In recent years, consumers have become more aware of how their data is being used. They have been battling with large enterprises demanding more control over their data. The governments of Europe and California took cognizance of the consumer’s data privacy issues and introduced new privacy laws such as the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA).
While it helped consumers gain more control over how their data is used, it has also changed how digital ads work.
Digital ads revolve around customer profile data. Advertisers used to leverage the third-party cookies on publisher’s sites and other data shared by consumers to track their online behavior. Based on their behavior, brands displayed personalized digital ads that led to more conversions. 83% of advertisers were able to achieve over five times the ROI through targeted ads. Data-driven marketing has become the go-to mantra for marketing success in the last few years.
The Impact Of Privacy Laws On Digital Ads
However, the introduction of stricter privacy laws meant that advertisers had to find alternate ways to do digital ads. They had to ensure that they complied with the laws on the books as well as with the ethical expectations consumers had from them in a more conscious age. This resulted in some unique trends in digital advertising.
- Permission-marketing to become the new normal.
In his seminal book called “Permission Marketing”, marketing guru Seth Godin discussed how advertisers must first obtain the consumers’ permission before sending them marketing communication.
As it turns out, the current privacy laws have compelled advertisers to rethink their strategy of displaying unsolicited and intrusive ads to consumers. Unlike earlier, where websites could naturally store third-party cookies of the consumer without their consent, publishers and advertisers have to inform the users that their cookies would be stored in the website. Prior consent must be taken from the consumer to activate the cookies. The visitor should also be given the option to accept all, none, or specific cookies. Under GDPR law, the consent should be stored as legal documentation and assessed frequently to ensure compliance with the latest guidelines. It also states that apart from necessary cookies (the first-party cookies), the other cookies such as marketing and statistics, cookies can be stored only if the consumer grants permission. CCPA states that the consumer should be provided with a copy of the consent if demanded. The European Data Protection Board (EDPB) entails that the cookie banner should not have pre-ticked options.
In a nutshell, consumers must have the final say on what cookies can be stored on the website and what kind of messages they are willing to receive. They should have an easy opt-in and opt-out option, so they are not forced to accept cookies to view a website. The consent should be clearly communicated, so the consumers are aware of what they are clicking.
- Rise of contextual ads and Private Marketplace
In a recent study that we conducted with Brand Equity, we found out that only 8% of advertisers were prepared for a cookieless future. With the GDPR and CCPA laws making it almost impossible for brands to save third-party cookies, advertisers are likely to have a tough time tracking the consumers’ online behavior.
Earlier, this data could be leveraged for personalizing ads, remarketing, and customer acquisition. Now advertisers have started relying on first-party cookies and other information provided by consumers voluntarily for advertising. This has led to the rise of contextual ads and private marketplaces.
In contextual ads, the advertisers display sponsored ads on the publisher’s website like they normally do. The only difference is that the ads would be related to the content on the website. It will not be targeted to the user specifically. The keywords would be the target here. For example, if the advertiser wants to post an ad for high-end headphones, he might display it on a website that reviews headphones or anything related to music.
Similarly, the absence of third-party cookies would increase the popularity of the private marketplace (PMP) advertising. In PMP advertising, the publishers offer a suite of tools to advertisers to target high-intent consumers. Advertisers get access to premium inventory, while publishers can ensure that the consumer’s data privacy is not breached.
- A shift from data-driven to privacy-driven culture
According to Gartner, increased regulatory norms will drive brands to recruit privacy officers or data protection officers to maintain compliance. Over 1 million companies would likely recruit chief privacy officers by 2022.
While being data-driven is important, companies have to balance it with a privacy-driven culture. Companies must build a team of marketers who are well-versed with the regulatory norms and comply with them. They should also choose automation tools that are compliant with the privacy laws and partner with agencies with experience in working with privacy-driven brands.
The objective should be to build an ecosystem and take a holistic approach to safeguard consumer privacy. Companies must review their internal policies and processes repeatedly to stay compliant. It’s time to shift to a privacy-by-design model.
The recent pandemic has renewed data privacy discussion as brands took more of their operations online, drawn by changing consumer behavior. As we draw to the end of 2020, it’s time for advertisers and brands to put customer data privacy first. They must rethink their digital advertising strategies and consider using methods and tools for programmatic advertising and contextual advertising that allow them to do that. It’s time to make peace with advertising in a cookieless world and prepare strategies according to that.