From Privacy To Antitrust, Regulatory Scrutiny Of Big Tech Is Growing. What Does This Mean For Digital Advertising? – Forbes

Digital Ethics & Privacy

Despite the United States seeing an overall decline of over 32% in economic growth in 2020, share prices among tech giants soared and profits saw a boost compared to the year before. And yet, antitrust concerns and a growing emphasis on privacy have proliferated, leading to probes, lawsuits, and infrastructural changes.

To understand the implications this holds for the future of digital advertising, I spoke with Gowthaman Gman Ragothaman, Chief Executive Officer at Aqilliz, a first of its kind technological infrastructure that ensures privacy-compliant personalization.

In addition to his time at Aqilliz, Gman cemented his career in the traditional advertising industry for over two decades at the WPP group of companies. Leveraging his passion for privacy and his expertise, we also looked at new data from Prosper Insights & Analytics 2021 survey on privacy attitudes and concerns among US consumers which involved over 17,000 respondents segmented across boomers, gen-X, millennials, and gen-Z.

Gary Drenik: Much has been said about the dominance of big tech in the digital advertising ecosystem. Tell us more about the market dynamics in this area.

Gowthaman Ragothaman: What were seeing today is a very crowded content landscape where consumers are constantly bombarded with marketing messages. Brands then rely on personalization to get in front of the right audiences at the right time. To gain access to these audiences, brands and advertisers have come to rely on platforms which has led to the rise of walled gardens. However, regulators are enacting new frameworks that demand a more stringent approach to how consumer data is collected, used, and shared with and by advertisers.

Meanwhile, consumers then contend with uncannily accurate ads or irrelevant marketing messages. In fact, according to a survey from Prosper Insights & Analytics, disdain was equally expressed among boomers, gen-X, millennials, and gen-Z consumers in response to whether they liked it when advertisers used their personal data for audience targeting and personalization. Boomers and gen-X consumers expressed the most negativity with over 80% and over 63% respectively, against the practice.

Prosper - Advertisers Who Buy Personal Data

There are two fallouts from these developments, which are now seeking a correction:

Drenik: Walled gardens are distinguished for their large-scale repositories of consumer data. Is there a future for digital advertising without the dominance of these players?

Ragothaman: Consumer consent is the new mantra. More than a future beyond the dominance of big walled gardens, the focus should be self-regulation. With the incoming elimination of third-party cookies by 2022 on Google Chrome, brands have been forced to rethink their targeting strategies. With Apples latest IDFA updates on its mobile devices, one would expect that Android would follow suit as well.

In anticipation, were already beginning to see the formation of publisher-driven first-party data pools. In an ideal scenario, publishers will work together as part of a broader consortium, allowing brands to address ethically obtained first-party data points rather than navigating disparate data repositories.

Drenik: Google announced that it would not be supporting "independent user level identifiers". What will this mean for brands and consumers?

Ragothaman: In my view, Googles announcement to move to aggregated insights via cohorts rather than user-level identifiers are a step in the right direction. However, we still dont know how this will play out. For one, it was recently revealed that Googles Federated Learning of Cohorts model couldnt run in countries where GDPR and the ePrivacy Directive are in effect. Despite this being an alternative that supposedly offers greater privacy for users, regulators are arguing that it isnt enough.

We need to strike a balance between privacy and profit, and this trade-off significantly varies between markets therein lies the challenge for platforms in developing common standards and technologies. Theres also the issue of the omnichannel customer journey. In fact, Prosper Insights & Analytics found that across all generations, the opposition to the use of cross-channel data to personalize ads is significant. Despite their preference for authentic messaging, even 56.3% of gen-Z consumers stated they were against the practice, along with 64.7% of gen-X consumers.

Prosper - Attitudes Towards Use of Personal Data

There are new terms like Privacy Budget that are being talked about but one thing is for sure: independent user level identification will give way to cohort level communication for a large part of advertising unless and until there is explicit consent from that individual that he or she would like to receive promotional communications and they can be tracked.

Drenik: Is there a promising "universal ID" solution out there that can be adopted just yet?

Ragothaman: The concept of a universal ID is a big one. Cookies were free and they did not carry any liability on behalf of the participants in the digital supply chain on consumer preferences or consent. They were just free and open source. What is expected now is a universal ID which is not free and is capable of capturing and carrying consumer consent across the digital supply chain. At Aqilliz, we are working on a solution to address this - providing an approach to cookieless identifiers for a collaborative, compliant data sharing network.

Drenik: Should brands and advertisers better communicate their privacy-oriented initiatives to consumers?

Ragothaman: Information asymmetry on privacy is still an issue. According to a recent Prosper Insights & Analytics survey, an average of 66.6% of consumers across all generations are in favor of legislation that prevents technology companies selling their personal data to advertisers. Among them, boomers felt most strongly about the issue with almost 80% of all respondents in favor of more privacy-oriented measures.

I wont be surprised if some brands decide to take a high ground on this and self-regulate themselves by declaring their privacy standards. As such, were beginning to see an approach similar to nutrition labels which brands can provide to keep their customers informed.

Drenik: Theres been several data collection initiatives as part of public health strategies during the pandemic. Why do you think some people have been hesitant to part with their personal data for this, yet we all seem content to share our information online?

Ragothaman: Privacy is poorly understood. The language around consent is often hidden in greatly overlooked terms and conditions. Beyond accessibility barriers, theres also significant variations in cultural understandings of privacy which results in fragmented regulatory guidelines in disparate geographies. What this shows is a dire need for standardization in this space. In my view, when such initiatives are structured properly with concerted outreach to educate the consumer, there has been very little resistance.

Drenik: Thank you, Gman this was certainly an eye-opening discussion on the challenges that brands, consumers, and platforms are all contending with in an increasingly digital-first age. As new regulatory milestones continue to unfold across the globe, American businesses need to take these into account given the borderless nature of the digital landscape. To read my previous Forbes articles on changing consumer behavior, predictive analytics, machine learning, data privacy and more, please click here.

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From Privacy To Antitrust, Regulatory Scrutiny Of Big Tech Is Growing. What Does This Mean For Digital Advertising? - Forbes