2020: If One’s Thing’s Certain, It’s That Ad Tech Will Stay In The Regulatory Spotlight

If 2018 was the year of GDPR and 2019 was the year of CCPA-related anxiety, 2020 will be the year the digital advertising industry is forced to mature rather than just talk about it.

The threat of severe penalties for noncompliance combined with inconsistent legal guidelines (and a lack of federal privacy legislation in the United States) is causing companies to rethink their products and reckon with their business models, said Doug Knopper, co-founder and former co-CEO of FreeWheel, and now an adviser to the Tide Foundation, a nonprofit organization building an open-source framework for securing personally identifiable information.

Third-party data continues to be under pressure, and the future will favor those with direct consumer relationships. Consumers will become increasingly dubious of the supposed value exchange between themselves and businesses they engage with.

Hindsight, like the year, is 20/20.

“Who ever thought that digital advertising could be a vector for harm?” said Fatemeh Khatibloo, a principal analyst at Forrester. “Now we know that there are lots of different forms of harm.”

There’s emotional harm when a woman who’s miscarried keeps seeing baby ads, Khatibloo said. There’s discrimination when ad targeting is used to exclude people of color from mortgage ads or older people from applying to jobs. There’s social harm when platforms are used to subvert democracy.

“This is why digital advertising is under fire,” Khatibloo said.

But how exactly will regulations and consumer wariness around data collection continue to impact the ad industry in 2020? We asked the experts for their predictions.

Fatemeh Khatibloo, principal analyst, Forrester

“It’s time for the ad industry to grow up and, unfortunately, self-reg hasn’t paid off. Now, we face two battles: legislators that want to look tough on data protection (but don’t really understand tech) and the browser wars.

“CCPA went into effect on Jan. 1 and it will upend things like cross-device identity and RTB. But I expect the impact to be limited for the first half of the year, until AG Becerra issues regulations that clarify a lot of squishiness. Browser wars on the other hand … ad tech is playing chicken with an adversary that’s going to win every time.

“If I have one hope for the industry in 2020, it’s that we can come to the table with advocacy groups and the browser companies, like Firefox, Apple and Brave, to agree on a set of standards that allow consumers to opt out of behavioral advertising.”

Alex van der Wolk, partner, Morrison & Foerster

“Seeing how much attention ad tech is getting from public opinion and advocacy groups, it’s unlikely regulators will become lenient on consent requirements. At the same time, not all actors in the ecosystem always have direct access to the individual that each can obtain its own consent.

“Fortunately, we are seeing regulators being open to dialogue with the market to identify how to best operationalize requirements and we’ll likely see further clarifications and guidelines being issued on this in 2020, for better or worse. What is certain is that ad tech will remain a focus of regulatory attention in 2020.”

Danny Sepulveda, SVP, policy & advocacy, MediaMath

“The majority of companies in the advertising industry want to do the right thing. Our industry is in the process of winning back trust. In the future, we’ll see more scrutiny of companies and, inevitably, more accusations of companies using backdoor workarounds in an attempt to not comply with the law.

“Consumers will tend to consent less and opt out more, particularly in the beginning, because they may believe there is no downside to doing so. If publishers wish to continue processing consumers’ personal data in order to monetize their content – and if advertisers wish to continue delivering targeted advertisements to individuals or measuring the effectiveness of contextual ads – then both parties will need to adapt their messaging to consumers to demonstrate the value consumers receive from the processing of their personal data.”

Doug Knopper, adviser, Tide Foundation

“Handling sensitive consumer data is now a liability and high-risk factor for businesses and platforms. In 2020, I expect this will be a boon to the scaled platforms, like Facebook and Google among others, as they are generally less reliant on third-party data for audience targeting and will be considered a safer haven in the face of unclear/inconsistent/ambiguous guidelines.

“In the medium and long term, I would expect to see a significant shift toward the use of first- and second-party data as its quality and relevance improves. Ultimately, the de-siloing of this niche data will find its way into a marketplace that will rival or even dwarf the walled garden duopoly.”

Scott Lake, SVP, data & technology, Rhone

“Generally, the changes are positive in that they will discourage negative forms of data sharing and favor formats and networks with stronger opt-in and first-party data. This is all the better for the consumer – and for the brands and companies that put their customers first.”

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