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Opinion | Are digital advertising and businesses based on it in danger?

Date: March 24, 2023 Time: 02:15:41

These weeks several news items have been published about Internet advertising and the large technology companies whose business model is based on it, which are not new, because they have been preceded by an intense and long debate on the subject for months or years, but which do represent, I believe, a qualitative leap or, as the sensationalist headlines would say, a ‘turning point’ or ‘no return’.

We first learned that “Google is finally killing cookies,” one of the most controversial aspects of the internet” and “now everyone is gearing up to sell personalized ads in the future: from startups to big telcos.” “The death date, which means turning the advertising market upside down, was postponed several times. This time, it looks like there will be no further delay.”

Then we learned that “the United States Department of Justice has filed a lawsuit against Google, for alleged abuse of its dominant position in the digital advertising market” and that “together with the federal government, eight states have joined the lawsuit , which calls for the division of Google’s advertising business through divestments to encourage competition.

And finally we have heard the incendiary speech of David Cohen, CEO of IAB (Interactive Advertising Bureau), the world’s largest association of communication, advertising and digital marketing, at the event of its Annual Leadership Meeting (ALM), which has taken place this week in Florida, in which he has attacked “extremists” whose mission is to cripple the advertising industry.

This news joins other previous ones, such as Apple’s decision, two years ago, to launch a new version of its operating system in which it forced application developers to ask users if they wanted to be tracked, or that of Netflix (October 2022) to launch a cheap ad-supported subscription plan, and the very recent resignation of its co-founder and CEO Reed Hastings.

advertising vs. privacy

In order to explain this gibberish of news for those uninitiated on the subject, I think the most enlightening thing is to give the floor to the CEO of IAB, to understand the vision of who, as he himself says, “as CEO of IAB, I have the opportunity to speak daily with all sides of the ecosystem.” Although, yes, we warn that it is an interesting position, but ‘from the side’:

The 1st conclusion: “extremists are winning the battle for hearts and minds (…). We cannot allow that to happen. Americans. Opportunists are on all sides of the political spectrum.”

Takeaway 2: “We all need to be in this together. If we can’t fix the rot at our core, we won’t survive. While there is no shortage of extremists attacking our industry from the outside, there are some who are attacking it from the inside out. In In particular, Apple exemplifies the cynicism and hypocrisy that underpin the prevailing extremist view.”

The third and last conclusion is hopeful: “Digital continues to be the greatest opportunity for society and our role in it. It is the great equalizer, the great democratizer. We cannot allow the cloud of economic uncertainty to blind us to the opportunity it offers digital (…) There is room for all of us to grow with innovation and healthy competition”.

He himself clarifies who the extremists qualify: “It is not necessary to look much further than the GDPR (General Data Protection Regulation of the European Union), which was designed to subdue the “Big Tech”. But, in fact, it had the opposite effect: punishing small and medium players. Making compliance so difficult that only the largest companies can comply.”

Internet companies vs. telecos

Apart from this vision from the point of view of communication, advertising and digital marketing companies and their criticism of those who bet on user privacy, such as Apple, there is a battle between internet companies (OTTs or Over The Top and telecommunications operators for taking over personal data, which is the key to personalized advertising.

In this sense, a couple of weeks ago the four major European telephone operators (Telefónica, Orange, Vodafone and Deutsche Telekom) announced an alliance to position themselves in the face of this future without cookies with their TrustPid solution, “a European-wide technological platform for marketing digital prioritizes user privacy”. And they have already asked Brussels for the go-ahead.

“The proposal consists of creating a digital identifier (‘token’ activated based on their IP address and linked to the subscription to the network) that will generate a series of pseudonymous data that will allow a user to be recognized without revealing any personal data directly identifiable The identity of each user will not be known, with one salvation: the telcos themselves.”

Therefore, we are witnessing a battle over who will control (protect, according to them) the personal data of users, when cookies finally come to an end. Whoever controls that data will control the advertising business, because the battle over personalized advertising is the battle over personal data. And whoever controls advertising will control the business models based on it.

In this battle, nothing has yet been decided and something -or a lot- will have to be said by the European and US personal data protection authorities and extremist and opportunistic politicians from all sides of the political spectrum, according to IAB experts for reconciling the advertising with privacy. What is clear is that David Cohen did not make many friends with his speech.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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