced revenue. Not unless a critical percentage of that audience is made up of loyal users.

Identifying (and keeping) loyal users 

At Piano, we often define “core audience” as those users who view at least 10 pages a month. If 5% of your audience or higher visits that often, that’s solid performance. However, if that number falls below 2%, there’s work to be done to drive deeper engagement and grow that share.

Building your core audience — and their engagement — is key to reaching your overall audience and revenue goals. And that starts with putting users at the center of your site experience. The media companies that Piano works with — companies that have made reader revenue the centerpiece of their businesses — understand that better than most. After all, they’ve realized that they need to build relationships if they expect users to pay.

So, what lessons can digital media companies learn from leaders in subscriptions? And what other opportunity does a user-first digital landscape present?

Understanding what your audience values

What do your most loyal users read or watch on your site? Which topics resonate with them most? Are their preferences different than those of mass, one-off users? 

A successful user-first strategy starts with knowing how your site’s core audience behaves and understanding what users are looking for when they get there. Both are key factors that contribute to subscription conversion, and audience data like this plays a large part in driving strategy. However, while data explains a lot, our customers find that talking to users is just as important. 

Asking users what they value about your content, website and brand, either through surveys or one-on-one interviews (ideally both) can give you an idea of unmet needs and what you could be doing that you aren’t yet. It helps develop an understanding on how they see you compared to a competitor and recognize the opportunity in those differences. And as you work to understand your users, you may begin to identify different segments of your core audience — along with the different content habits, demographics and benefits they gain from your brand. 

And that’s the kind of information that’s critical to the next step of building a user-first strategy: defining the customer journey.

Defining the customer journey

At Piano, we’ve developed a model for the customer journey that can be applied to both media and other types of business. It helps define the milestones of increasing user engagement and key conversions you want to drive along the way. This is what it looks like:

Of course, these generalized milestones are applied differently from brand to brand. Business Insider and The Daily Beast, for example, both use registration as a sampling tool. They offer temporary access to premium articles in exchange for registration. In that case the Known stage of the customer journey becomes an important milestone, with a set of specific tactics employed to target active users who might not be ready to subscribe, encouraging them to register and experience paid features.

That highlights another essential element of this approach: considering the “next best action” you want your users to take to move them from one step of the customer journey to the next, then using small nudges, “micro-experiences,” to move them along that path.

In a user-first world, building deeper user engagement means considering the value exchange between the user and business. What action do you want the user to take? What’s the benefit to them? What are you asking in return? If you ask for permission to track them, for example, does that enable you to improve their reading experience by only showing articles they haven’t read yet? Are you making that benefit clear?

GDPR and the coming California privacy rules require sites to ask permission for tracking, but few sites are doing more than disclosing what’s being tracked. There’s a missed opportunity to use human language instead of legalese and take it as a moment to build a relationship.

Lastly, the specific tactics also define the metrics to focus on. In the case of the two sites I mentioned above, the exposure rate (the proportion of users who see a registration offer) and the conversion rate (of those exposed, how many register) are both key metrics to measure and understand.

In the Piano database, there’s a pretty wide range of exposure rates, but registration conversion rates are fairly stable — 2.2% for the bottom quartile and 3.4% for the top quartile. If you have enough audience, even a 1% conversion rate can bring in a lot of registered users. If subscriptions are a goal, then exposure rate, conversion rate, revenue per user, retention and customer lifetime value are all crucial metrics to consider.

Building user-first revenue

If you get the user journey and value exchange right, you open up a world of opportunities to drive revenue. For subscriptions, donations and memberships, certainly. But less obviously, direct, trusted reader relationships become more valuable for advertising too. 

That value hinges on publishers collecting first-party data and capturing user consent to track and display targeted advertising. Insider and Mediahuis in Belgium have each developed in-house solutions to create rich first-party profiles of users. Their approach primarily uses behavioral data on content consumption and extending their reach via lookalike modeling. They also allow advertisers to bring and match their first-party data to refine that targeting.

