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Email box filling up with updated privacy notices? Thank the GDPR.

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Wondering why your email box is filled to the brim with companies asking you to opt-in to their new privacy policy or renew your subscription to their newsletter? It’s all due to Europe’s General Data Privacy Regulation (GDPR) which goes into effect next Friday May 25th.

Recently, I’ve been writing a great deal about GDPR and the impact it will have on the digital marketing ecosystem. Worldwide, not just in Europe. Beyond the required compliance, I see it as an opportunity for brands to build stronger relationships with their customers (and make more money!) by creating offerings and policies that respect privacy and offer the consumer real value in exchange for use of personal data.

But none of this will happen overnight. For the most part, advertisers, publishers and ad tech companies are in a mad scramble to comply with the law by the deadline of May 25th, or at least show good faith efforts. Points for trying and all.

Here a short primer on how the GDPR deadline impacts consumers.

Overflowing email boxes

The most visible immediate impact for the consumer is all those emails with opt-ins and links to privacy policies. GDPR requires companies to obtain consent for use of the personal data of EU citizens, but for practical purposes, most companies are executing their plans worldwide. Consent is required down to the specific uses, and brands must provide mechanisms for consumers to manage or withdraw their consent. This is an oversimplification but it will do for today’s purpose.

Most privacy policies were written much too broadly to be acceptable under GDPR. Even if they specified the uses the company would make of the data, they didn’t offer a mechanism to withdraw consent. And many more issues beyond that simple one, from sites that didn’t really offer “true consent” in that “free” functionality was contingent upon the submission of private data, to collection of data that wasn’t really necessary for the business purpose at hand, but helped the collector understand more about its customers for future targeting. For example, if you are buying a ticket for an event open to the general public, does the organizer need to know your gender or income to process the transaction? No. That information is used for marketing and audience targeting. Under GDPR, the event organizer has to provide much more information about, and justification for, the personal data they are collecting and potentially sharing onward with other partners, and give you a mechanism for managing that consent.

You will probably get an email from every site and every email newsletter you ever registered with, even ones that you long ago forgot. And if they DO share or sell your data, they are looking for an opt-in to the new policy, so that can claim they have your consent. In the long run, I don’t expect that’s going to be sufficient consent for the regulators, but it is why you are being asked to “renew” your subscription. Even though it may damage their subscription numbers in the short term, it is a whole lot easier to scrub the list and move forward with consumers who’ve consented than to keep people on for whom they have no audit trail, of any kind. That’s also why multi-nationals and companies conducting international e-commerce are generally applying the same policies across the board. It makes no sense to have double overhead by having one system for the EU and another for the rest of the world. Especially since other nations may follow suit with similar privacy laws and matching IP addresses to physical locations is far from foolproof.

What exactly are you giving permission for?

From a casual reading of my own emails, companies are keeping these communications pretty simple. They outline the uses they make of your data, and provide guidance on how you can manage consent. The thing you need to watch out for is whether they share or sell your data to other parties, and how you can manage consent once they have shared your data on. Companies are required to have a mechanism to manage this, and quite frankly, my take is that many haven’t gotten very far along with this part of the complex GDPR compliance process because it requires cooperation among multiple partners in the technology chain. And that has been slow in coming, even though the deadline has been known for a long time.

Generally speaking though, in my opinion, the more specific the policy is, the better off you are, even if it seems like a PITA to read all these policies. The thing I would be most wary of is when the site/firm uses “legitimate business interests” as a general reason for sharing your personal data with a third party. That’s a handwave that won’t pass muster. Especially if they haven’t produced a consent mechanism.

You should also expect more detailed sign-up forms going forward, both when you are signing up for access to content and subscribing to newsletters.

Some advertising terms that will help you better understand this privacy debate.

First-party data — That’s the data that you share directly with the website you are visiting. It can be personal data that you share or anonymous data that the site collects as a result of your use of the site. Privacy regulations are most concerned with personal data that can be used to identify or target you, and how companies will protect it and your rights to your own data. The opportunity for brands inherent in GDPR is to build a stronger relationship with you so you have incentive to share personal data with them — to make products better, to get more relevant advertisers, and so on.

Second-party data — This is not used that frequently. It refers to when a site shares/sells first-party data about you with a second-party, who then uses that data to contact or market to you. For example, a conference shares its registration list with its sponsors, who then contact you directly with offers. The conference (the first party) is obligated to get your permission to share your data with the second party, but the data is typically used as is, not combined with other information to create super-sets of data.

