July 27, 2023
As published in Association of National Advertisers
Over the past few years, governments around the world passed sweeping new laws to protect consumer privacy online. These laws, adopted in response to widespread consumer concern with marketers' collection and use of third-party data to serve targeted online advertisements, gave consumers new rights to be informed about marketers' data collection practices, to delete and correct their data, and to block advertisements that relied on internet "cookies" and related advertising technologies.
According to Gartner, 65 percent of the world's population is protected by modern privacy laws such as General Data Protection Regulation (GDPR) in the European Union and California Consumer Privacy Act (CCPA) in California. Other states are actively considering similar privacy laws.
So, what does this mean for advertisers who rely on third-party data to track consumer online behavior and serve targeted advertisements? While adjusting to these new laws won't be easy, there are several alternatives for marketing teams that are looking to connect with consumers in ways that respect their privacy rights, and minimize privacy compliance headaches.
Clear communication lies at the center of the effort. Combining better messaging with privacy-safe methods like zero-party data and contextual targeting can help brands respond to this new normal.
Respect for consumer privacy begins with clear communication. In the era before comprehensive privacy regulation, digital marketers in the United States could lawfully collect consumer data without the need to obtain consent. Now, marketers seeking to comply with the GDPR and CCPA must inform the consumer of their data collection and data use practices prior to collecting the consumer's data, and they must respect the consumer's choice to opt-out of data collection activities.
Giving consumers as many opportunities as possible to opt in (or out) of targeted advertising ensures that digital marketers comply with these new laws. For an app developer, this might mean implementing a clear targeting preferences menu in settings. Or on a website, the developer might display a pop-up message that communicates the website's privacy practices then allows consumers to opt-in or opt-out accordingly.
Clear communication of a business's privacy practices also builds trust with consumers. According to a report from analytics firm AppsFlyer, 62 percent of Apple users opted out of targeting after Apple introduced opt-in messages — which just underscores how important privacy is to today's consumer.
Privacy laws such as the GDPR and CCPA have burdened the use of third-party cookies to such an extent that many digital marketers are searching for new ways to reach their customers. The final holdout is Google, who has announced they will remove third-party cookies from Chrome in late 2024. In the meantime, they're working on a new Privacy Sandbox initiative that will better protect user data.
What should marketers do now that Google is phasing out third-party cookies?
Well, luckily, there are other types of data available to advertisers. Zero-party data is a newer term that refers to information that users knowingly and willingly provide. This could include demographic information, purchase intentions, or user experience preferences.
It's up to digital marketers to build trust with users so that the user feels sufficiently comfortable enough to share personal information. Zero-party data is reliable and valuable because it's coming directly from a business's audience — but these individuals will provide their information only if they know the business will use their information responsibly.
Zero-party data isn't the only alternative to the status quo. Contextual targeting is another tool to consider. With contextual targeting, advertisements are displayed in relevant locations rather than through cookies that follow users from website to website. Using keywords, contextual targeting delivers content that is relevant in the moment, rather than basing ad displays on the user's previous action.
For example, a consumer reading reviews of different blenders might be presented with an advertisement from a kitchen essentials store that sells blenders. During this process, no data will be gathered from the consumer or stored anywhere. The consumer will simply see relevant advertising at the moment. With zero-party data tracking technologies, data collection simply does not occur.
Digital marketing technologies and best practices are rapidly changing. Now is a good time for digital marketers to take stock of existing workflows and tools. It's very possible that marketing technology investments that made sense in an unregulated environment no longer advance business objectives – and may, in fact, attract unwanted scrutiny from privacy regulators.
Emerging technologies may point a way forward in today's highly regulated business environment. For instance, data clean rooms enable organizations to collaborate securely around consumer data while minimizing the risk of data leakage. And almost every day, new AI-enabled technologies come online that help teams work smarter and faster. Collaboration among marketing leaders and in-house IT professionals will ensure that a business's marketing technology stack is both effective and compliant with all relevant privacy laws.
The days of reliance on third-party data to serve targeted advertising are coming to an end. Now is a good time for digital marketers to think creatively and communicate with their customers in new ways. New methods and technology tools will make this adjustment easier — and hopefully build a new standard for respectful and effective online advertising.