Diving a little deeper into the current ad landscape, increased privacy regulation and consumer awareness, plus changes in web browser cookie policies have made publisher-user relationships both valuable and essential. Valuable because publishers can build trust and encourage users to log in, allow tracking and even volunteer data in the right circumstances. Essential because without it, programmatic ad revenue drops, as browsers squeeze out third-party tracking.

Focusing on user relationships also opens up other product possibilities. Some other innovative examples we’ve seen: Austrian publisher Russmedia developed a gamified “Landlepunkte” points system to encourage user engagement, with points redeemed for swag, digital coupons and local event tickets. It dramatically increased user registrations, logged-in users and articles per user. Amedia in Norway turned 73 local newspapers and a national obsession with local professional soccer teams into a national live streaming sports network.

That’s the type of value a user-first strategy can bring. That and the loyalty obtained from users who intuitively know they live at the center of the experience you offer. No matter how big (or small) your company is.

About the author

Michael Silberman, SVP Strategy, leads Piano’s Strategic Services team, helping clients develop reader revenue strategies and drive success and revenue on the Piano platform. He joined Piano in 2018 after 10 years building the digital media business at New York magazine, and earlier, as one of the top editors launching and growing MSNBC.com in the early days of the consumer Internet.

Featured Post | Perspectives

How marketers and agencies can address increasing privacy regulation

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.

Advertising | Perspectives | Revenue

With the cookie crumbling, the new recipe for data-driven success features consumer trust

The digital advertising industry is changing. Third party cookies are being rendered obsolete by recent browser updates including Safari’s ITP 2.2/2.3 and Firefox’s v69. Users are also becoming wary of how vulnerable their personal information is to misuse and mishandling following the Cambridge Analytica Scandal and Equifax Data Breach – among others.

In the face of this shift, the industry needs to behave responsibility and be cautious, so that “data” is not called out as the underlying issue that needs to be solved. Data is not inherently good or bad. And when data is used responsibility, it empowers digital media and advertising. Data can a user to discover a compelling article or product that they may have never found on their own. It also gives tools to advertisers to be strategic about who, when, and where their messages reach valued consumers. And data allows the world’s leading publishers to focus on producing quality content that consumers depend on.

As an industry, we are scrambling to find tactical solutions to each new browser update or legal regulation that comes out. Despite the need to address these emerging issues, we must keep our eye on the big issues. And the proper use of data is one we must focus on.

Consumer privacy comes first

Consumers have a right to privacy. They also have a right to know how their data is used and shared and they have a right to determine if they are comfortable with their data being used for advertising. The industry needs to come together to align on governing principles that, at the core, have fundamental protections in place for user’s data across the entire ecosystem.

There needs to be a sincere consideration for the user’s right to privacy and fundamental protections in place for their data across the entire ecosystem. Consumers need to feel safe and protected online. And their information is not being misused or mistreated. Additionally, we need to be mindful with the perception of “creepy ads” in order to build the level of trust like that of users sharing fingerprints and face recognition with phone manufacturers.

Education is key

The industry needs to better inform users about how their data is being used and provide the option to opt-out. At the same time, it is critical to teach users about the importance of advertising and how it fuels the free content that they consume on a daily basis.

Moreover, we need to educate users on why allowing sharing data with responsible parties can help them have a much better experience and receive more personalized ads. With more and more direct-to-consumer brands, consumers mostly learn about them and their products through advertising. These companies are taking on giant competitors and need to be very efficient with their advertising. To do so, they focus on providing a unique and added value to consumers, particularly early adopters. The most effective way to reach those people is by using data and customer profiles.

We also need to be open about how data driven advertising supports journalism while making a true and honest best effort to provide value to marketers, publishers, and users.