Third-party data — This is where all the action is with regard to GDPR compliance. The basic issue is that the digital advertising ecosystem relies on a variety of technologies to target and deliver ads to consumers, using data aggregated from multiple sources to create new “super-sets,” which identify consumers even more discretely than the original data sources. As a vastly oversimplified example, we combine the data from a media website with data from a luxury goods company to target ads to site visitors based on their past purchases of luxury goods. The basic concept is sound; it helps advertisers deliver ads to the people most likely to be interested in the products, BUT it also introduces a privacy issue. If I am the consumer, I did not give my information to the luxury goods company to facilitate delivery of ads on a media website. I intended to buy a product. There was probably a blanket consent within the transaction to the advertising use, but it most likely doesn’t pass the GDPR sniff test.

Right now, a lot of very smart people in the ad tech world are working to figure out how to manage consent for third party data. It’s tough, because it isn’t simply about the initial consent; the consumer has the right to withdraw that consent at any time, and then all the partners in the chain have to remove the data. In my opinion, it is worth solving but it will increase advertising rates for this premium targeting. As it should. There will be a whole lot of infrastructure to manage the consent as well as a burden on the first-party who collects the data initially to market the downstream use to its customers.

Consumers won’t “see” the impact of GDPR on advertising delivery. Behind the curtain, though there is a lot going on. Ad tech innovation to manage consent but also, I believe a return to more reliance on first-party data and contextual targeting, showing ads based on the surrounding content, not presumed consumer behaviors.

I’ll be participating in a Conference Board webcast next Wednesday May 23rd at 11am ET to talk about GDPR and its impact on the digital economy. It’s free, so if you’re inclined to know more, please join us.

Digital media predictions for a post-GDPR world

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Last week, a business acquaintance made a ballsy prediction on LinkedIn for which he took a fair amount of flak. Posting a comment, I noted that his essential point was not that much of a stretch. Of course, there were nuances to the argument, but a long statement with a bunch of caveats wouldn’t be nearly as interesting or thought-provoking. Predictions have to push at the edges or people won’t pay attention. So, I figured it was time to step onto the ledge and make some predictions about the future of digital advertising. I’d love to hear what you think, agree or disagree.

1. In a post-GDPR world, targeted advertising is going to become more expensive. Not immediately. There is still a lot of confusion (some real, some manufactured) about what is required.  In the end, though, the increased costs of delivering compliant targeted audiences combined with a decrease in available inventory as consumers retract or refuse permission, will increase ad rates to premium, not programmatic, rates. I’ve been arguing this for a while and the pundits are finally admitting it. 

2. Context will be queen again. In order to reach the right audience, we will turn to content-centric, community-centric marketing tactics. In part because they ARE more effective in converting customers, but mostly because the cost differential between them and targeted/programmatic advertising won’t be so great. It will be just that much easier to take the leap of faith to try these tactics, which are still working out their success metrics (more about that in a bit.)

This is the opportunity for niche publishers and brands to create content for their micro-audiences that both provides the necessary context for ads and sponsored content and creates a relationship and value exchange in which the consumer is more likely to give permission for the specific use of personal data. As an example, Pepper & Wits, a new content site for women 45+ who are navigating menopause is owned by P&G; we certainly should expect sponsored content and other brand outreach but the primary purpose is to offer value to the consumer and targeted context, not targeted ads.

3. “If you aren’t paying, you’re the product” is a cliché whose days are numbered. Consumers will start to care about privacy. It has been a LONG time coming, but I truly believe that consumers are finally understanding the true cost of free digital services/platforms, and are going to want real value in exchange for the right to use their personal data. “Legitimate business interest” is not going to be sufficient to use a person’s data without permission. Publishers and brands who are offering great content and building relationships with consumers will have a far better chance of obtaining (and retaining) permission.

4. Things are about to get more competitive. Facebook and Google are vulnerable in this new advertising economy. They aren’t in danger by any means, but their models are based on scale, not relationships. They have no friends, just users. This opens up a sliver of opportunity for niche content publishers to create better experiences for consumers and pick off a little wedge of the pie. The duopoly will still get (more than) its fair share, but they will be handicapped in delivering their biggest strength, targeted audiences at scale, so the little guys can dart in and nab their share in areas where Facebook and Google cannot play effectively, content and community. Niche publishers, bloggers, even brands who can make the long haul investment. And Amazon. Amazon already does a better job of community than either Facebook or Google, is nipping at their heels and has a distinct e-commerce advantage. I also predict Reddit will make a strong play for the “community ad dollar.”

