Stronger privacy laws could help ad industry with transparency
New data protection laws are going to create a "wave of paranoia" about the use of consumer data, according to Johnny Ryan of Irish advertising company Page Fair. The General Data Protection Regulation (GDPR), effective May 2018, will require all companies to ask EU users for permission to track their data for ad-targeting purposes. However, the rules may change mindsets in the ad industry, which has primarily been concerned with how it can "hoover up as much data" as possible, Ryan said. Unscrupulous practices will come under scrutiny when the GDPR comes into effect, meaning advertisers may focus on above-board relationships with publishers.

Online advertising is terrible. Ads clutter your screen, slow down your computer, and drain your batteries. Publishers saddle pages with tracking technology that vacuums up your data so they can, ostensibly, serve you more relevant ads (though this practice really just leads to serious privacy concerns). Sometimes ads even try to install malware on your computer.

But it doesn't have to be this way.

For more than ten years, an ad network called The Deck showed the world that digital advertising could be different. The service displayed only one small ad per page. Its parent company, Coudal Partners, vowed not to collect personal data. Instead, it carefully selected both the publishers and the advertisers it worked with, cultivating a collection of relevant ads for an engaged audience. The Deck was, in short, exactly what most people would want in place of today's nightmarish advertising ecosystem.

But last month Coudal Partners announced that it's shutting the network down. The company blamed the ad industry's tectonic shift of funneling dollars to Facebook and Google and away from other platforms. Advertisers are drawn to the two tech behemoths precisely because they each collect an enormous amount of user data and can theoretically serve ads to targeted audiences. And now ad networks that value privacy are casualties in a battle where gobbling up personal data is routine. All of which raises the question, does The Deck's dissolution mean that ad networks can only survive in the industry if they collect and sell against massive troves of information?

This isn't an entirely academic question, especially given that last year, the European Union passed a sweeping set of data privacy rules called the General Data Protection Regulation. The new rules, scheduled to go into effect next May, will require all companies serving EU residents to get explicit permission from those users for ad-targeting purposes. The rules also require that companies allow EU residents to view the data about them that's been collected; update or remove that data from those companies' servers; and even transfer it to other companies. Companies that violate the rules could end up paying out as much as four percent of their worldwide revenue.

These regulations will impact advertising companies and publishers worldwide, says Johnny Ryan, of the Ireland-based advertising company Page Fair. Because people across the EU use Google and Facebook (and read sites like WIRED), all of these companies will need to comply with the EU's rules if they want to serve the region's 508 million residents.

"No one is going to give their consent [to be tracked]," Ryan says. "The kind of information you're going to be shown about how your data is used, who it's shared with, how often its gets stolen, all of these things are going to create a wave of paranoia about data use and people are going to be very conscious about keeping a tight grip on their stuff."

But he doesn't think these changes will destroy the ad industry. Instead, it will have to adapt---and the industry could be stronger for it.

Status Quo

The current state of digital advertising isn't just bad for readers, Ryan says. It's bad for advertisers and publishers as well.

The great promise of digital advertising was that sponsors would finally be able to know, with great precision, how many people actually saw their ads and could rely less on the nebulous market research gleaned from things like television ratings or print circulation estimates. What digital advertisers soon realized, however, was that even though huge numbers of people might see an ad, a small percentage of those people would actually click on those banners. Ads had to be ever more distracting and personalized just to get noticed.