Let’s build a healthy economy

In order to move forward, we need to commit to building a healthy digital economy and evolve compliance in order to restore trust among consumers. We need to look at ways to ease concerns among users, providing more transparency across the web and making it easier for users to exercise their right to privacy. We need to educate users on the value of their data and the ways that it is being used to provide a healthy digital economy that they can benefit from.  The bottom line is a cookie-less world means one big thing for advertisers: We need to gain back the user’s trust in order to succeed as an industry.

Featured Post

Opportunity lies at the intersection of data protection and healthy competition

Over the course of the past year or so, states have significantly ramped up their efforts to hold big tech platforms accountable. In fact, more than a dozen states either have new data protection regulations on the books or in committee. Efforts like the California Consumer Privacy Act (CCPA) and DC Attorney General Karl Racine’s lawsuit against Facebook are examples of states’ attempts to regain some measure of control for consumers. And just this week, 50 Attorneys General from 48 states, Washington DC, and Puerto Rico announced an antitrust investigation into Google.

For those following tech policy, the escalation is not surprising. Google and Facebook have built massive, unrivaled data collection operations. According to research from Princeton, the top 10 domains that track consumers across the web belong to Google and Facebook. This tracking, along with careless data practices, has given rise to a growing tide of consumer distrust that affects the entire internet. At the same time, these activities are a major factor in the widespread adoption of ad blocking.

A broken supply chain

Platform intermediaries with black box algorithms redirect more and more value from the supply chain. As a result, buyers (advertisers) and sellers (publishers) suffer increasing harm.

According to the Association of National Advertisers (ANA), approximately 30% of advertiser dollars go to fraud. At the same time, advertisers have suffered reputational harm as platforms negligently and haphazardly run ads for trusted brands against abhorrent content such as terrorist propaganda and child pornography. Thus, brands and marketers are increasingly wary of these opaque and irresponsible practices.

On the other side of the supply chain, publishers’ share of the advertising pie is shrinking as it is gobbled up by data-fixated platforms. And, given ad blocker adoption, the amount of metaphorical pie being served is also dwindling.  

What’s worse, however, is that rules and expectations of the digital advertising marketplace are being written by and for the big tech platforms. With all of that turmoil, state legislators and state Attorneys General, which tend to be younger and more digitally savvy than their national counterparts, are attempting to rebalance the scales in an effort to empower consumers and revitalize competition.

State led, nationally significant

The history of the United States is littered with examples of states taking the lead on policy issues. This was partly by design as the federal government lacked strong tools for regulating the economy prior to Teddy Roosevelt’s trust-busting campaign and FDR’s New Deal.

However, even in the modern era, states often take the lead. For example, civil rights were won first at the state and local levels. States continue to push the envelope on environmental protections. And now, states are now stepping up to serve as incubators for innovative public policy regarding consumer privacy and competition.

While it is heartening to see states assume their role as early advocates for issues of national importance, it’s more important than ever for the federal government to assume a leadership role in this debate. There are some promising signs: The Department of Justice has launched an investigation into the dominance of tech platforms, which could lead to a levelling of the playing field. Meanwhile, Congress is actively looking at setting a national consumer privacy standard.

Clarifying standards and policy

With more states expected to pass their own privacy standards in 2020, we are likely to see a mismatched patchwork of state privacy laws by this time next year. As a nation (and a global marketplace), we need to mend this situation – and fast. Given that data and competition are not bound by state lines, Congress needs to enact a single privacy standard that would empower and protect all consumers while at the same time paving a clear pathway to compliance for businesses of all sizes. Giving consumers real tools to protect their privacy would improve consumer trust and engagement online. It would also reward good actors and give regulators stronger tools to prosecute bad behavior.

At the same time, we must also expose anticompetitive practices and remedy the impact of monopolies on the digital economy. As we’ve seen over the last decade, Facebook and Google simply bought out their competition with the acquisitions of Instagram and DoubleClick respectively. Those acquisitions solidified their dominant position in the marketplace. They have also squelched the competition that drives innovation. Withouta level playing field, smaller companies and the next wave of innovation will be stunted.

