ON THE CMO AGENDA: 2020 2.0—WHAT CAN WE EXPECT TO SEE FROM THE INDUSTRY IN H2?
Published on August 06, 2020
Now in the throes of summer, we’ve finally reached the halfway point of 2020. A little over 200 days into the year, it’s safe to say that while we’ve certainly witnessed great uncertainty and change, in many ways the world has remained the same.
For one, the digital advertising industry is (unsurprisingly) still struggling with familiar challenges: economic headwinds, regulatory scrutiny, supply chain woes, and a lack of transparency across the board. That being said, change could never take place overnight—even with the damning results of ISBA and PwC’s study of the UK’s digital advertising ecosystem which found that 15 percent of costs in the campaign supply chain were unattributable. Calls for “transparency and change” have reverberated across the industry for years yet it’s hard to say if we’ve made enough progress.
Beyond that, some of the world’s leading tech-cum-social platforms which now serve as part of a ruling class of walled gardens are also facing increased brand scrutiny amid rising tensions surrounding hate speech as well as geopolitical conflicts. Some brands have opted to divert their ad spend away from these platforms altogether—a significant cut to consumer access—considering the abundance of first-party data that many of these walled gardens are home to.
As we look back at the first 6 months of 2020 and peer out into the following 6, what lies in store for the advertising ecosystem?
The first-mover advantage in playing the first-party data game
The demise of third-party cookies on the world’s most popular browser by market share was always on the horizon—after all, all that Google’s Chrome had to do was follow in the footsteps of Apple’s Safari and Mozilla’s Firefox in putting user privacy first. That being said, the withstanding appeal of third-party cookies is a credit to its interoperability and widespread adoption across the industry. With that in mind, any alternative that AdTech firms and marketers are looking to consider will need to reach the same level of utility and acceptance across different platforms and publishers. For an overview of some of the promising alternatives that seek to upend how user data is identified, shared, and procured across the digital landscape, check out our blog post on innovations in identity management.
On the other side of the coin, the end of third-party cookies is likely to conjure an image of the future that will see more walled gardens. Publishers that collect first-party data to deliver their own services are honeypots of authenticated audience data and naturally, they’re in an advantageous position that advertisers are looking to leverage. For years, tech companies such as Facebook and Google have exemplified this new model of an advertiser-publisher relationship and over time, it’s likely that we’re going to see a greater movement towards first-party data providers. In fact, The New York Times announced earlier this year that it would be phasing out the use of third-party data for audience targeting by 2021. This July, it officially enabled advertisers to access a fully-segmented first-party data market across the 6 categories of age, income, business, demographic, and interests. Vox Media and The Washington Post are similarly moving in the same direction.
It’s clear that first-party data will largely underscore the future of data-driven, personalised advertising in the years to come. While not all publishers may be in a position to leverage their scale and strength of consumer relationships to build out their own first-party data sets, we’re likely to see more offerings of this kind coupled along with consortium-style arrangements as we enter 2021.
The compulsory costs of compliance
While the California Consumer Privacy Act (CCPA) only officially became enforceable earlier this July, Californian privacy advocates are pushing for additional enhancements to the law, forming the basis of the California Privacy Rights Act (CPRA) which will be on the ballot during this year’s U.S. presidential elections in November. If enough residents approve the initiative, the CPRA will see additional privacy provisions going into effect immediately and the rest following suit in 2023. As marketers continue on their journey to CCPA compliance, they’ll also need to grapple with the far-reaching amendments stipulated by the CPRA in tandem. Some notable additions offered by CPRA include:
- The establishment of the California Privacy Protection Agency, a first-of-its-kind body that will have full administrative power, authority, and jurisdiction to enforce the measures under CCPA.
- A stronger distinction between “sensitive personal information” and “personal information”, with the former being applied to data points including government-issued identifiers such as social security numbers and passport numbers, financial information, precise geolocation, race and ethnic origin, contents of emails, as well as many others.
- Additional consumer rights such as the right to know the length of data retention, the right to opt-out of advertising services leveraging precise geolocation, the right to restrict the usage of sensitive personal information, and many more.