5. All of this will drive innovation. Certainly, in ad tech to manage consent, but that’s just the tip of the iceberg. Folks are already working on challenges like better measurement and attribution models that assign value properly and proportionally to all the players in the value chain, not just the last click. This is crucial for branded content, video, social media and influencer marketing.

Community is also getting some attention. Two start-ups doing interesting things to connect brands with consumers: Social Data Collective and Suzy. Suzy (AskSuzy.com) is the evolution of social media and influencer business Crowdtap. It helps advertisers make and manage meaningful connections with customers by offering them access to its super panel of consumers. Social Data Collective has a slightly different approach; it asks consumers to share personal data with the brands they love in exchange for products/services.

But I think even more interesting things are on the horizon. For example, aggregators of consumer information that validate consumer audiences and can compare them across properties, including blogs and YouTube and all the other places that community will form, not just sites big enough to register on comScore. Audience data all the way down the long tail to validate that the context IS delivering the right audience. This “data hole” has been the bête noire of the influencer marketing business, but there wasn’t a strong enough incentive to solve it, when advertisers could just buy targeted audiences cheaply. To sell content and community as the right context, you need the metrics to prove that you’ve got the goods. It’s coming. I am certain. And it won’t need PII (personally identifiable information) to do it.

We also need tools to give consumers control over their privacy across platforms and processors. Right now, if you think someone has compromised your private data or is using it without permission, good luck tracking it down. Blockchain is the best bet for creating this privacy audit trail. Someone is certainly working on this already. In fact, if you know who, I’d love to chat with them!!!

So there you have it. My predictions for the digital media industry. If you need me, I’ll just be out here teetering on the ledge.

P.S. If you want to check out the prediction of my business acquaintance, you can find it on LinkedIn.

Customer-Centric Marketing. An idea whose time has FINALLY come?

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Activating the passion that consumers have for the brands they love and turning them into your advocates is the secret sauce to identifying and converting new customers as well as increasing the loyalty of retained customers.

This simple concept, customer-centric marketing, has been the basis of my work for more than 20 years. It’s why I embraced blogs and then social media so wholeheartedly. It’s why I advocate so strongly for transparency, authenticity and disclosure, because they foster trust, the currency of social interaction. Online and off. It’s why I have embraced GDPR and other privacy initiatives for the promise they offer to build strong relationships with customers based on a balanced, informed value exchange for personal data.

Customer-centric marketing is also an idea that is often given lip-service, but not nearly as often embedded in our corporate DNA. We talk a good game about building relationships with customers, incorporating consumer feedback, building products and services that delight them. But when it comes time to implement the marketing plan, we use the language of war. We target audiences. We deploy tactics. We execute plans. We profile the customers into personas who are expected to follow prescribed patterns of behavior.

Which is fine, to a point. It would be foolish not to aim your marketing efforts at the audience most likely to buy. But our language and our tactics both tend to dehumanize our customer, to the point that we forget they are people and not just impressions or clicks or conversions or profiles. Taken to the extreme, and make no mistake modern digital marketing exists on the very edge of this extreme, our marketing isn’t just automated, it’s robotic, and not in a good way.

More human tactics like social marketing, influencer engagement, event marketing and even branded content restore the balance and remind us that customers aren’t simply segmented groups of purchasing behaviors, they are people. Living, breathing people who love our products and services, and are simply waiting to be asked. While these tactics are very often more effective, they are nearly always more expensive than digital advertising which uses programmatic buying and consumer targeting to reach the right audiences cheaply, at scale.

The good news, for advocates of more human centered approaches (like me), is that GDPR promises to reduce that financial gap. The SUPPLY for targeted ads will be diminished when (inevitably) publishers can’t document permission or consumers withdraw permission. It also will be more expensive to deliver an audience targeted PROPERLY with personal data. Both scenarios will increase CPMs for the remaining inventory. More on these and other scenarios in Marketing Week.

Certainly, contextual targeting will pick up the slack for digital advertising. There also will still be a market for premium permission-targeted audiences. Niche publishers in particular have tremendous incentive to develop a strong value proposition, both for their content and in exchange for the use of personal data for targeting. I wrote about this last fall.

