Increased regulation may have been catastrophic for parts of the ad tech industry, but as the shake-out continues, publishers and reputable partners are seeing the benefits of better data management and transparency, says Esther Kezia Thorpe in this chapter of our Media Moments 2019 report.
There has never been as much noise around data in publishing as this year. The conversation is complex, with issues around GDPR, cookies, privacy and advertising tangled up with personalisation and first-party data. For this reason, this chapter will touch on the progress of advertising and data protection as well as how publishers have been innovating with data this year, and some of the opportunities for the year ahead.
For almost a decade, third-party cookies have been at the centre of the digital advertising economy, with providers packaging and selling publisher data for advertisers. But following the introduction of GDPR in 2018 and an increasing awareness of consumer data rights, the world’s most popular browsers are now forcing a move away from third-party cookies, putting power firmly back in the laps of publishers.
Where are we now
The current focus on consumer privacy can be tracked back to two major incidents in 2018: the introduction of the GDPR in Europe, and the Cambridge Analytica scandal, where Facebook had allowed the company to harvest the personal data of millions of profiles. The impact of these two events has continued to ricochet into 2019, with a heightened awareness of the importance of data privacy, and the need for individuals to be in control.
GDPR fines during the first year of the legislation totalled €56 million, with more than 64,000 of the 200,000 investigations upheld. However, of that €56 million, €50 million was a single fine against Google. France’s National Data Protection Commission fined them under GDPR for failing to comply with its obligation to be transparent about the data it was collecting and using to serve personalised ads.
Australia passed Consumer Data Right legislation in August. Like the GDPR, the bill gives customers more control and choice over the data companies hold about them. Although there are issues with the implementation of these new laws, the more general shift across the nation to stricter data laws directly affects the publishers based there in the same way European publishers have been affected by tighter data regulation.
Although the US has yet to introduce any comprehensive data laws, the headline legislation this year has come from California, where the state is introducing its own Consumer Privacy Act. The CCPA becomes effective in January 2020, and similarly includes new individual rights to data access and erasure, the right to opt-out of data selling, and strict rules about system vulnerabilities.
This has already raised a number of questions around how businesses across the US will handle compliance across individual states, and like the GDPR, it is likely that enforcing these rules will be a challenge.
Facebook, Google and Amazon have spent significant amounts of money this year lobbying Congress to pass federal data privacy legislation, to minimise the risk of other states adopting a patchwork of state laws that would be impossible to comply with. Of course, they want to write these rules on their own terms, but a national standard would make data privacy far easier to deal with than individual state regulations.
Separately, Facebook was actually fined $5 billion by the Federal Trade Commission in July for failing to live up to privacy commitments agreed with the FTC back in 2012. The settlement also established an independently-appointed privacy committee, to be incorporated into Facebook’s board.
But one of the biggest developments in data this year has been the ‘death of the third-party cookie’. This began with Apple, who announced a new tool to block third-party ad trackers at their 2019 WWDC event. In September, Firefox said that they were releasing an enhanced tracking protection feature, which would block all third-party cookies for users on the browser by default.
Google’s Chrome browser, with a 66% share of the market, has yet to commit firmly to similar measures. But in its latest Chrome 78 Canary build, it has been seen testing a third-party cookie blocker.
This privacy-driven anti-tracking movement has had an impact on revenues this year. Firefox and Safari control up to 40% of overall traffic to publisher sites, and without third-party cookies, these users are invisible to media buyers. Publishers stand to lose 52% of their programmatic ad revenue at present, without third-party targeting.
As expected, the publishing industry is divided in its approach to this impending ‘cookie-pocalypse’. Some are ignoring the issue, and are hoping that industry ID solutions will solve most of the problems.
Others are being proactive, and rebuilding their businesses around first-party data instead, because they have the technical and legal right to process user data. This direct relationship with consumers opens the door to an estimated $19bn opportunity for publishers in the US alone.
Thanks to this behaviour from browsers and a growing necessity to collect first-party data, a growing number of publishers have turned to registration walls. The most basic versions of these require an email address in order to access articles, with some requesting more information.
Hearst, GateHouse Media, Forbes and the New York Times are just a few of the publishers who have launched registration walls in 2019. For publishers with a subscription strategy, registration walls can be particularly effective, driving conversion rates 10 times higher as the users are known rather than anonymous.
Some publishers such as Bloomberg Media trigger registration walls after a user has visited the site more than 8 times in a month; a variant which reduces the rate of people abandoning the site when hit with a registration page for the first visit.
Registration walls have a number of benefits for publishers. Firstly, it allows them to see exactly who their audience is, if of course the information has been filled out correctly. It also reduces reliance on third-party cookies, which are increasingly unviable in the long-term. And finally, it enables a direct connection with readers, laying strong foundations for building out reader revenue or growing loyalty.
The other outcome of this is that many publishers are coming together in alliances. First-party data is the most valuable type of data, but most publishers will struggle to ever get it to scale compared to the audiences Facebook and Google can offer.
A number of alliances have grown in strength this year, from Ozone in the UK; a publisher-owned data and advertising platform jointly owned by publishers like News UK, Reach, The Guardian and more, to Project Nonio in Portgual, which pools data between the country’s top six publishers.
But this year has also seen new collaborations between publishers of different countries around first-party data, with ‘login alliances’ forming between publishers in countries from Switzerland and Finland to France, Portugal and Germany.
Even if publishers aren’t joining full alliances, some are beginning to collaborate around first-party data. Aller Media and Amedia have been collaborating on a single sign-on project across local newspapers. They then share the user data anonymously between the brands, and make those segments available for advertisers. It’s a collaboration that works well as the publishers aren’t competing in the same markets.
What can we expect in the future
Many publishers are making it a future goal to be totally non-reliant on third-party cookies, from changing tech stacks to swapping data management platforms. This may be painful for revenues in the short-term, but if first-party data becomes the new currency, publishers have a huge advantage.
To read the rest of the final part of the chapter on what to expect in 2020, plus case studies, download the full Media Moments 2019 report.