With the General Data Protection Regulation (GDPR) due to come into force in one week's time, Alexian Chiavegato, VP of marketing at Marfeel, considers how it will impact ad tech.
As the prospect of becoming (and remaining) compliant with the European Union’s new General Data Protection Regulation (GDRP) draws closer, the advertising technology industry is facing unprecedented uncertainty. What is not uncertain is the possibility of a harsh fine for non-compliance, whether that’s in the form of a €20m fine or 4 per cent of an offending organization’s global annual revenue - whichever is larger.
Advertising technology - which capitalized upon the public’s overwhelming shift to mobile devices in recent years to propel itself to a multi-billion dollar industry - relies upon the use of data and algorithms to deliver relevant advertising to users. Publishers and the advertising/marketing world have certainly benefited, with publishers able to leverage advertising technology to support ad-funded models and deliver their content to users without the use of paywalls.
But by placing the use of data in peril, GDPR runs the risk of forcing publishers to jeopardize their open model. The key to driving user engagement is to deliver the right message to the right user at the right time; it is the bedrock upon which advertising technology exists. Without the ability to target users, ads will become less impactful on both sides of the transaction. Publishers stand to see their revenues impacted while users will be disturbed by irrelevant ads.
As GDPR and its rigorous compliance standards gather steam, it could put a significant strain on many smaller publishers.
On top of this, many of the large tech platforms have sent word that the onus for GDPR compliance - the acquisition and tracking of user consent - will rest upon the shoulders of the publishers and ad tech intermediaries they do business with. This will only place further burdens upon smaller publishers, which will need to allocate resources simply for GDPR compliance and, in the event of possible non-compliance, the €20m fine could put them out of business. Larger publishers, of course, are in a better position to utilize resources for GDPR to create their own systems and can probably withstand a non-compliance fine.
Finally, all publishers will have to tap dance around the way the law is written. There are many difficult ambiguities due to some interesting choices of words which leave room for a lot of interpretation. IAB Europe is providing importance guidance along these lines that should help publishers and ad tech firms navigate the complexities of GDPR. But even with IAB Europe’s help, there will be interpretations that create confusion and added expenses due to legal fees when the audits start.
Despite this, GDPR should have an overall positive impact on the industry because we are asking ourselves the right questions about data and privacy. But right now, the ad tech industry is in an anxious spot. GDPR, as a major enforced regulation, will be difficult to understand and incorporate into the burgeoning online mobile industry. What is going to be the impact on revenue for publishers and advertisers, and how severely will the quality of advertising be impacted? These are the questions we are left with right now, just days away from the dawn of GDPR.