CEO & President Member Newsletters
Advertising Can Work Without Invading Anyone’s Privacy
Dear ARF Colleague,
A year ago, when I wrote the Q2 edition of this quarterly letter, we were in the frightening early throes of the pandemic. The anxiety level was off the charts and people everywhere were struggling to cope with the emotional and practical demands of the moment. At the ARF, we fielded tons of questions about how marketers should respond to the crisis — about what lessons learned from prior crises could be applied and how.
Fortunately, those darkest days appear to be behind us and the conversation now tends to be about the pace and shape of the recovery. However, a different spectre now haunts many in our media/advertising ecosystem: the disruption to digital marketing expected from Google’s deprecation of third-party cookies and Apple’s shift to an “opt in” policy beginning with IOS 14. It is the subject of daily debate in the trade press and is the focus of at least two or three industry forums per week (including a few rather good ones that we have run at ARF and CIMM). To some observers, it seems as much a matter of life-or-death as the crisis of a year ago. It’s not. I want to encourage everyone to calm down a bit.
Yes, some of the data strategies that companies used over the past five years won’t work anymore. Yes, you may need to ask consumers permission or offer something of real value in exchange for their permission. Yes, the changes will tilt the field in favor of those who have direct relationships with their customers and thus first-party data on those customers. But this reckoning over privacy, tracking and re-targeting has been on the horizon for a long time and the insights professionals who objectively study consumer attitudes have been preparing us for this moment. It might be surprising that the immediate impetus for change is coming from big tech companies rather than from government action, but we should not be surprised that the moment of change has arrived.
For those who are alarmed at what this new environment will mean for their business, let me offer a few consoling thoughts:
- The Good Old Days Weren’t Always That Good. Data-driven targeted digital advertising was always a mixed bag. In some situations, the targeting was very accurate, but in others you were no more likely to hit your target than you would have been using a random sample. Despite many efforts to make commercial marketing datasets more transparent (via ingredient labels or quality indices), data buyers always had to beware. In many cases, marketers who got too beguiled by the promise of one-to-one precision ended up spending a lot to get very little return.
- Contextual Targeting Continues to Work Well Without Offending. For decades, advertisers could target prospects by placing ads in places (physical places, media places) where they were likely to be seen. No PII required. Techniques to facilitate contextual targeting are increasingly available for digital marketing and can be used now to not only target in a privacy-compliant way, but also to guarantee that your ad is not adjacent to objectionable content.
- Attribution Will Survive and Thrive. Certainly, some of the approaches used in multi-touch attribution and customer journey diagnostics will be challenged. But the net result seems to be not the demise of attribution but increasing integration with its older sibling — market mix modeling. For marketers who had grown weary of the either/or debate between those two disciplines, this is a welcome development. And a reinvented MMM is more likely to account fairly for both long-term and short-term advertising effects than was likely from an unreformed MTA.
- Permission-Based Databases Are a Good Thing. Through the action of privacy-conscious consumers and their browsers, we have already seen considerable degradation of digital marketing data. One attribution vendor recently estimated that for most clients 50% of the data available to them in 2016 is not available today. But since advertising is mostly about small shifts in perception and probability of purchase, we can still have very successful campaigns with lower levels of data resolution. And in the meantime, companies are rebuilding their data assets by giving something of value in exchange for a data item. ARF research on privacy has shown that consumers are open to being paid for their personal data — and they won’t even set a high price on it. A little discount at checkout in exchange for giving my date of birth? Sure!
I tend to be a glass-half-full optimistic person, but I really don’t think that that the sky is falling. Advertising and marketing don’t need to be sneaky and indifferent to consumer opinions to succeed. Targeting can still be successful without abusing privacy. And let’s not forget the even bigger picture drawn from decades of research at the ARF and elsewhere — that targeting is nowhere near as important as ad creative in driving the success of an ad campaign. So, let’s try to keep things in perspective.
Stay healthy and stay tuned.
All the best,