Why First Party Data May Not Save Digital Advertising
Also notes on YouTube sitting out the NBA negotiations and the Trade Desk's possible motivation
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Over the past few years, every publisher, tech platform, brand and shopping entity has raced to gather as much first-party data as possible. Cookies and mobile IDs are going away, and anyone with data collected directly from consumers would not only be in a great position to target customers with ads, but also stay on regulators’ good side.
They could even pass all this first-party data around through clean rooms and the like to match up different ID sets to do even more clever targeting. Again, as long as they got this information straight from consumers on the up and up, they were set.
What if they’re not?
I stopped by the IAB Tech Lab’s 10th anniversary event the other day, and CEO Anthony Katsur was very blunt about the ‘very real challenges that strike at the core of how this industry operates.”
Because of signal loss, digital advertising was going through a “great reset” centered on “privacy and addressability” - one which most companies are “woefully underprepared for.”
Then he mentioned the term “data minimization.” “Get used to that phrase,” he said.
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That sounds super ominous, and to be honest, I wasn’t sure what he meant exactly. Data minimization is a core concept of GDPR, which was enacted back in 2018 - but it’s also featured in several US state privacy laws, of which there will be 25 by the end of the year.
As Katsur explained it, the data minimization concept is about publishers, brands, retailers’ needing to limit their collection of data, and being very specific and clear in its purpose.
Here’s how Law.com explains the concept via the California law:
The CCPA provides that “[a] business’ collection, use, retention and sharing of a consumer’s personal information shall be reasonably necessary and proportionate to achieve the purposes for which the personal information was collected or processed, or for another disclosed purpose that is compatible with the context in which the personal information was collected, and not further processed in a manner that is incompatible with those purposes.”
The Electronic Privacy Information Center, an advocacy group to be sure, says that secondary uses of personal data are a big grey area for marketers and media companies.
For those of you still reading, this all got me thinking:
When you sign up to buy stuff from a retailer like Target or Amazon, do you know that your account info and purchase history will be used as a ‘secondary purpose’ to power a Retail Media Network?
When you sign up for Peacock, you assume your personal information is being used for billing purposes - but do you know that Peacock might allow brands to match up that data with data from another brand you get emails from (like say J Crew) to send you targeted ads while streaming The Office?
When you sign up to subscribe to a publishers’s email newsletter, do you know that your email address will be hashed and then used to help replace the cookie via UID.com?
If these companies are truly trying to minimize the use of consumer data, and only use it for one purpose, would any of these other purposes fly with regulators?
I don’t know, so I asked some experts.
Alan Chapell, a digital ads privacy legal expert: “Data minimization is the idea that you only collect, process, store, use the data that you need to process for a specific function…It begs the question, ‘what data do you need and what is the specific function you’re talking about?That question is at least a bit subjective and open to multiple interpretations. “
Is the specific function “all the things that help the publisher keep the lights on so long as those things don’t create too many headaches for the pub’s readers?” Or is the specific function limited to “you can only provide that email for a specific newsletter and any other use case is strictly off limits.”
Jesse Redniss, CEO of Precise: “We looked at the definitions of Data Minimization and “Consent” with GDPR and invested in the notion that eventually, every use of your PI or SPI will need to be “permissioned” by you the consumer. Right now, most of the industry is relying on base line Privacy Policy or TOS to be a catch all. That is being blown up.”
Richy Glassberg, co-founder and CEO of SafeGuard Privacy: “Folks have no idea what is going to hit them.”
Like I said, this all sounds scary. First party might not be everything it’s cracked up to be.
At the same time, there is the obvious question as to whether the US Attorney Generals are really going to enforce data minimization in a worst case scenario fashion? Do they really care or want to go after Target’s retail media business, or big streamers or even a middleman like the Trade Desk? Or will there be far more egregious consumer data abusers that soak up their time and effort? Can’t everyone just update their Ts and Cs anyhow?
This issue will either be fascinating to watch and result in huge changes in our industry - or another example of privacy experts crying wolf.
Major Tradeoffs
Had a great conversation this week with, Shiv Gupta, co-founder of U of Digital and expert on all things ad tech. Naturally, we touched on the recent buzz/excitement/controversy surrounding The Trade Desk and it’s now infamous list of the top 100 ‘premium’ publishers.
Gupta made an interesting point about why many might be uncomfortable with the Trade Desk’s role in handicapping the web - while also trying to push forward the great cookie replacement in UID 2.0.
“They're starting to be the arbiter of good supply versus bad supply,” Gupta said.” And hey, by the way, publishers, we may not come out and say this to you, but we just released this list and, and these are our picks for the top 100. You know, if you're not gonna play nice with UID too, like with our currency of the future, then you might not make it on this list, you know? There's some conflict of interest there.”
I recommend you check out the full conversation here.
YouMissed?
Until the 11th hour, it seemed as though Warner Discovery was trying to carve out a fourth NBA rights package. But alas, the winners of the crucial sports rights battle are NBCUniversal, Amazon and ESPN. I have been sayin for a while that YouTube should have been in the mix - the NBA would help vault YouTube further into the live, must-buy sports ad conversation, while the league would have benefited from getting closer to YouTube’s young audience and creators.
Regardless, whatever talks there were between Google and the league never seem to have gone anywhere, but maybe YouTube should have been more aggressive? Focus group of one brand executive, but Brad Feinberg, North American VP of Media and Consumer Engagement at Molson Coors, said one reason that his company doesn’t spend more TV money on YouTube is it’s lack of live sports (not counting NFL Sunday Ticket, which YouTube can only sell so many ads for).
“Obviously their scale makes them a viable competitor and overall audience,” he said. Even as YouTube has soaked up 10% of TV time, “In terms of how we make investment decisions. It doesn't automatically reflect that we're going to make a big significant change or jump in our strategy. And largely due to the fact that still a lot of live sports viewing is still done on other platforms.”
Some brands, particularly in categories like beer, are sports-first in their video strategies.
“We talk about building a waterfall to drive reach,” he said. “So YouTube is, because of its size, probably is not at the tip of the waterfall. It's probably closer to the bottom now as a result.”
I spoke to Feinberg as part of my multipart video series focused on the YouTube ad landscape in partnership with VuePlanner. Check out the conversation below.