Is RegTech The New Ad Tech?

That was one of the questions raised during a symposium hosted by the Institute for Advertising Ethics (IAE) last week featuring hundreds of regulatory, ad industry, and academic experts who spent a day hashing out what it would take for Madison Avenue to create the kind of ethical standards that would prevent new regulations restricting how, when, where and why advertisers use data to identify and target consumers.

Remarkably, MediaPost has barely even referenced the concept of RegTech, which is a new cottage industry of technology solutions for managing and optimizing regulatory outcomes. With the exception of three Email Marketing Daily articles over the past three years, MediaPost has never even published the term.

But it is looming large, says Andrew Susman, who helped organize the symposium with IAE Executive Director Wally Snyder. The reason, he says, is that many of the solutions necessary for the ad industry to become compliant with regulatory requirements such as the California Consumer Privacy Act (CCPA) likely are not things that can be processed manually.

“We don’t have the tools that will be necessary for our governance,” Susman explains, noting that the regulations such as the CCPA require that brand marketers get the consumer to sign off on every piece of data marketers request of them. “The solution will be RegTech for ad tech.”

What will that technology look like? According to Susman, it will have to be technology that serves the consumer first, not the way most ad tech solutions work, servicing the advertiser first.

It will require a whole new way of thinking about the advertiser/consumer value exchange, and the technology will not just have to work efficiently to process billions of consumer data requests in real-time, but it will have to deliver something that may not be easy to operationalize into a programmatic algorithm: trust.

Research presented at the symposium indicated that even after years of news media coverage about consumer data glitches like Experian’s consumer credit breach, or explicit theft like Cambridge Analytica’s appropriation of Facebook user data, most consumers feel a sublime distrust and confusion about who controls their data.

Instead of cryptic thousands of words, legalize opt-in agreements, Susman says the new RegTech for ad tech will need to be frictionless, easy-to-understand and create peace of mind for consumers who feel an inherent distrust of all things ad tech, oftentimes opting out completely via ad blockers or alternative browsers that prevent ad targeting at all.

Susman says the greatest area of interest coming out of the symposium were requests for access to some research presented by Kent Grayson, a professor at Northwestern’s Kellogg School of Management indicating that when marketers do it right, it will pay trust dividends with consumers.

The research showed that like advertising, consumers don’t trust most politicians, but they trust the representatives they vote for. Specifically, it found that people trust only 20% of politicians overall, but they trust 60% of the ones they vote for.

Developing similar models for advertising is part of the goal of the IAE, which plans to use the results of the symposium, as well as other industry input, to develop a certification program for ad professional ethics.

“The idea is that we’re going to see the emergence of Chief Risk Officers coming into the ad industry to address these issues the way they have entered other industries that need to mitigate risk,” Susman says, adding: “These risk officers will need to address real issues, not superficial practices and avoid things like greenwashing.”

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