The federal government should look to the states to better understand the issues – and envision the opportunity – before us. Empowering consumers and ensuring a healthy competitive landscape will do far more than help cure what ails the internet. It could usher in a new age of innovation and economic growth.

Perspectives

Google Chrome cracks down on tracking cookies. But who should make the rules?

Google has joined the likes of Apple Safari and Mozilla Firefox on the privacy front by offering users of Chrome the chance to disable or remove third-party tracking cookies. Last week, the company announced three protections that will soon be coming to the world’s most widely used web browser:

  1. In order to access consumers, developers will be required to specify – with attributes – which cookies contain user tracking and cross-site capabilities.
  2. Chrome users will be able to access this information and delete all cookies without affecting those which are active on a single domain (e.g., login, settings, site preferences).
  3. The browser will “aggressively restrict” fingerprinting techniques used by websites to identify browsers without a tracking cookie, though Google is vague on what this entails.

In today’s environment, it shouldn’t come as a surprise that one of the biggest players in online advertising and data-tracking is coming down hard on third parties (even if they don’t have a stellar track record with tracking). Let’s take a critical look at this new direction, starting with the positives.

The good

In the past, measures to crack down on data privacy abuse have swung between ruthless and milquetoast. Safari’s Intelligent Tracking Protection (ITP) has been called “nuclear” [by pundits for crippling trackers right out of the box, a measure that users rarely bother to disarm.

As a cornerstone of the digital ecosystem, Google understands the importance of data tracking for online publishers, acknowledging on its blog that cookies “play an important part of the web experience today,” It went on to add:

“Blunt solutions that block all cookies can significantly degrade the simple web experience that you know today, while heuristic-based approaches—where the browser guesses at a cookie’s purpose—make the web unpredictable for developers.”

Chrome’s new privacy features differentiate themselves by providing, in outline, a standard for transparency that eliminates guesswork and ostensibly leaves users in charge of their web experience.

This approach is both more balanced and precise than the wide bat swung by some competitors. These approaches challenged publishers to take inventory of the cookies they drop, and to use them in a more responsible way.

But not everyone is convinced that Google should wield its power over the web this way.

The bad

With a natural vested interest in its own data-driven products and services, some wonder whether the new privacy standards will apply to Google itself. While the company insists that they will, its power to act otherwise points to a larger problem.

We have heard time and time again that “data is currency,” and that’s true. Organizations depend on it for every step of the business cycle, from lead acquisition to customer service. However, with customer bases collectively exceeding half the global population, tech giants like Google  and Facebook have as much data as they could possibly want.

Even assuming the best of intentions on their behalf, we still must ask: Should privacy standards be determined and enforced by the very organizations who stand to benefit the most from them?

The battle for control

The drive for more and more data has given rise to the advertising crisis as we know it today. In the face of invasive third-party trackers, malvertising, performance issues, data breaches and other privacy infringements, consumer trust is at an all-time low.

One thing is increasingly clear: The industry needs oversight, and many contenders have stepped up to fill the vacuum. From emerging legislation like GDPR and CCPA, to Google, Mozilla, and other browsers, publishers have no shortage of authorities trying to dictate their relationship with clients—both consumers and brands/advertisers.

Awash in downgraded content, poor segmentation, and privacy agreements galore, end users are the casualties of this struggle, and the battle for privacy governance has quickly become a case of too many chefs spoiling the pot.

So, here’s a thought: What if organizations were equipped to set their own rules? And instead of concentrating power in the hands of Silicon Valley giants, what if the relationship between businesses and advertisers could be self-governed?

A better way forward

Publishers and media organizations are on the cusp of winning the future of digital. With historical direct relationships with brands and ownership of coveted first-party data, there’s never been a better time to take control of the digital revenue channel. The first step to winning is knowing the parties that contribute to your supply chain and verifying compliance with publisher policies covering data, security, quality and performance.

