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.
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.
The led to the birth of a huge ecosystem of ad-tech companies dedicated to collecting, selling, and mining personal data to find users who would be more inclined to engage with an ad. The trade-off was advertisers lost control of where their ads appeared, and publishers gave up a big chunk of their ad revenue to middlemen. Publishers, who can only make at most a few dollars per thousand times an ad is viewed, pandered to the lowest common denominator to attract as many eyeballs as possible, leading to the rise of clickbait. Advertisers began seeing their brands popping up alongside fake news and extremist content, and found themselves the victims of “click-fraud” bots that click on ads to make money for scammers. Facebook, meanwhile, admitted that inflated its ad metrics. The ecosystem is now so complex that it’s hard to pinpoint just which middleman is responsible for placing particular ads. Ironically, despite the glut of data, advertisers may be no closer to knowing exactly how many people actually see their ads than they were before the rise of analytics. Advertisers are understandably fed up with the situation.
“We’re all wasting way too much time and money on a media supply chain with poor standards-adoption, too many players grading their own homework, too many hidden touches, and too many holes to allow criminals to rip us off,” Procter and Gamble chief marketing officer Marc Pritchard said in a speech at an Interactive Advertising Bureau event earlier this year. Pritchard gave the digital advertising industry a year to clean up its act, after which he said Procter and Gamble, the world’s largest advertiser, would begin pulling its business from ad brokers that aren’t sufficiently transparent in their dealings.
The EU rules would force not just more transparency, but it would also cut the number of middlemen wheeling and dealing in user data. Or, to put it another way, it could force the industry to take the steps it should be taking anyway to keep advertisers like Procter and Gamble from bolting.
“Until now everyone has been thinking, ‘How can we hoover up as much data from as many people as possible?’” Ryan says. “Those data are about to become toxic. It’s not just that you might expose yourself to litigation, it’s that you might expose your advertisers to litigation.”
That means advertisers might start to rely less on shadowy networks of ad brokers and more on direct relationships with publishers to place ads. Sound familiar?
A Different Kind of European Export
Given recent events in America, it’s hard to imagine EU-style data laws passing in the US. President Donald Trump signed a resolution just last month preventing the Federal Communications Commission from forcing internet service providers to seek permission from users before using their web browsing history for ad-targeting. In other words, the current trend is towards fewer privacy protections, not more.
But that decision was unpopular. According to a survey by YouGov and the Huffington Post, 72 percent of Republicans believed the FCC rules should have been allowed to go into effect, as did 71 percent of the public overall. Popular opinion could force lawmakers to embrace reform sooner than later. Many states, meanwhile, are considering passing stronger privacy rules. Illinois, for example, is considering a European-style “right to know” bill that would give consumers more insight into what data is collected about them, while Minnesota might pass rules similar to those that Trump just overruled.
As ad networks work to comply with European and state laws—and work to appease giants like Procter and Gamble—they could end up looking more and more like The Deck. Instead of using arcane algorithms and ill-gotten user data, ad brokers would seek the most relevant publications, or sections of publications, to place their clients’ products. With fewer fingers in the pie, publishers could command higher prices for their ad space. Perhaps fewer people would use ad-blockers.
New privacy laws might not stop the growth of tech giants like Facebook and Google—those companies still have enormous reach after all. And Ryan still believes some ad-targeting will be possible. But better privacy would restore some sanity to the ad market, and that would be good news for everyone but the sleaziest of operators.