GDPR, or General Data Privacy Regulation, is becoming a hot topic in the advertising industry, as its rules and restrictions toward the use of consumer’s personal data is limiting how organizations can use personal data for use in advertisements and ad-targeting. Even though GDPR may seem at first glance as only an abundance of problems for advertisers, the regulation is subtly pushing advertisers into a new direction to seek consumers, instead of their old ways of focusing on personal data-driven information for ads.
General Data Privacy Regulation, a new European Union law on data protection, focuses on giving consumers proper control over their personal online data, meaning they will have control over data including online shopping, social platform information, financial institution, etc. These new rules and restrictions make it nearly impossible for organizations to simply use consumers personal data for ad-targeting without consent. If organizations ignore the GDPR and still use consumer data without consent, there will be major repercussions, as organizations can face fines of 4% of annual global turnover, or 20 million euros ($24 million). As the consequences are very harsh, organizations are not taking these new regulations lightly, and are quickly scrambling their ways of advertising to fit the GDPR.
One type of advertising that will only be hurt with GDPR is programmatic advertising. As programmatic advertising focuses on the algorithmic purchase and sale of advertising space in real time, this form of advertising will simply not be as effective in these types of regulations. As organizations need the consent of the users for access to their online behavior for targeting of relevant ads, which is not considered to be a popular option for consumers according to research by PageFair, programmatic advertising will be much less effective under these laws. Companies are closing because of GDPR, as they cannot deal with the guidelines as their rules and restrictions make it near impossible to manage specific type of ads targeted for specific consumers, such as programmatic and data-driven advertising.
Social media platforms such as Facebook and Instagram, who have a less than harsh history with advertising and handling user data, have not taken these new regulations lightly, as they are becoming GDPR submissive as the regulation takes effect in less than a week. Other companies such as Google are taking an approach that will support non-targeted ads for GDPR but are unfortunately still putting all the weight on advertisers by still making them gather data needed for target ads. With GDPR, the advertising industry might go back to the simpler times of advertising, as the use of algorithmic models will be dwindling in affect of the GDPR. The use of higher quality and less bulk of data might dominate in the years to come.
There are several different ways to approach online advertising these days, with data-driven consumer information not needed to be successful. Under GDPR, it is still possible to create a targeted group of users whose site visits and other data indicate they are interested in a certain field, such as going to baseball games, living in the Tampa area, or are animal lovers. As these descriptions can match thousands of people, creating a targeted group of users can be just as effective instead of using personal data for ad targeting. GDPR will influence the relationship between organization and consumer, which may end up being a positive outcome in the end, as consumers will build more trust to organizations as companies will explain how they use the consumers data and not hide any negative undertones with the use of this personal data.
It will be interesting to see how organizations will change the way they find their information for advertising, as they are now more limited on obtaining personal data for use in advertisements. Online companies such as Facebook and Google are finding their own solutions in dealing with GDPR, albeit in very different ways. Even though there are several effective alternatives to advertising, the GDPR is still severely limiting certain types of advertisements, such as programmatic, which are forcing companies to close their doors as their complete focus was on these certain types of advertising methods. Organizations will slowly have a more personal relationship with consumers because of the effects of GDPR whether they like it or not, and we will see advertising being done more manually instead of an algorithmic way, which has been a more popular method to advertise. As the GDPR goes into full effect on May 25, 2018, we will see if these new rules and restrictions will either grow or hinder the advertising industry.