In most cases, more than 90% of their code is third-party generated and the veil of mystery surrounding a third-party’s identity has been a significant obstacle to content moderation. If Google did one thing right with the new Chrome updates, it was forcing developers to identify the purpose and scope of their cookies to the end user.

As long as businesses can vet the partners executing on their platforms, vulnerable and abusive code can easily be censured, creating a better digital supply chain for users, ad exchanges and publishers alike.

In this future, Digital Vendor Risk Management (DVRM) can arm organizations with the information they need to govern their digital assets. With built-in regulatory compliance, DVRM not only identifies risks, but ensures that the proper response is taken in any jurisdiction.

The best solution for customers and the best solution for business always go hand in hand. Rather than bringing them under an iron fist, DVRM creates a sustainable digital ecosystem by empowering businesses to protect their customers while driving revenue.

About the Author

Chris Olson co-founded The Media Trust with a goal to transform the internet experience by creating better digital ecosystems to govern assets, connect partners and enable Digital Risk Management. Chris has more than 15 years of experience leading high tech and ad technology start-ups and managing international software development, product and sales teams. Prior to The Media Trust, Chris created an Internet-based transaction system to research, buy and sell media for TV, radio, cable, and online channels. He started his career managing equity and fixed income electronic trading desks for Salomon Brothers, Citibank and Commerzbank AG.

Featured Post | Perspectives | Policy

What policy makers can learn from privacy-focused products

The legal and policy community continues to debate the impact of General Data Protection Regulation (GDPR), the ins and outs of the California Consumer Privacy Act (CCPA), and how (or whether) Washington should regulate consumer privacy. While the debate rages on, we are seeing a stream of consumer-focused privacy-oriented product rollouts. It is interesting to look at what these controls actually do and how they might inform the policy debate.

In a concession to consumer privacy, Google recently announced that it would allow consumers to block companies from tracking them across the web when they are using Chrome. Specifically, they will differentiate between 1st party and 3rd party cookies. As such, they will allow consumers to delete 3rd party cookies while preserving the 1st party cookie, which, for example, allows a website to remember a consumer’s log-in information. In addition, Google will soon roll out features to prevent companies from identifying consumers via device fingerprinting, another method used to track consumers across the web.

Let’s be clear, Google is late to the privacy game given the long history of privacy protections offered by Apple and Mozilla. Apple has famously blocked 3rd party cookies by default in Safari and recently introduced Intelligent Tracking Prevention (ITP), restricting the ability of companies to access cookies when a consumer is not interacting with that company.  

Services that care for consumers

When a consumer visits YouTube on Safari, Google can access the cookies they have set on their browser. However, as soon as the consumer navigates to another website, Google can no longer access those cookies. ITP essentially breaks the ability to track consumers around the web.  Apple has also worked to block loopholes where cookies, set by companies like Google and Facebook, pretend to be 1st party but are then used for tracking and secondary use. Unfortunately, it is hard to muster much confidence that Google will be anywhere as diligent as Apple in closing loopholes, given its business model is built on its ability to expertly track consumers.

Mozilla, on the other hand, offers multiple ways for consumers to block third party tracking in Firefox. Mozilla is also considering rolling out a “Super Private Browsing” mode, which would incorporate Tor privacy features into Firefox.

Beyond the most commonly used browsers, a whole suite of new services have popped up. Duck Duck Go, a search engine, and Brave, a browser, offer strong privacy controls as their primary value proposition. As we’ve noted for several years now, more and more consumers are turning to ad blockers to protect themselves and/or improve their web experience. Forcing these massive platforms to once again compete on privacy will be good for everyone, particularly consumers. The question, of course, is whether some of these companies are simply too big to change at this point.

Policy implications

Back to my original question: What can policymakers learn from these new consumer privacy controls?

