IAB Estimates 80% Of Data Will Be Ignored Based On 2023 Legislation

State privacy laws coming into effect in 2023 will significantly impact marketers' use of data, and managing legal standards will remain challenging, according to data released Tuesday by the  Interactive Advertising Bureau.

The findings show marketers are struggling to keep up with changes. When it comes to understanding some of the privacy implications scheduled to go into effect in 2023, many were not familiar with how they would affect their respective organizations, according to Angelina Eng, vice president of Programmatic+Data Center at the IAB.

“Larger organizations have a lot more resources to address these changes, such as larger teams, investments to manage data management platforms and data clean rooms, but many are struggling in the way they approach the change,” she said. “They are not sure if they will implement a sweeping change across all states, or whether they will approach each state legislation differently.”

Marketers recognize that approaching all state legislation with the same methods -- regardless of the territory and location -- is the easiest method, but there are limitations and they could lose opportunities if one state has stricter requirements when it comes to sensitive information.

Findings from the report -- IAB State of Data 2022 Part II: Preparing for the New Addressability Landscape, commissioned by IAB and fielded by MediaScience -- highlight privacy legislation, deprecation of third-party cookies and identifiers, and platform policies that affect data collection, addressability, measurement, and optimization for digital advertising and marketing. 

Many marketers face compromises, struggle to create consistent measures and protocols, and realize that a cohesive strategy spanning multiple jurisdictions is necessary. The challenge of a “practical multi-jurisdictional approach to compliance that creates consistency where state laws are similar and options when requirements are unique to a state” seems daunting to many.

The senior-level, data decision-makers at brands, agencies, and publishers interviewed for this study agree consumer trust is important, but what’s lacking is a more effective way to communicate more about the data value exchange. There lacks communication with consumers regarding how their data is being used by companies for monetization in support of their businesses, and how that, in turn, powers the creation of personalized consumer experiences, products, and services, according to the study.

The study also notes differences in the way marketers think and the level of impact the deprecation of third-party cookies and identifiers will have on their respective company’s revenue.

Some said it’s still too early to tell, while others estimated up to 25%. There was consensus that smaller businesses are likely to be more heavily impacted due to a lack of funds or infrastructure to keep pace with changes and technology. Communication plays a large part.

Lack of communication and awareness across companies regarding the types of data beyond email addresses being collected and used for identifiers. Although leveraging email addresses for marketing purposes can be done in a way that complies with current privacy requirements, it is likely that email and IP addresses will face increased scrutiny in the future as state privacy legislation continues to evolve consumer choice requirements, restrictions on the use of “sensitive data,” and further refines the circumstances in which information can and cannot be shared with third-parties for advertising purposes.

Among the study participants, capturing data on logged-in first-party audiences is being prioritized ahead of capturing data on consumers when not logged-in. It ignores many consumers, and becomes “a missed opportunity,” as the majority of publisher audiences--80% according to interviewees--are unknown. This leaves out a significant amount of data that could otherwise be leveraged advertisers for various purposes, most notably to power advanced contextual targeting.

While privacy legislation in the long run may benefit platforms and publishing giants, it could hurt smaller publishers who have loyal audiences. While there are a range of third-party tools that can help power data collection and enrichment, only a handful of interviewees have the budgets to test these new approaches. The consensus is that there are too many tools and not enough resources to test or manage them all — particularly among smaller publishers.

When asked if survey respondents from smaller companies believe changes could lead to the demise of their respective businesses, Eng said, “no, but we heard that with the introduction of Apple iOS 14.5 many saw a significant impact on revenue, ability to reach audiences, cost per acquisitions were down, and audiences were downs.”

She said many are concerned they will need to shift their ad dollars into walled gardens like Facebook

The IAB Legal Affairs Council plans to roll out an MSPA (Multi-State Privacy Agreement) and Global Privacy Platform through the IAB Tech Lab as solutions. The goal--a practical multi-jurisdictional approach to compliance that creates consistency where state laws are similar and options when requirements are unique to a state. 

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