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Privacy, Media, and Advertising: A Tough Act to Follow

By Andrew Frank | October 31, 2016 | 0 Comments

Thursday, October 27, 2016 was so densely packed with news that some of it may have gone unnoticed. On this day the FCC adopted new rules for how ISPs collect and share information, a move that was hailed by privacy advocates and condemned by advertising organizations which filed an ex parte notice summarizing objections. Chief among these is the gap between the new FCC rules that govern ISPs and the FTC rules that govern Internet companies such as Google, Facebook, and Amazon, especially when it comes to the widespread use of browsing history and geolocation data to target ads. Critics point out the potential for consumer confusion when one opts out of data collection from an ISP (which must now pro-actively seek permission to collect data for advertising) and assumes this choice applies to data collection by other sites and services they use, which is not the case. They also point out, more generally, that the order places “substantially greater burdens” on ISPs than other Internet companies face. This has led pundits to speculate that the rules could harm the prospects for AT&T’s proposed acquisition of Time Warner.

Speaking of media, let’s look at some other news items that you may have missed. The same Thursday the New York Times summarized the ongoing challenges of the newspaper business, noting layoffs at the Wall Street Journal, Gannett, and (soon) The New York Times itself, which also noted in August that its print ad revenue had fallen 14 percent in the second quarter, while digital advertising revenue dropped 7 percent. Also that day, Twitter announced it was cutting staff by 9% and discontinuing Vine, its once-hot video app, suggesting that fallout from advertising revenue shortfalls is not limited to newspapers. But Thursday’s news was not all gloom for ad-supported media: Google’s parent reported 20% YoY revenue growth, mostly attributed to ad revenue from YouTube, mobile search, and its programmatic display ecosystem. Even as click prices fall, growth in volume of paid clicks continues to reward Google for its dominant share. But journalism, even in this season of political ad saturation, appears to be losing ground. Might journalists still have something to teach marketers about their flagging craft?

Meanwhile, at Facebook, a new controversy was brewing as Ars Technica sought to demonstrate how the social network’s self-service ad portal could allow advertisers to allegedly exclude racial minorities from housing ads in violation of the Fair Housing Act. Facebook defended its practices but the whole affair underscored a few key points: that data is now critical, not just to the strategy but to the economics of the media business, that’s it’s highly concentrated in a few companies whose ad businesses are thriving at the expense of many former media empires, and that, when it comes to privacy, it appears that no legislative solution can bridge the division between consumers and the media business.

What does all this mean to marketers? Here are a few take-aways:

  • Put a premium on opt-ins. Data is money, and the best way to collect it is to give customers transparent incentives to share it voluntarily. Take that trust relationship seriously.
  • In advertising data is still only half the story; content also counts. Think about content strategy alongside data strategy.
  • Seek value from aggregate data, not just data about individuals. The FCC has attempted to carve out a privacy-friendly option for ISPs to share aggregate data by permitting them to disclose data without customer approval provided they’ve removed personally identifiable information (PII). Learn how to tailor advertising to anonymous audiences with common features, and look for rich sources of data that goes beyond demographics and behavior.
  • Identify and protect PII. While the FCC doesn’t clearly define PII, it provides a list of “illustrative, non-exhaustive” examples which includes things like device identifiers, IP addresses, and “persistent online identifiers (e.g., unique cookies).” It also includes more questionable things like Internet browsing history and application usage data which are not always found among examples of PII. Make a distinction between customers and marketplace personas.

We discuss these principles in greater depth in a research report, Use Personification to Balance Privacy and Relevance, available to subscribers. The bottom line is, there’s a lot to keep up with in the world of privacy, media, and advertising, and a lot that can go wrong. It’s a topic the eludes black-and-white polarities.

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