'We're being squeezed:' Marketers are freaking out about upcoming privacy laws in the US and worry that it will be worse than Europe's GDPR
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The opening gala of Advertising Week 2019.
- At this week's Advertising Week, privacy was the big concern on marketers' minds as they brace for the upcoming California Consumer Privacy Act and other legislation that threaten to limit their ability to target ads at people.
- Publishers like Meredith and CBS Interactive are working to make contextual targeting more sophisticated and preparing for high opt-out rates by consumers.
- The US doesn't have a federal privacy law like Europe does, and advertisers worry that managing multiple state laws will be a headache.
- Privacy legislation will give brands with first-party data a leg up, while advertising will be harder for third party-dependent marketers like automakers and packaged-goods brands.
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At Advertising Week in New York this past week, close to 100,000 marketers, ad-tech execs, and media folk crammed into New York's Lincoln Square for a week of programming that was billed as a chance to connect, learn, and get inspired - and spot the occasional celebrity like Laverne Cox, Gwyneth Paltrow, and Pitbull.
But the actual tone from the stage and corridors was one of unease. Some of the issues aren't new: Ad avoidance continues to challenge advertisers to get their message in front of consumers, tech giants continue to dominate digital ad budgets, and trust in news media is dwindling.
But this year attendees seemed most worried about privacy laws as regulators start to clamp down on digital advertising and threaten to dismantle the longstanding way advertisers have targeted people with ads online.
Execs from big-name brands like Mitsubishi and American Express talked about how they're preparing for a post-cookie world, publishers including Meredith and CBS Interactive spoke about how regulation will change their business models. And ad-tech execs stepped up their concerns that privacy laws could cause the industry a big existential crisis if it's mishandled by regulators.
More than a year after Europe's General Data Protection Regulation, or GDPR, rolled out and required companies to get consumers' consent to use their data for marketing, the California Consumer Privacy Act, or CCPA, also promises to put more privacy pressure on advertisers when it takes effect in January. At the same time, giants like Apple and Google are creating new privacy-focused products.
Read more: Apple's new single-sign-on feature has advertisers quaking over the marketing implications
"We're being squeezed from both sides," said Chip Schenck, VP of programmatic sales and strategy at Meredith, publisher of magazines like Better Homes and Gardens and People. "We are not going to be able to rely on third-party tech in any way as it relates to tracking, targeting."
One way publishers are working around cookie-less targeting is with contextual ads. Schenck said that Meredith is working on going beyond basic contextual targeting that marketers have used for years. For example, instead of just showing a food ad to someone reading a recipe, Meredith can target ads based on whether a visitor came to a website through search or social media.
Some marketers worry that CCPA opt-in rates will be high
One of the biggest differences between the CCPA and GDPR is that CCPA will require consumers to take action to opt-out of sharing data. Some marketers think the impact on them will be minimal for that reason.
But Jason White, EVP and GM of global programmatic revenue at CBS Interactive, said if consumers don't know how their data will be used for advertising, they might opt out in droves.
"I think the opt-out rates are going to be much higher than we anticipate," he said. "Advertisers are going to spend … they're just going to have to connect with different device IDs, use propensity models or contextual targeting."
Using GDPR as an example, he said that the revenue impact from regulation can be significant. When GDPR rolled out last year, CBS Interactive's CPMs (or cost per 1,000 impressions) dipped by 30 percent. Today, he said ad prices are still 20 percent lower than they were before GDPR.
To teach consumers about how marketers use their data, White said that the ad industry could create a big PSA campaign about privacy. A large-scale ad campaign could also double as a way to educate regulators about the ad industry, said Steve Silvers, VP of product management at Neustar Identity DMP.
"Nobody understands our industry," he said. "We need to do a better job of informing the public and regulators on exactly how our industry works so that they can possibly put legislation in place that would both regulate and protect consumers."
Marketers are fighting for a federal privacy law
While GDPR covered all of Europe, the potential for multiple, state-based privacy laws could make life harder for marketers in the US.
That's why agency trade group the 4A's is part of a coalition called Privacy for America that is working towards creating a federal privacy law.
"Imagine if you have 50 different states all enacting similar legislation. Trying to manage that as a company will be far too complex," said Marla Kaplowitz, president and CEO of 4A's. "We need for the FTC to launch a data protection bureau."
Third-party data is getting harder for marketers to use
Privacy regulations favor first-party data like email, loyalty program, and sales data that marketers collect directly from customers, and make it harder for marketers like automakers and packaged-goods that rely on third-party data to target people.
Last year, Facebook began requiring marketers to work directly with third-party data firms like Experian and Oracle to create their own audiences for targeting before uploading the data to Facebook to run ad campaigns.
Jeff Nicholson, CMO of digital agency VaynerMedia and CEO of its ad-tech platform, Tracer, said the new process puts an additional burden on advertisers.
Gerry Bavaro, global chief strategy officer of M1 at Merkle, said that while there are companies that provide third-party data, CCPA will favor marketers with first-party data.
"There's a perception that third-party data for targeting has gone away - it hasn't," he said. "This is where ownership of data and identity is important."
