Ad-Tech Consolidation Poised to Accelerate Under GDPR

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If the four-letter acronym "GDPR" isn't on your radar yet, then now might be a good time to start panicking. For some, current uncertainty around its implementation is the least of their worries.

Europe's General Data Protection Regulation, which goes into effect May 25, will require publishers to obtain explicit consent for the ways they use consumers' data. It covers not only companies based in Europe but any publisher or vendor that does business there. And its requirements might not be satisfied by the sort of little-read "check this box" user agreements that are commonplace today, at least according to several executives who are following the situation closely.

Instead, readers will likely be greeted with an overlay stating that the publisher uses data to keep content free -- and listing every company the publisher works with to gather that data.

Such lists can easily include hundreds of names. Soliciting consent for each company one by one isn't practical, but it may very well be necessary.

Even if publishers are allowed to gather one blanket sign-off from consumers, displaying a lengthy list of companies gathering visitors' data may lead to higher bounce rates, especially on small mobile screens.

"The fear factor here is if you are a publisher, you don't want a customer experience where there are hundreds of pop-ups for every single company that is seeking to track that individual," says Senny Boone, general counsel at the Data and Marketing Association. "Publishers don't want a bad consumer experience."

The issue has some ad executives wondering if GDPR's stringent rules will add another incentive to the consolidation that's already underway in ad tech.

"There will be no room for exchanges that simply sit in the middle and add no value," says Michael Connolly, CEO at the ad-tech provider Sonobi. "No longer will they only be creating an unnecessary ad tech tax. They will also be creating a liability."

As Connolly and many others point out, it's unclear whether every ad-tech company needs to get consent or only the publishers using them. But the arrival of GRDP may prove a clarifying moment regardless. "In either case, it is going to force the publisher to more closely examine the advertising platforms receiving data," Connolly says.

Some executives at major publishing outfits said they don't have a clear strategy for supporting GDPR, but most will likely get on board -- either here or abroad -- as failure to comply will result in a fine by the EU to the tune of 4% of overall annual revenue or $25 million, whichever is greater.

"Doing nothing is the dumbest thing you can do," says Scott Meyer, CEO of Evidon, who recently sold his anti-ad tracking company, Ghostery. "This isn't like other programs where the level of fines are unclear. Any company that doesn't have a plan in place, and isn't putting it out for consumers and regulators to interact with on or before next May 25th is simply irresponsible. Any company that wants to wait and see is welcome to do so. But that's a very dangerous game."

Like Connolly, Meyer agrees that GDPR will accelerate the natural consolidation that is already at play, adding that publishers and brands will likely be pushing new contract requirements onto the ecosystem to be compliant.

'Holding pattern'

"Everybody knows it is coming, everybody knows it is law, so you must abide by it," says Andrew Casale, CEO at Index Exchange. "There is still a lack of purpose and clarity on important elements around consent."

That fog has led to a number of brands to kick the issue down to their agencies, which in turn are kicking it to their tech partners.

"When any company is barrelling down the path of GDPR readiness, they hire some lawyers and they hire some consultants, but they also run into issues as GDPR is not crystallized yet and that usually means it gets punted to a vendor in ad tech."

As Casale puts it, brands and agencies have found themselves in a "holding pattern" until further clarification is made. Casale, however, says Index Exchange isn't standing still.

"We're not remaining in a holding pattern," he says. "Although we don't know exactly how consent will work, we're building on the assumption that it will be a factor and component to GDPR and we're doing that now so we're not caught off guard in May."

"Chances are, one likely change this will bring forward is yet another dimension of consolidation," he added.

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