The Upside: How GDPR Will Level the Playing Field & Foster Innovation

GDPR is officially here, and according to a recent eMarketer survey, only 6% of firms said that they were ready for the new European Union privacy laws. Given the prospect of such a large-scale disruption, and the uncertain nature of regulatory enforcement, it’s easy to see why some in ad tech are panicking. In this piece for ExchangeWire, Amit Dar (pictured below), General Manager, U.S., Taptica, explains why the GDPR disruption has an enormous upside for ad tech – it will reset the playing field and foster innovation.

GDPR is consumer-centric. That’s great news for innovators.

As a recent article in Wired points out, GDPR empowers consumers by giving them greater control over their personal data and requiring companies that want to use that data to be more transparent about what information they’re collecting and how they intend to use it. Practices like forcing consumers to click ‘yes’ without telling them precisely what they’re signing up for will no longer be tolerated. Along the same lines, companies won’t be able bury the kind of disclosures mandated by GDPR in vague and voluminous terms of service agreements.

To be clear, GDPR’s consumer-centric approach will disrupt the ad-targeting business. But isn’t that a good thing for anyone who takes the consumer experience seriously? By putting the onus on companies to have an informed conversation with consumers about data collection and use practices, our industry will have to rethink the consumer experience in levels of detail that go beyond the binary choices of opt in or opt out. Or, put another way, GDPR compliance will be the threshold question for larger, more nuanced conversations between consumers and firms that use and collect consumer data – conversations that can result in better, more meaningful consumer experiences.

Amit Dar, GM U.S., Taptica

True, any firm could have chosen to have those conversations prior to GDPR, but the fact is the industry didn’t do that. Instead, what we’ve seen is a massive collection of data that’s resulted in a rather clunky experience where consumers are bombarded with ads. As a response, many consumers have tried to opt out of the digital economy altogether by using ad blockers. By giving consumers a meaningful voice in data collection and use practices, GDPR will allow our industry to do a system-wide reboot on the consumer data supply.

Some firms will play it safe, while others will look to push the limits of compliance. But the opportunity isn’t in the extent to which a firm complies, it’s in the degree to which each firm commits to innovating its operations around a more consumer-centric marketplace for data. After all, a greater consumer voice in data collection and use won’t just shrink the supply of data to more manageable levels, it’ll improve the data we have to work with. Instead of the current arms race to bombard consumers with infinite impressions, our industry will be able to focus on personalisation and performance.

A level playing field means innovation won’t come from the duopoly

In the run up to GDPR, some analysts pointed out that the penalties for non-compliance (€20m [£17.44m] or 4% of revenue, whichever is greater) favours larger players like Google and Facebook. To buttress that claim, critics of GDPR have pointed out that the average cost of compliance is already about USD$1m (£753k).

For smaller firms, the cost of compliance and possible penalties are high. But let’s remember that in recent years, venture capitalists have taken a somewhat dim view of ad tech, both thanks to the fact that Google and Facebook have eaten up such a large share of the total advertising spend, as well as the recent fraud concerns that plague the industry and the constant upheavals and change that make it challenging to understand the space. That’s hurt smaller ad tech players far more than new regulations ever could. And the fact that Amazon represents the only real threat to the Google/Facebook duopoly should tell you that ad tech is ripe for disruption.

The EU’s previous regime for regulating consumer data began in 1995, when Yahoo was on top, and neither Google nor Facebook existed. In the following decades, our industry has seen several major disruptions, and those disruptions have brought new utility and value to both consumers and marketers.

GDPR isn’t designed to disrupt Google, Facebook, or even Amazon, but it does force those companies to grapple with the same uncertainty that all ad tech startups face. If the relatively brief history of our industry teaches us anything, it’s that nimble startups have an advantage over lumbering giants, especially when it comes to finding new opportunities amid uncertainty. After all, when it was founded in 1998, Google was the David to Yahoo’s Goliath; just as in 2004 Facebook was one of many social networking challengers in a field everyone thought would be owned by Myspace. Reforming the rules around consumer data will disrupt business as usual, but that’s a good thing because, eventually, new rules will lead to new business opportunities.