September 30, 2023

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Why less data and more understanding is key to privacy-forward digital advertising

Over the past decade the digital ad industry has evolved tremendously and a key question for marketers has emerged: What is the right balance between privacy and utility? The internet fundamentally revolutionized advertising and ad viewing, and in return digital advertising underwrites the free and open internet—but at what cost, to both the advertiser and to the internet user?

The drive for more privacy has resulted in consumer-protecting laws like the EU’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CPRA), which is set to go into effect on Jan. 1. In reaction to these new regulations, Big Tech have introduced or announced changes to their operating systems and browsers that have upended the digital advertising ecosystem on both desktop and mobile. 

So, it’s essential that anyone who has a stake in digital advertising care about this issue, and how the average consumer understands the overall value exchange they receive within their internet experience—and in particular what they get out being targeted by ads.

“Depending on how overt the advertising is, there are degrees of understanding and of appreciating that value among consumers,” said Anthony Katsur, CEO at IAB Tech Lab. “Yes, the value exchange is probably clearer when consumers interact with publications—ads are expected there, after all. But in general, the ad industry could do better in conveying the value exchange it and consumers can share in.”

These points were particularly well illustrated in a candid discussion between Katsur and Kieley Taylor, global head of partnerships at GroupM, during a Nov. 1 Meta Industry Discussion moderated by Tanneasha Gordon, principal of risk and financial advisory at Deloitte, on how a greater understanding of an ad-supported internet can be realized with new technologies that enhance privacy as well.

Less data, greater understanding

There is an emerging consensus in thinking about the right balance between privacy and marketing utility, which can be summed up as “the least amount of information a marketer should need about a person to deliver value.” It could be as simple as asking a few questions of the consumer. Yes, proper privacy notifications are table stakes, but also a clearly articulated, purpose-led request for data gathering also can be conveyed to consumers.

“Context may become king again in all of this,” Taylor noted. “There has been no slowdown of ad blockers, and that should serve as a wake-up call that there needs to be much more respect in terms of the interactions that we have with customers.”

Proper privacy notification and clearly articulated, purpose-led requests for data gathering need to be conveyed to consumers. Where the ad industry may have failed is in conflating privacy with data security into a single discussion. Fortunately, there is an evolution in technology that’s combining privacy with data collection. 

Privacy-enhancing technologies—PETs, for short—are techniques designed to extract data value without risking privacy and security. In addition to the creation of the ad server and real-time trading, PETs may be the next ground-changing development in digital advertising.

PETs are a confluence of practice in the areas of crypto photography and encryption, machine learning and on-device computing. The beauty of PETs is that they really do address the data security issue, the ability to de-identify consumers and basically anonymize them, and then encrypt even that anonymized token.

Meta believes PETs will support the next generation of digital advertising, which is why the company is investing in a multiyear effort with academics, and global organizations  to build solutions and best practices. Meta has also established research award opportunities to support privacy-focused projects in academia, which resulted in awards to 10 groundbreaking projects

“It’s encouraging to have an exciting initiative in the ad ecosystem to recapture signal and to understand efficacy, potentially with more opportunity for deduplication across the media buy, which had not been available because of cookies for some time,” Taylor said.

The role of PETs in consumer education

The essential challenge in balancing privacy with ad utility is communications. While the ad industry already has challenges explaining the value exchange of digital advertising, it now has to figure out how to explain PETs to consumers, and how this technology is securing their data in a way that they’ll understand. 

“Governments also have to be fully informed of the efficacies of these new technologies, how PETs can enhance privacy and data security while maintaining impactful advertising,” Katsur said. “That’s going to be a heavy lift.”

Advertisers have an essential role to play, Taylor said. 

“They have to get their data house in order,” she said. “They need to understand what match rates look like. They need to make sure their records are complete and housed in a respectful way—things like naming conventions and standardization of taxonomy of the data. That will be the right way to move forward so that the models can be as effective as possible.”

To watch the entire Meta Industry Discussion “Has the digital ads ecosystem found the right balance between privacy and utility?” click here


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