As the cost gap closes between digital advertising at scale and more engaging tactics like influencer marketing and branded content, marketers will have incentive to shift budget to customer-centric marketing, where relevance can be proven by our interest and engagement with content and brands, not simply implied by our browsing history or past purchasing behavior.

It’s then up to us as marketers to create the compelling, customer-centric campaigns that engage consumers and convert prospects to buyers.

I’m game!

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Additional Reading on GDPR. Tick Tock. Less than 3 weeks to go. 

The long term outlook for influencer marketing

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In a bid to demonstrate a shift in its behavior, Facebook implemented restrictions to the APIs for both Facebook and Instagram on March 30 — APIs that many third-party developers, including players in the influencer marketing industry, were relying on in order to support their products.” – MediaPost

Some are concerned that this restriction on data will negatively impact the third party partners. In my opinion, whatever short term impact this restriction on data may have on measurement and influencer marketing platforms, the long term outlook for influencer marketing has never been better. Increased privacy regulations like GDPR are creating a positive situation that will far outweigh the short term issues that the current Facebook changes present.

Here’s why:

Audience targeting is about to undergo changes that will likely result in higher CPMs. The requirements for managing consent will add to the cost basis, thereby increasing ad rates. Some forms of ad targeting may even become too cost prohibitive.

This opens the door just a bit wider for influencer marketing and branded content. They rely on context and aggregate audiences, which are not impacted by privacy regulations. They also have nearly always been more costly than programmatic media and Facebook boosts. As the cost gap narrows, more budget should shake free for human-centered forms of marketing.

AdWeek certainly thinks so:

Working with social media influencers is another important model for marketers to consider in this shifting landscape. The assumption by many marketers about working with influencers is that they are meant for one-off projects rather than as parts of a wider campaign strategy. Yet, the brands who see the greatest success with influencer marketing take a longer-view approach, creating a steady connection with their intended audiences.”

So do I.

Is Facebook vulnerable?

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For the first time since its very early years, Facebook is vulnerable. The Cambridge Analytica mess highlighted an important but oft-overlooked fact about Facebook’s business model. Facebook’s business is data, monetized through advertising, not community or social networking. Social networking and community are merely the means by which it gathers and aggregates data and delivers advertising.

This was easy enough to forget in the feature wars and fight for online social dominance, but the public now is generally far more aware than ever that if you aren’t paying, you are the product. It’s also now clear that Facebook’s business models skirt very close to violating consumer privacy, if not outright violations. When working as designed, by the way, not through some breach or hack into the system.

While Facebook has announced changes in the face of governmental scrutiny in the US and Europe following the Cambridge Analytica revelations, the response still seems pretty superficial. Lipservice, not customer service.

As a result, while I wouldn’t sign a death certificate for the platform any time soon, consumer trust in Facebook has seriously eroded, and it isn’t doing such a terrific job at getting it back. At least so far. I’m not sure they can. So many of the problems are built into the very infrastructure. This leaves an opening for competitors.

Others agree.

When asked by NY Mag whether a new platform could get a seat at the table, Dan McComas, former SVP of product at Reddit, said:

I think it’s absolutely possible, but it takes a couple of major factors. I think a start-up needs to think about the monetization and how it can work with the users instead of against the users. I think they need to figure out the right funding mechanisms and incentive structures that also work toward the users. I think they need to have the right product team in place to focus on users.”

Angel investor and entrepreneur Jason Calcanis has put some skin in the game, announcing via his newsletter this weekend a competition called the LAUNCH Open Book Challenge to find Facebook’s replacement. Seven winners will receive $100K investments from the LAUNCH Incubator. In his newsletter, he stated he is looking to fund a social network that is good for society, that will:

– Respect and protect consumer’s privacy
– Respect and protect our democracy from bad actors
– Respect and protect the truth, by stopping the spread of misinformation
– Not try and manipulate people by making them addicted to the service
– Protect freedom of speech, while curbing abuse (not easy!)”

If you’d like to follow along, or think you might like to enter, details are at openbookchallenge.com. The competition is open to existing projects as well as new ideas/paradigms, but ideas alone are not enough. The main criteria for selecting the semifinalists and the eventual winners will be ability to execute.

Reddit, Snapchat and perennial second place finisher Twitter are also in the hunt, but they may have too much baggage (and their own privacy violations) to prevail.

Something will succeed Facebook. It’s not a matter of IF, only of WHEN. Right now, WHEN feels a whole lot closer than it has before.