For starters, consumers increasingly demand more and stronger protections of their data and digital lives or the market wouldn’t be headed that direction. You can reasonably debate whether Google’s recent announcement went far enough. But the fact that a multi-billion-dollar company like Google did anything at all speaks volumes.

It’s also worth pointing out that all of these new controls, which curtail the ability of companies to collect consumer data at scale, are not actually breaking the internet despite the frequent claims of ad tech lobbyists. In fact, given this push to meet consumer demand for greater privacy controls, it’s funny and a little sad to look back at the hysteria from some of these lobbyists.

Meeting consumer demand

The big takeaway is how these companies and their engineers are designing services and features to meet consumer expectations for privacy. This new wave of privacy controls gives consumers the ability to stop companies from tracking them across the web. Yet, these services preserve the ability for websites and apps to collect and use consumer data when the consumer is interacting directly with that company.

This approach makes sense. Consumers share their data so that companies can use it to provide a service or content. In this fair value exchange, the consumer can choose to engage or not. Consumers do not expect companies to track them outside of that fair value exchange and doing so is simply bad business.  

It isn’t a question of whether consumers want their privacy protected, these market moves demonstrate the demand and inevitability. And, as policymakers consider how best to craft consumer privacy protections, it’s worth noting how today’s best engineers have attempted to meet consumer demand and expectations for privacy.

Advertising | Industry-Research

Better machine decision-making, rethinking digital ads, and smart cities will improve the health of the internet

Mozilla’s newly released 2019 Internet Health Report offers insights from more than 200 experts examining what’s key to a healthier internet. The report is an open source compilation of research that tracks the internet and general technological progress. The findings center on three key areas: the need for better machine decision-making, rethinking digital ads, and the rise of smart cities.

Better machine learning

Machine learning and artificial intelligence (AI) are the next generation of computing. They enable more powerful automation, prediction, and personalization. As AI intelligence works its way into our daily lives, we need to question the ethical decisions and potential risks associated with it.

Industry experts are concerned that the large tech companies that control social media and e-commerce, are also shaping the AI agenda. Given Facebook’s, Amazon’s and Google’s ability to gather large quantities of training data, they are developing powerful AI technologies. An ethical assessment of their algorithms is important to ensure the consumer’s fundamental rights are protected.

Rethinking digital ads

Digital ads monetize online content and services and are the key driver of the advertising economy. Many researchers contributing to this report are alarmed by Google and Facebook’s combined control of approximately 84% of the global digital ad market outside of China. Their access to user data as a source of global market power in business negotiations is a major concern. Targeted ads used by these companies exploit their users. A scandal uncovered a few months ago included ads on Facebook demographically targeted to exclude people of a certain race from housing ads. Another example, also on Facebook, allowed advertisers to use available data on the service to create an affinity group to target ads to “Jew Haters.” 

Some brands and marketers are stepping away from YouTube and Facebook but many still purchase their inventory for targeting campaigns. As a result of these scandals and others, users want to take control of their data. New software initiatives are being explored to offer a decentralized solution, giving consumers control over who has access to their personal data.

Rise of smart cities

Smart cities exist when the internet and connected devices are applied to solving problems from energy efficiency, transportation to government services. Similar to rethinking digital ads, collecting neighborhood data must be thought about carefully. Smart cities face challenges with regards to establishing policies and processes to guide the usage of local data with regards to privacy and transparency.

Steps to a healthier internet future

Many of today’s biggest internet companies still access users’ clicks, likes, friends, emails and downloads to fuel their business models. However, some companies are thinking about alternative business models and new technologies to give users control of their data. One such initiative is Purpose Foundation. It promotes “steward-ownership,” a legal structure to prioritize a mission over profit revenue model. It involves users in the ownership of the company to ensure consumers benefit in the economic growth. Importantly, involving consumers in internet innovation and safeguarding personal data are key steps to a healthier internet.

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