Setting It Straight: The Unintended Consequences of the FCC ISP Ruling

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A short time ago, the FCC ruled that ISPs must get opt-in permission from their customers to collect meaningful data. The industry has expressed concern following the ruling, citing that marketers, publishers and consumers may be adversely affected by it. While the exact ramifications remain unclear, as is the case with any government ruling, it will have unintended consequences. Here are some of those potential outcomes, and how marketers can prepare for them.

ISPs will get and use this data

Even if ISPs act in accordance with the strictest interpretation of this ruling, ISPs will still find a way to get and use this data. They'll just get the data another way -- one that isn't out of compliance with the ruling. Even if this one source is eliminated, there are far too many sites with deterministic data that marketers, ISPs and anyone else can use to piece together the picture they need. What happens when you melt enough slices of swiss cheese? Eventually the bread is covered.

However, the ruling is very open to interpretation. It allows ISPs to collect the data, PII and all, just not use it -- unless the collected data is first anonymized. What this doesn't curb is selling grouped data segments such as "bacon lovers," "pickup truck shoppers" and the like. With so much dynamic retargeting using 1st-party data (and thus not needing to buy it elsewhere) anyway, how much curtailing does this ruling actually accomplish?

To ensure that ads continue to be served effectively, agencies should have redundancy in where they buy data and how they access it. Plus, they need to ensure there is sufficient parity among their data partners. Like any other system with a single point of failure, if the entire strategy relies on an ISP for specialized data, agencies should quickly find additional data vendors and resources.

Expect an M&A spurt

Amid the short-term confusion of what this ruling means, and the desire for absolute certainty from ISPs with large cash reserves, it's a fair bet there will be a burst of M&A activity, at least in the short term. Companies that hold pieces to the data puzzle will now become more valuable to those wresting with how to piece it back together. So we will likely see a handful of deals in the next 12 months. These deals will likely be short-sighted and overpriced, but sound like the right thing to do at the time. For example, ISPs may acquire publishers or services with combinable data.

Agencies should likely sit tight. Third-party data is, and still will be, sufficiently commoditized to make a direct move to own a data source nonsensical.

Short-term wins for Facebook, Google

This decision was scoffed at by ISPs, but not just because it limits their data collection. Their perception that the government just gave Facebook and Google a competitive edge isn't a stretch. As the largest owners of deterministic, validated, frequently updated/used data, Facebook and Google will have a slight leg up in the next 12 months, while ISPs figure out their position on the ruling and patch up the data gaps it creates.

Slightly humorous here is the nuance of the law. Both Facebook and Google are certainly shy to brazenly use nonanonymized data. Most of their data is paired and sold in segments as well. This doesn't seem like too much of an upper hand, but they'll play it nonetheless.

Rather than succumbing to the hype of any one property, agencies should keep their current strategies in place, and continue focusing on making smart marketing decisions out of opportunity, not fear.

"Data use," "data abuse"

This ruling further empowers and emboldens privacy advocates, but the unintended consequence is that this additional emboldening incorrectly suggests that "data use" equals "data abuse." First, this data is used by ad systems, not people. Second, it's used in bulk. Using the data means engineering better targeting. Abusing it is looking at it line by line, and then figuring out who that line of data represents in the real world. Data use does not equal data abuse, but this ruling furthers that misnomer.

Furthermore, consumers will continue to be outraged when they see ads that seem to be targeted at them individually. Even if the data is anonymized, this won't stop the outcry, and will likely prompt further probes by the FCC in the future.

Agencies need to be advocates of the data-use-versus-data-abuse message. Data is the fuel that drives targeting and efficiency engines as the world becomes fully programmatic. Collectively, we should be evangelizing the harmlessness of (most) data collection and application.