Gowthaman Ragothaman delves deeper into the ongoing privacy issue that is raging across the globe and its implications on the ecosystem. Gowthaman, spent 25 years in WPP, before joining Aqilliz, a marketing technology company as its chief executive officer. He makes a case for a creative solution beyond the age-old advertising vs subscription model.
Privacy. Compliance. Personalisation. The three most talked-about words in the marketing industry today. Each of these words, in itself, impact our industry very much. And together, it pretty much defines digital marketing today. Or so is the intent. Personalisation has been bandied about in digital advertising, as the most exciting possibility. This helped take monies away from ‘traditional’ media to digital platforms. Focus on privacy is a recent phenomenon, a general data protection policy that nations are now putting in place, largely as government regulations, to protect the interest of its citizens. Compliance is the new kid on the block. This is almost like taking an insurance policy. Let me be ‘better safe than sorry’, even though corporate fines on data breaches can be as severe as nearly 10% of the revenues.
Time to rethink the commercial model
Digital platforms across Search, Social and Commerce made a virtue out of personalisation to acquire customers or subscribers. The recommendation engines that run these platforms act as an incentive for the customers to keep going back to them. Customers in turn share their data for this experience. So far so good. Users have signed the terms and conditions with the platform (not many would have read it though!) and it is all good. So where is the problem today? It is in the commercial model. When these platforms offer these services for ‘Free’, but earns revenue from a third entity (on the back of the count of subscribers or users), a bilateral agreement is being used with a third entity for commercial benefits, without proper consent.
Does the truth lie somewhere between Apple and Google
Platforms have responded to this in two different methods. But the principles have remained very traditional. Nothing new. Back to the age-old advertising vs subscription model. Apple moved to one extreme, with a fully paid subscription, protecting the terms and conditions they have with their consumers. Google has now moved to the other extreme, supporting advertising, and protecting the terms and condition they have with their consumers. How is it possible? Yes. Consumers on Apple are fully addressable. Consumers on Google can only be addressed as a cohort. That is the difference. It remains to be seen, what the response will be from other platforms. Interestingly, Facebook officially declared Apple as its competitor.
Cleaning the muddle between targeting and privacy
The impact of this will be severe on two stakeholders in the digital marketing ecosystem. One, the Open Web. Second, the marketer. By deprecating the cookies and migrating to a cohort-based targeting, Google has addressed the concerns on privacy but has left the open web high and dry without any solutions. The Open Web needs to re-architect itself to this new world. As such the open web survives on a decentralized and fragmented supply chain. Without any central authority, an assembly of stakeholders is rallying around to save the open web. Marketers, on the other hand, will have to let go of their possibilities on personalization and return to the traditional way of targeting. The promise of personalization that drove monies from traditional to digital is an unkept one. New analytics are required for the new digital marketing ROI.
Think of an out-of-box solution
There is also a third path, that is now showing a lot of promise. What if we take the subscription model and commercialize it for adjacent services? Like a subscriber to a parenting website/app, being offered a discount on diapers. Or a sports website regular, being offered a discounted merchandise from a sports club. To achieve this, the participating entities should know their consumer very well. All of them; the website, the diaper brand and the sports club. And secure consent from them for activation. And a record to maintain it, for compliance. The race to knowing their own consumer has just begun. Not just brands, even publishers are now trying to be ‘direct to consumer’. This is an expensive investment, though. However, if the brand or the publisher can establish the ROI, from this privacy-compliant personalization, this new and emerging path can create a thriving digital marketing ecosystem. The jury is out.
Gowthaman Ragothaman is the chief executive officer of Aqilliz, a marketing technology company.