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GDPR Open Mic Data & Privacy

Innovation in Europe is dead: Has GDPR helped or hurt the digital advertising industry?

By John Tigg, EVP, global buyer development & GM, international

Yieldmo

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November 17, 2022 | 8 min read

As part of The Drum’s Deep Dive on Data & Privacy, John Tigg, EVP, global buyer development & GM, international at Yieldmo, explores how GDPR has affected the global advertising landscape, and how adjusting to ongoing privacy changes could drive greater innovation within the industry.

EU flag under grey skies because of GDPR

GDPR celebrated its fourth birthday earlier this year, but there wasn’t much cake being cut in the digital advertising world. GDPR and the wider push for privacy have certainly been challenging, causing many late nights and worrying business projections. Despite the UK government planning to replace GDPR with alternative regulations that will reduce ‘red tape’, no one can deny the way the wind is blowing as GDPR-like laws roll out in markets across the globe while privacy and transparency gain ground as guiding principles.

For nearly half a decade, Europe has been operating under GDPR, and two schools of thought have emerged about its effects.

The first sees Europe as the epicentre of thriving privacy innovation, which over the years has developed a compliant digital advertising ecosystem more sophisticated than anything achieved prior to GDPR, when personal data was handled recklessly, power was concentrated on the buy-side, and audience targeting often overreached.

The second believes Europe is where innovation goes to die. Strict privacy regulations have stifled solutions that the industry came to know and love, burdening publishers and making tracking, targeting, and attribution difficult for advertisers, turning them towards the scale and detail offered by walled gardens and their sizable audiences.

But (approaching) five years is a long time in the tech world, more than enough for us to predict with a high level of confidence how a privacy-first ecosystem will function once third-party cookies disappear for good. Let’s look at how Europe’s ad ecosystem has evolved in response to GDPR and how businesses have successfully adapted to this new environment.

Brands and publishers have discovered the benefits of a varied data diet

From the panic GDPR initially caused — which included some companies exiting from Europe altogether — you would think that third-party cookies were the only source of data on the web. In fact, there are layers upon layers of signals, first-party data, and PII-free ID solutions that can be used to build a detailed picture of audiences, their preferences, and their behaviors.

Throw the predictive capabilities of machine learning into the mix, and marketers have a high-tech toolkit for delivering relevant campaigns to their target consumers. At the same time, publishers can build detailed audience segments and personalized user experiences to add value to their inventory.

What disappeared with GDPR was the ease with which data was gathered and transported, but this both devalued data that belonged to publishers and created data vulnerabilities that led to the push for privacy to begin with. In the pre-GDPR era of programmatic, it was the buy-side that amassed the most data, meaning they effectively owned the yield.

Today, the pendulum has swung to the sell-side as publishers can decide which vendors and media buyers can access their consented first-party data. Publishers are investing heavily in activating and expanding their audiences through matching IDs with other publishers and brands, sharing PII-scrubbed data in clean rooms, and using visitor behavior to optimize ad placement, user experience and creative content. Data Clean Room tech company InfoSum has quadrupled the number of clients it is working with this year.

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It’s not just publishers who are doubling down on first-party data, either. E-commerce platforms have used their wealth of insight on shopper behavior to open up targeting opportunities to advertisers, while brands such as Patagonia and Starbucks are implementing loyalty schemes to offer customers perks and personalization in exchange for insights derived from their account activity.

Of course, not every brand or publisher has a treasure trove of first-party data to monetize or the resources to do so, but thanks to AI-powered real-time contextual engines, websites can begin gathering insights and optimising around user behavior from the moment they launch. While much of the post-GDPR ecosystem could have rolled out years ago if the ease of third-party cookies didn’t remove the incentive to invest in alternatives, the rise of AI tools has provided genuinely new possibilities.

While privacy-first digital advertising has matured, the dust has not settled and likely never will. The ongoing back and forth between the IAB and the Belgian court over TCF shows that digital privacy will always be a work in progress, but the proactivity of the industry has minimized any unpleasant shocks as we can forecast where regulations are going and adapt long-term plans accordingly.

Whether you love or loathe GDPR, digital advertising continues to grow

Some people will always be ideologically opposed to innovation being in response to regulation rather than purely driven by market forces, but no one can fairly argue that the European digital advertising market lacks innovation or that the consequences of its regulatory environment have been entirely negative for the programmatic ecosystem.

One positive consequence of GDPR (depending on where you sit) is how it shifted the balance of power toward publishers. This is good news for everyone who benefits from a healthy and active open web: the more publishers can monetize their properties, the more they can invest in high-quality content that keeps valuable audiences coming back.

It’s the open web — where multiple technologies can coexist, where publishers can share audience insights with one another, and where collaboration can occur across the supply chain — that provides the most fertile ground for innovation. As long as privacy regulations don’t make the open web less open, there will always be room for digital advertising to grow.

GDPR Open Mic Data & Privacy

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Yieldmo

Yieldmo is an advertising technology company that operates a smarter version of an exchange that differentiates and increases the value of ad inventory for buyers...

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