Stringent laws of such nature may or may not break the ecosystem depending on how the big platforms respond to this. Data is key to message relevancy and better targeting which makes advertisers prefer online advertising to offline advertising.
As per a report in 2014 from California’s Legislative Analyst’s office, California is the world’s 8th largest economy. So, it is definitely a prime spot where advertisers spend a lot of money.
Let’s look at the key elements of this law:
What consumer data is this law looking to protect and where are these data elements used in online advertising?
Below are the key elements that got called out in the law. I have also connected them to the key areas of advertising tactics this could potentially impact:
| Data Type | Some areas of Advertising where this data is used |
| PII like Name, email Address, Phone #, IP Address, License Number etc | Used in 1st party audience: Email, Name and Phone number are often used by companies via DMPs to advertise to their existing customers. Data Sets for targeting purchased from data providers: Some companies also provide email lists to advertisers for targeting based on specific criteria. Data Scraping to create audience list: Some sophisticated companies also scrape information available online to scrape PII for targeting. While the information is available publicly, user consent for targeting might not have been taken |
| Biometric Information | I am not yet aware of any company that uses biometric information for targeting. |
| Internet or other electronic network activity information, including, but not limited to, browsing history, search history, and information regarding a consumer’s interaction with an Internet Web site, application, or advertisement. | This is the core of how most of the advertising platforms as well as big data providers like Telcos create: in-market audiences – (people who are looking to buy some product/service like credit card)remarketing – showing ads to people who have visited your site before and/or took a specific actionbehavioral targeting – showing ads to people based on whether they index high on specific behaviors like fashion, online commerce etc.If you are interested in seeing what this means, read about Facebook Audience Insights Tool. |
| Geolocation data | Advertisers add geographical limits to all their campaigns because their product/service might not be available in all areas or might be better performing in one region vs the other |
| Professional or employment-related information | Professional and employment related information is core to B2B marketing because you are trying to show promoted content to key decision makers in specific industries and organizations Employment information is also a good indicator of income and the likelihood of you spending money on a specific product/service |
| Commercial information, including records of personal property, products or services purchased, obtained, or considered, or other purchasing or consuming histories or tendencies. | Some businesses do scrape information around home purchase data to infer values of regions as well as houses that have just moved in to show them ads relevant to new home set up. |
| Inferences drawn from any of the information identified in this subdivision to create a profile about a consumer reflecting the consumer’s preferences, characteristics, psychological trends, preferences, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes. | Most of the advertising platforms in the world various levels of probabilistic and deterministic models to classify people into various buckets that would be relevant for advertisers to target to. Almost every advertiser in the world uses it to reach out to new prospects who haven’t bought its product or service. This will also impact lookalike creation in platforms. Advertisers use this feature to generate audiences that look very similar to a seed audience that the advertiser chooses. This seed audience could be their 1st party segment or a pixel based audience. |
As a digital marketer, I am a little concerned about the future of digital advertising. Over the years, efficacy of online advertising and the breadth of targeting criteria available within advertising platforms, diverted a lot of marketing dollars to it. Marketing was able to prove better ROAS and grow organizations effectively.
Is this the first time that such a consumer privacy related law has come?
No, Europe had taken a lead in being very stringent about such laws. From enforcing consumers “right to be forgotten” to the very recent GDPR law looks to bring more transparency around how is data used, how is it processed as well as enforcing the need for a clear user consent policy.
While this is not the first time privacy has come to the forefront, it is definitely the first time where it is front and center in a lot of dialogues happening across the wester world (Europe included). I cannot ignore the active voice Mozilla is playing in this.
What could be the impact?
Since this is just for California, the impact should be a lot lesser than if it was all US. However, when a specific state sets a precedence, it can lead to a trickle effect when others jump on board and implement versions of this law. This could impact revenues of some of the biggest publicly targeted companies. In the latest Twitter earnings report (October 24, 2019), they missed both top line and bottom estimates. The key reason was low advertising spend because of bugs that impacted their ability to target ads, share data with advertisers which led to reduction in spend from advertisers on Twitter platform.
Big Boys like Google and Facebook would survive but I worry for the smaller niche players who might be pushed out of business while trying to be compliant with this law.
Digital Advertising efficacy would most definitely suffer in California.
Finally, I do think about how I need to evolve my skills as a digital marketer.
- If power of data is lost, then online advertising might soon be on the same level playing field as offline advertising. In that case, maybe I should start learning more about offline advertising right now.
- If strict privacy laws are going to be the case of future, I should really build my skills further to advise organizations on how they can stay ahead and ensure they build systems, structures and data processing capabilities that account for all future use cases from a user consent perspective
- If digital advertising laws are going to be so big, I should maybe become an advisor for legal companies to improve their understanding of digital advertising. Because, there is a serious gap in their understanding of this ecosystem
On some days, I do think about the role of marketing and advertising in biasing us in some ways. An understanding of a customer helps an advertiser target them with specific in formation to buy a product or a service. Yes, in some cases organizations take advantage to influence voting behavior as seen lately.
However, is this approach any different than when someone we know influences us through a conversation. If we have a conversation with someone on the road, they ask us a few questions, identify a need we have and then tell us about a great product/service. Digital advertising at its core is/was supposed to be that. It was meant to talk to you about a product or service that can satisfy a need you have. I hope that essence doesn’t get lost in all this privacy debate.
