[The Big Idea is a distillation of conversations held during our Cannes Expert Interview Series. The full conversation with all of our experts can be found here.]
As privacy concerns escalate, the digital advertising industry faces significant challenges in navigating user data collection, regulatory changes, and the evolving landscape of ad tech. Insights from our conversation with Ratko Vidakovic, founder of AdProfs and the writer of the ‘This Week in AdTech’ newsletter, highlight the critical importance of privacy, the complexities of data collection on the open web, and the impending reckoning that the industry must address to adapt and thrive.
Privacy is an Evergreen Concern
Privacy remains a central issue in digital media, driven by regulatory actions, big tech initiatives, and growing user awareness. The industry must prioritize privacy to align with legal requirements and consumer expectations.
“Privacy is one of those things that’s hard to argue against. From a political perspective, it’s something that easily earns support… If regulators, big tech platforms, and users care about privacy, businesses need to care, as well.”
The Open Web Presents Unique Challenges
Users are largely unaware of how their data is collected and used on the open web, especially regarding third-party and fourth-party data sharing, which increases privacy risks and regulatory scrutiny.
“It’s safe to say users have little to no idea what’s happening with their data on the open web!… This results in increased third-party risk on the open web. We’ve seen cases where brands and companies face privacy fines because they have third-party vendors on their sites without understanding their operations or data practices.”
A Privacy Reckoning is Imminent
The industry should anticipate a significant shift due to privacy concerns, which could lead to damaging legal and regulatory actions. Brands must prepare by enhancing accountability and monitoring practices.
“Privacy is seen as a human right, leading to expectations for industry safeguards. I foresee growing technical sophistication of regulators. There’s been a skills gap between legal professionals and the technical side of the internet, but regulators will become more adept at monitoring digital activities. As they gain expertise, they will enforce privacy laws more effectively, which will have real consequences for brands.”
By acknowledging the fundamental importance of privacy, addressing the complexities of data collection on the open web, and preparing for the imminent privacy reckoning, the digital advertising industry can adapt to these challenges. As Ratko emphasizes, brands and companies must enhance their maturity regarding data privacy and protection to navigate the evolving landscape successfully.
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Transcript
Cannes Interview Series
[This interview has been edited for clarity and brevity.]
Terry Taouss (Acceptable Ads Committee): Hello, I’m here with my colleague Ratko Vidakovic. Ratko is the founder of AdProfs and the writer of the This Week in AdTech newsletter. He’s a serial entrepreneur who’s been involved in digital media for over a decade, in various capacities including publishing, marketing, and ad tech. He’s generally considered one of the foremost experts in ad tech and digital media. So, I’m honored to have Ratko here today.
Ratko Vidakovic (AdProfs): Thanks for having me.
Terry: A lot of people turn to you when they’re trying to make sense of the ad tech industry. That’s a big part of why people read your newsletter. Since around 2018, you’ve been talking about privacy almost every year. Why do you think privacy is such an important evergreen topic in digital media?
Ratko: Privacy is one of those things that’s hard to argue against. From a political perspective, it’s something that easily earns support. It all started in 2018 with GDPR in Europe, and we’ve seen it spread ever since. From a tech industry perspective, it’s similar – big tech platforms gain points by adding privacy features or championing data privacy. Apple, for example, anticipated GDPR and pioneered privacy measures in the ad tech space. Google has followed, although more slowly. If regulators, big tech platforms, and users care about privacy, businesses need to care, as well.
Terry: It seems that consumers are becoming more aware of the data being collected and used by big platforms like Meta and Google. That may not necessarily be the case regarding their understanding of data collection on the open web. What are the implications of users not having the same awareness when it comes to the open web?
Ratko: It’s safe to say users have little to no idea what’s happening with their data on the open web! What’s collected, what’s shared … unlike with walled gardens, the open web is often managed by third parties. In the RTB (real-time bidding) ecosystem, data is frequently broadcast with minimal technical safeguards. This results in increased third-party risk on the open web. We’ve seen cases where brands and companies face privacy fines because they have third-party vendors on their sites without understanding their operations or data practices.
Terry: Can you provide an example of a third-party service collecting or using data in the programmatic space that the average consumer may not be aware of?
Ratko: There’s this concept of ‘fourth parties’ which most consumers – and even some legal and privacy professionals – aren’t aware of. You have third-party service providers on a website, and their code can call additional parties. For example, a third party might be a service related to marketing automation. A fourth party could be piggybacking on their code, used for analytics or ID resolution. This may not be obvious to the brand, and it’s definitely not obvious to the consumer.
Terry: We saw a “reckoning” with intrusive advertising through the adoption of ad blockers. Given the attention privacy issues are receiving from regulators, consumers, and the media, can we expect a similar reckoning in digital media?
Ratko: Absolutely. The privacy reckoning could be even more damaging than the ad blocker reckoning, primarily because it involves legal and regulatory action. Privacy is seen as a human right, leading to expectations for industry safeguards. If these aren’t in place, there are consequences like fines and reputational damage. Brands, who maintain consumer relationships, are likely to be the most affected, demanding more accountability from their tech partners.
Terry: Within ad tech, there’s a reliance on identifiers that connect consumers to devices, which is a hot topic. What are your thoughts on the importance, sustainability, and impact of identity solutions?
Ratko: Identifiers are crucial for monetization and performance in digital media. Evaluating their longevity varies. Device fingerprinting, for instance, relies on browser signals like IP addresses and user agents, which users can’t easily control or opt out of. Big tech platforms, such as Apple and Google, are already countering fingerprinting practices. Its long-term sustainability is questionable.
Network-level identifiers, especially in Europe, are more transparent as they rely on user consent, but they still have vulnerabilities. First-party data, often email addresses, is increasingly collected by publishers and brands. While there’s little issue on the surface, complications arise during data activation, involving third-party technologies like clean rooms and identity resolution providers. This is currently a limited approach, but as third-party cookies and fingerprinting become harder to use, first-party data usage may increase.
Terry: You have a reputation for identifying critical issues before they enter mainstream conversation. What do you see as the three biggest issues in digital media over the next five years?
Ratko: I foresee legal and technical battles over signals the ad tech industry depends on, such as IP and email addresses. Apple and Google are taking measures against IP-based tracking, and the same goes for email tracking. Legal battles may arise, with ad tech arguing that these platforms are overreaching or engaging in anti-competitive behavior.
The second issue is the growing technical sophistication of regulators. There’s been a skills gap between legal professionals and the technical side of the internet, but regulators will become more adept at monitoring digital activities. As they gain expertise, they will enforce privacy laws more effectively, which will have real consequences for brands.
Lastly, I believe brands will, out of necessity, increase their maturity regarding data privacy and protection. They’ll need technology that matches regulators’ capabilities, leading to a mutual improvement in tools and expertise. Brands won’t be able to rely solely on contracts or CMPs – they’ll need their own monitoring tools to verify what’s happening on their sites instead of just trusting vendors.
Terry: Ratko, thank you for joining me today and sharing your insights. It’s always a pleasure. If you’re not yet a This Week in Ad Tech subscriber, please visit adprofs.com to subscribe and get Ratko’s insights regularly. Thanks again.
Ratko: Thanks for having me.
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