The UK’s Information Commissioner’s Office (ICO) has condemned the programmatic advertising industry in a strongly worded report questioning the legalities of real-time bidding (RTB).
The data regulator singled out RTB, the auction in which ad impressions are bought and sold in microseconds, claiming that widely adopted practices such as the profiling of users via cookies were in breach of both UK and EU laws.
Pulling no punches the regulator wrote: “The adtech industry appears immature in its understanding of data protection requirements. While the automated delivery of ad impressions is here to stay, we have general, systemic concerns around the level of compliance of RTB.
“The processing operations involved in RTB are of a nature likely to result in a high risk to the rights and freedoms of individuals.”
At issue is the complexity and opacity of data-driven advertising in its current form which leaves individual internet users to the mercies of adtech giants.
Despite the firm rejection of current practices the report does not serve as a formal declaration of illegality but does send a signal to the industry that it has been served notice to change its ways and comply the General Data Protection Regulation (GDPR) rules.
Prash Naidu, founder and chief executive of Rezonence, explained: "The fundamental programmatic functionality that allows all the actions that the ICO have ruled as being essentially unlawful is the audience segment. A typical online user is in thousands of audience segments accessible to just about any firm participating in RTB processes.
"Users are almost entirely unaware of the segments they’ve been added to and how these segments are being used. I believe adding a user to an audience segment without their understanding and consent is unlawful according to the ICO’s latest guidance."
He warned: This would mean that just about every audience segment being used in the market today is invalid and will therefore need to be deleted. The impact on the programmatic world is going to be like the dinosaur-killing asteroid hitting it; entire species will go extinct but new ones will evolve."
He doesn't believe six months is a lot of time to right these wrongs.
Facebook and Google have much of the adtech market sewn up between them but are facing a growing threat from the emergence of Amazon as a significant player.