Emergence of Data Protection Laws Leaves Targeted Advertising Behind

Sujha Sundararajan

October 8, 2020

Advertisements are everywhere today, be it between a YouTube video or reading a breaking news on an online portal. Targeted ads pop up every now and then when you visit a website.

To win viewers’ attention, advertisers have adapted to remembering what viewers read and look online, and then using that information to sell things that they might like.

This practice is called ‘targeted advertising’, which has become more popular lately. With customers’ specific traits, interest and preferences by tracking their activity on the internet, advertisements are generated. 

For instance, if an internet user looks for a product on Amazon, it creates a file called cookie on the computer that stores the users’ website visits. Later, when the user goes to read an article, automated advertisements are generated by reading those stored cookies, to get customers’ attention.

An Invasion to Privacy?

Could certainly be an invasion to privacy as all the information that a user submits on the internet can be tracked, be it search engine request or the websites that the user visits.

Besides, it is more likely that these ads can follow users across various devices. For example, if a user is shopping for a formal shirt on his laptop, he can get targeted ads for formal shirts on his smartphones. This can be done by analyzing user’s location, browsing habits and websites that the user logs in.

According to Finn Myrstad, director of digital policy at the Norwegian Consumer Council, business models will be created that are privacy-friendly. “If we are successful in our complaint, this indiscriminate sharing of data will have to end,” he told to Wired.

Many net browsers sign their rights in order to access the benefits of the platform before even reading the terms and conditions document on how their personal data will be used by the company. For instance, 53% of Singapore consumers are willing to share personal data with online shopping and 50% to social media, a report said.

Adjusting to new improved privacy standards is a key step to long-term solutions. Updated privacy standards and national privacy policies are presently among the top factors to be considered by advertisers.

Data Protection Legislation: Rise of a New Dawn

Data privacy protection will continue to become a growing focus in 2021 and beyond. The emergence of stringent data protection laws, has become a turning point to the cycle of targeted advertising.

General Data Protection Regulation (GDPR), a rigid privacy and security law, was enforced in 2018 to give EU citizens more control over their personal data. Even though the GDPR was crafted for the members of the European Union, many US firms and companies across the globe have decided to conform to its regulations.

Along with such privacy standards, the growing sentiments and demands among the public for better privacy is clear. According to the Managing Director of the UK’s Data & Marketing Association, Rachel Aldighieri, majority of tech-savvy consumers are ready to share their data for services that they deemed as valuable.

What exactly does such a regulation mean?

While GDPR and privacy laws will end programmatic advertising, it doesn’t mean that the change should be viewed in a bad light. Such stringent laws will provide businesses, a better opportunity to generate relevant ads to the right people.

The realm of GDPR’s impact extends far beyond privacy protection such as greater consumer confidence. GDPR compliance will prove to customers that the organization is a good custodian of data, GDPR report said. GDPR-compliant framework will also make sure of improved data security and reduced data maintenance costs.

In general, GDPR grants individuals a greater degree of control over how companies gather, store and use their personal data.

Followers of GDPR

Following GDPR, California passed the California Consumer Privacy Act (CCPA) with a similar rule to provide consumers “more control over their personal information.”

Such emerging data protection regulations pushes businesses and organizations to employ various steps to face a hefty fine. Also, lawmakers in various other states including Washington, Colorado, have proposed their own data protection regulations. 

Is this enough?

Despite formal legislation to provide adequate privacy, 61% of Americans say that they would like to do more to protect their privacy, a Pew Research report stated.

Additionally, two-thirds have said current laws are not good enough in protecting people’s privacy, and 64% support more regulation of advertisers.

Aldighieri told TechHQ, “Our research shows that customers are reasonably happy with the amount of data they’re sharing, but they want more control, they want more transparency.” 


Rise of Contextual Advertising 

GDPR and other privacy laws have brought many changes for programmatic and targeted advertising, and have given opportunity for richer campaigns. 

Contextual advertising is one such where ads target individuals based on the content they are looking at. For instance, a car ad shows up only alongside articles about cars. 

Rather than depending on personally identifiable information gathered through third party data, ad identifiers and cookies; growing number of advertisers have moved to pursue contextual targeting strategies, using topic-based categories and relevant keywords in order to engage with the right audience at the right time.

Many advertisers take advantage of contextual advertising and make the shift from targeted audience-based methods. Few reasons to do so include:

  • No consent from users required.
  • Reduced reliance on third-party data.
  • Delivering the right ad content at the right time to right users.
  • Reduces risks associated with data misuse.

An early study by IPG Media Lab indicated that contextual targeting has been found to increase purchase intent by up to 63%.

Sources: Wired, TechHQ, PewResearch, CCPA, DenverPost, SeattleTimes

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About the author
Sujha Sundararajan

Contributing Author

Sujha has been writing and reporting on cryptocurrencies and blockchain technology developments since 2014. Her work has appeared in CoinDesk, CCN, EconoTimes and Fintech News Malaysia. She is also an accomplished Indian classical singer and loves baking cakes.

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