Marketing Adtech Data & Privacy

We’ve come too far to ditch data-driven advertising

By Mathieu Roche | Chief executive officer

November 14, 2022 | 7 min read

Privacy advocates have forgotten that data-driven advertising is the support system of the open web and of democratized access to information, writes ID5’s Mathieu Roche as part of The Drum’s Data & Privacy Deep Dive.

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Data-driven advertising has come under fire recently. Political extremists have sought to rebrand the whole of advertising informed by consumer interests, behaviors and identities as ’surveillance advertising,’ and some have called for a wholesale ban on using consumer data to target ads.

But these arguments ignore the many benefits of data-driven advertising, chief among them free and open access to online information. They also turn a blind eye to the readily visible middle ground between endorsing advertising that uses consumer data without consent and banning data-driven advertising altogether.

To understand the case for data-driven advertising, we need to understand the services it finances, consider what responsible data-driven advertising looks like and reckon with the inconsistencies in some of the arguments data-driven advertising’s critics make for its abolition.

Data-driven advertising finances the free and open internet

Advertising pays for the many websites and apps – from small niche publications to CNN’s bustling news site – that billions of us use without subscription fees, allowing all users to access valuable information. It’s what pays the bills of most of the content creators that we follow and has empowered smaller creators and influencers from all over the world to make a career of their talents. At the same time, it allows small businesses to find customers and creates hundreds of thousands of jobs.

Undercutting the revenue that data-driven advertising provides, thereby forcing content and service providers to move to subscription models, would have a chilling effect on the news industry, which is essential to functioning democracies, and the many other advertising-supported sites that we use to communicate, learn and entertain ourselves. Even worse, it would be anti-democratic, shutting out lower-income people or limiting them to only a few sites while the privileged enjoy broader access to information.

It is easy to scare people into claiming they support the abolition of data-driven advertising. If you ask consumers whether they want their data used for advertising without explaining its benefits, then sure, many will say they don’t. But when the trade-off is clear, most will accept ads in exchange for content. Two out of three consumers say they welcome ads in exchange for free content, according to data from Tivo, while Adlucent research reveals that 71% of consumers want personalized ads.

Data-driven advertising doesn’t need to involve surveillance

Data-driven advertising’s harshest critics want to lead consumers to believe that there are only two options: ban using consumer data to personalize ads or let companies track consumers all over the internet without their knowledge and use their information for any business purpose. But there is enormous middle ground between those extremes.

The most nefarious uses of consumer data and poor data stewardship – including election manipulation, credit card fraud and commercial harassment – are truly harmful. But allowing consensual data collection by premium publishers does not mean opening the floodgates to these behaviors.

Regulators from California to Europe have passed sweeping data protection regulations in the past few years and they all hinge on two principles: getting the consumer’s consent for data’s commercial use and protecting that data so that there are consequences if it is compromised. Businesses are shifting their practices to do precisely that: ensuring consumer consent underpins the collection and use of data and protecting data to minimize breaches and render breaches useless to hackers should they occur.

If businesses deliver on these two principles – obtaining consumer consent and protecting data effectively – data-driven advertising becomes far from dystopian. And that is precisely what ongoing regulations intend to do.

To be sure, some businesses have overreached, collecting and using consumer data without consent and storing it improperly. These excesses need to be reined in. But the industry is already moving in the right direction. Countries like the US should go a step further by adopting nationwide data protection regulations to define the rules of engagement between businesses and consumers with respect to the latter’s data.

Advertising can’t go back to the 1990s

Some will read this argument and concede that advertising plays an important role in the digital ecosystem while continuing to argue that data-driven advertising is unnecessary because its role can be filled by other mechanisms like contextual targeting. But this, too, is a misleading argument that obscures the downsides of eliminating data-driven advertising.

Personalized data-driven ads are the lever that allows advertisers to reach their audiences most efficiently, driving up media prices to sustain publishers’ businesses while ensuring that advertisers need fewer ad spots to reach the right audiences. If data-driven advertising were eliminated, publishers would need to run far more ads to make up lost revenue, and ads would be much less relevant to consumers.

Just think of traditional TV and how many ads those publishers need to serve to sustain their businesses. A lot more – and more irrelevant – advertising is the reality we face if we stray from data-driven approaches. Is that a future that audiences want to see or an experience that publishers want to deliver?

Data-driven advertising has flourished over the past two decades because it works. It allows advertisers to reach the right audiences, publishers to generate revenue efficiently without spamming audiences with irrelevant ads and audiences to enjoy free content in exchange for a few moments of their time and information.

As long as data-driven advertising is consensual and secure, there’s nothing wrong with that.

Mathieu Roche is chief executive officer at ID5. For more on how the world of data-driven advertising and marketing is evolving, check out our latest Deep Dive.

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