Evidently, the data protection landscape never rests and as more frameworks emerge across the globe, brands and marketers alike will need to do all they can to keep up. Earlier this July, the Global Advertising Lawyers Alliance (GALA) and the International Advertising Association (IAA) launched the world’s first guide to privacy laws and their impact in marketing and advertising. The 700-plus page guide aims to offer a holistic view of how privacy frameworks and data protection regulations are impacting marketing and advertising across 70 different jurisdictions. Though the most comprehensive guide of its kind, it’s clear that regulations will continue to emerge over the next few years and marketers must make a concerted effort to hold themselves to a better standard.
Simply put, it’s not enough to wait for the regulators to come knocking. Data privacy compliance may be a costly endeavour—be it in the form of hiring the right staff to enforce data protection practices or to make better investments in privacy-enhancing technologies—but it’s much needed in an effort to build and retain customer trust. While initiatives such as the IAB Tech Lab’s Project Rearc Taskforce are opening far more collaborative discussions in a bid to better balance personalisation and privacy, we’re still yet to arrive at a common industry standard for better data protections to hold ourselves accountable. Beyond that, the ongoing coronavirus pandemic has kickstarted discussions surrounding the proper collection and use of personal data, prompting conversations surrounding the culture of surveillance and the market-specific nuances of privacy.
Perhaps it’s a bit hopeful to say so, but amid the convergence of critical changes in the identity management landscape and the ever-evolving realm of data protection frameworks, we’re perhaps likely to see a more collaborative approach to self-regulation in the months to come.
The growing shift towards commercial brands with a conscience
Today, the consumer-brand experience extends far beyond commercial transactions and overt marketing messages. As interactions spill over into social platforms in a bid to boost brand accessibility and humanise brand identities, consumer expectations are equally changing. This, of course, refers to the rise of the “conscious consumer” which describes consumers that actively seek out brands that similarly espouse the same ethical positions or ideological and political views. No longer satisfied with “no comment” responses, consumers are demanding more transparency and a clearer stance from beloved brands.
According to a 2019 Sprout Social study, 70 percent of consumers believe that it’s important for brands to take a public stance on social and political issues. Why? Because consumers genuinely believe that in a position of such power, privilege, and visibility, brands can do a great deal in generating greater awareness around key issues when speaking out about it, especially on social media. That being said, this can prompt greater scrutiny from consumers who want to ensure that stances aren’t being taken for the sake of performative support either—today’s consumers want authenticity.
As marketers juggle the commercial implications of taking on a more vocal approach, there are, of course, other ways to express solidarity with their consumers’ concerns such as taking their business elsewhere—a move that over 400 brands, including Starbucks and Unilever have taken on as a means to boycott hate speech on platforms.
In addition, the Pew Research Centre also found that 81 percent of consumers believe that the potential risks they face from data collection practices ultimately outweigh the benefits, pointing to a growing recognition of an increasingly imbalanced exchange of value. Beyond causes relating to the environment or civil rights, brands and marketers also need to also ensure that they’re doing more than just the bare minimum when it comes to treating their customer data with respect and dignity. With more of our lives increasingly being lived online at this time, adequate data protection is an issue that consumers are casting a more discerning eye towards and are likely to continue doing so, as regulatory frameworks continue to mature across the globe.
Balancing the risks and rewards
As an industry that concerns itself with balancing the needs of brands and consumers alike, the digital advertising sector has been forced to juggle multiple paradoxes in the past year alone as they balance the risks and rewards of navigating this new normal. From addressing the costs of retaining visibility versus cutting ad spend in the midst of a global recession to the age-old conundrum of balancing privacy and personalisation, marketers have made difficult decisions in a bid to stay afloat.
But if there’s anything for certain, the ongoing global pandemic has given marketers pause to re-evaluate existing practices. From examining plausible solutions to address third-party cookies to rethinking existing MarTech investments, the next 6 months are likely to bring about a more future-fit industry. Equipped with the necessary tools, skills, and understanding of changing consumer preferences, we believe that the marketing industry will be primed to evolve.