The single most significant regulation in the history of digital advertising, the General Data Protection Regulation (GDPR), comes into force next week.
While often portrayed as a burden for digital advertising, GDPR will in fact be the catalyst for a new era of quality and clarity in the ecosystem. For too long digital has been the "wild west" of the advertising industry, but GDPR’s potential penalties will lead publishers to carefully scrutinise the quality of their partners. This will inevitably lead to consolidation around the industry’s most responsible providers, as publishers refuse to place their fate in businesses they don’t trust. For the first time, trust, quality and clarity in the digital advertising ecosystem will be non-negotiable.
The digital ecosystem as we know it
Programmatic advertising brought huge benefits to digital when introduced almost a decade ago. The technology enabled advertisers to precisely target audiences efficiently and at scale, while also delivering relevant, personalised messaging that enhances the user experience for consumers.
But programmatic has also spawned an unwieldy and incomprehensible ecosystem where bad actors can thrive and issues around quality, ad fraud, and brand safety have proliferated. A recent CMO Council survey revealed that almost three-quarters of marketers are concerned about brand integrity and control in programmatic.
In addition, some low-quality exchanges have begun a price war, competing on an impression-by-impression basis to maximise publisher yield, rather than working toward mutually beneficial long-term partnerships. And as a standoff continues to develop within the crowded exchange space, an undisciplined "free for all" environment persists.
A GDPR inspired clean-up begins
The enforcement of the GDPR will transform the ecosystem’s approach to consumer data -- the lifeblood of programmatic advertising. It will regulate the collection, storage and processing of data, issuing fines of up to €20,000,000 or 4% of a company’s worldwide revenue -- whichever is greatest -- for serious infringements.
As "data controllers," publishers will find themselves liable for the data security measures their technology partners, known as "data processors," have in place. They will need to ensure that the legal agreements they have with these partners comply with the GDPR, and as a result will become far more aware about who they work with, limiting partnerships to trusted and transparent providers. Digital supply chains will be shortened, reducing the opportunity for shady or fraudulent practises, and mergers and acquisitions will consolidate the ad-tech space around a smaller group of high-quality, trusted partners that have a track record of investing in security and quality. The net result with be a simpler, more streamlined and healthier ecosystem.
The GDPR will also raise the bar for data quality. By requiring users to opt in to data collection and processing, and compelling businesses to obtain explicit consent to specific types of processing such as automated decision-making and profiling, the regulation may reduce the volume of data collected, but will dramatically increase that data’s value. Higher-quality data, gained with explicit consent, will allow advertisers to obtain a more granular view of their target audience and reach consumers with relevant, meaningful messaging. A recent ICO survey reveals that 80% of UK citizens do not trust organisations with their data, but the GDPR provides the opportunity to demonstrate data responsibility and respect for personal information, helping businesses build trusting and rewarding consumer relationships.
Collaborating toward a brighter future
While the GDPR will bring a new era of transparency and trust, it should not be relied upon as an all-encompassing remedy for the ills of the digital advertising industry. It is just one force contributing to the great cleanup, and there are a multitude of other initiatives that the whole industry must get behind to restore faith in digital.
Standards put in place by industry bodies such as the Internet Advertising Bureau (IAB) are rapidly gaining popularity across the ecosystem. These include the ads.txt initiative, among others, which enables publishers to declare who has authorisation to sell their inventory and is designed to prevent practises such as inventory arbitrage and domain spoofing. Buyers, sellers and technology providers have all been urging the widespread adoption of the initiative, and as a result ads.txt has already been implemented by over half of programmatic publishers.
At the same time, cross-industry accountability programs such as the Trustworthy Accountability Group (TAG) aim to bring clarity to the ecosystem by fighting fraudulent traffic, malware and internet piracy as well as ensuring brand safety. By taking part in these initiatives themselves, or only working with providers who are certified through these programs, all sides of the ecosystem can help create a secure, high-quality marketplace and restore trust in digital advertising.
The GDPR’s enforcement on 25th May will be a pivotal moment for digital advertising. It will compel the industry o take a path of transparency and integrity, and will ultimately result in a simpler, more streamlined ecosystem where trusted providers will thrive. While the GDPR alone won’t clean up the industry, and needs to be supported by other initiatives and accountability programs, it does make data transparency a legal obligation -- heralding a new dawn for digital advertising.