Welcome to The Martech Weekly, where every week I review some of the most interesting ideas, research, and latest news. I look to where the industry is going and what you should be paying attention to.
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Here’s the week in Martech:
- The privacy winter: How much of this decade will be informed by consumer privacy?
- The rise of collaboration apps. It’s one of the fastest-growing categories of technology investment.
- LinkedIn’s AI platform: The social network is building data science products to tap into its data.
- Everything else: The Wordle acquisition, the web3 stack, should we move on from personalisation? Advertising in gaming, building a citizen developer program, NFTs and loyalty programs, and the sarcasm machine!
The privacy winter. What do you think will be the defining theme of marketing technology in the 20s? Will it be the blockchain, artificial intelligence, or big data? I’m beginning to think that the defining theme, at least for 2022 will be consumer privacy.
Last week I talked about what is happening to cookies, but after several readers sent articles, videos, and research into the space, one thing that stuck out was that the problem of online privacy is bigger than the cookie and far more complex.
What is the privacy winter? It’s the coming restrictions imposed by both governments and platforms that will inform how companies can collect, store and use consumer data. It will impact how we can market to customers and even define the shape of the future internet economy.
This week two things happened which are good signals for where online privacy is headed, and it's cold.
The first is a major ruling on tracking consent. The Belgian Data Protection Authority, a GDPR enforcer, has found that the EU arm of the IAB (Interactive Advertising Bureau) has committed multiple violations of the GDPR regulation. The violations focus on the transparency and consent framework developed to guide cookie consent popups that were implemented by 80% of European websites.
The charge is that the consent popups fail to ensure that personal data will be kept secure and confidential and also fails to provide transparency of use with advertising networks. The consequence is that the IAB’s consent framework has been deemed illegal and all historical data collected with consent popups using IAB's framework must be deleted. Sadly we’ll still probably have to deal with annoying popups for years to come.
IAB is a private industry association that leads political representation on standards and frameworks for appropriate use of data use across online advertising. The IAB also sets things like industry-wide taxonomies and rules that AdTech companies use to exchange data across the ecosystem. The IAB also interprets things like cookie preference and consent regulations so that there’s an authoritative direction for the industry to follow in each region.
The IAB ruling is in the context of more than 600 GDPR cases of data protection violations in Europe since the regulation went into practice in 2018, of which less than 30% of them have been delivered. There are so many cases pending against AdTech vendors that have breached data protection rules, that the regulator can’t keep up. Meanwhile, the global spending on data sharing in the AdTech ecosystem has increased by 176% since 2017, ballooning to more than a $50 billion industry.
It’s not only regulators catching up with advertising technology companies. Meta shared this week in its latest earnings report that Apple’s AppTrackingTransparency (ATT) framework will likely decrease advertising sales on Facebook and Instagram by about $10 Billion. This is a little less than 10% of the total ad revenue for Meta in 2021. The announcement combined with slowing user growth in rest of world markets eventuated to a 26% drop in the company’s stock price, wiping $232 billion off the company’s value, the largest single-day decline for any company in US history.
It’s these kinds of changes in the market that give regulators and privacy-focused platform companies like Apple more confidence to enact and enforce data privacy regulations.
One of the main reasons I think it’s taken almost two decades for government bodies to enforce rules for data protection is that personal data is a fluid concept. It’s not like regulating finance – an accountant can tell you exactly how many dollars are in a company’s bank and where it’s being spent because finances are easily observed in a business and disclosed to government bodies like a tax office.
Data collection, data purchasing, processing, aggregation, activation, and sharing in almost every case is inscrutable in most companies because its private company property. With the rise of so many marketing technologies, data is stored in dozens of different places compounding the issue even further.
Consumer privacy, using the GDPR’s standard definition, is the protection of any data used to recognize any person with a unique identifier, such as a username, an email address or an IP address associated with a cookie. The GDPR rules state:
‘personal data’ means any information relating to an identified or identifiable natural person (‘data subject’); an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person;
This is what needs protecting. But what often gets confused about privacy regulation is that the thing about an identified person is not necessarily the problem, it’s the way you can trace that data to a person.
The distinction is important because it helps define what we mean by personal data. If I completely conceal myself online with a fake IP address and use a social network under a pseudonym, all my interests and behaviors are tracked and stored. But if that data is being shared with a third-party without my consent, is that still in breach of privacy laws? Last time I checked, my name was Juan Mendoza, not 18.104.22.168 (don’t worry that’s not my actual IP address) which means there’s no way to know if it was me, but merely that my laptop was doing things. What this does breach is consent laws, regardless of how I'm identified.
The bi-directional nature of data collection also confuses what we mean when we say data privacy. Let’s imagine I go onto a social network and click on a link from a friend’s post. Who owns the data? Me? The social network? The website I clicked to? My friend? There are four parties that are involved in the data collection of a very simple interaction, which makes the entire discussion about online privacy very challenging when you start asking who’s responsible for it.
The kinds of data that are now being collected in the advertising ecosystem also give an indicator for what we mean by data privacy. A quick canvas on the kinds of data that identify people online are things like your common first-party IDs like an email address or device ID, demographic data like household income, behavioral data, purchasing, psychographics, customer sentiment, and real time location. Some of the data in IAB’s ADCom framework is so granular, like inferring whether you’re infertile, or experiencing intimate partner abuse and religious categorizations based on the sites you visit gives you the extent to which advertisers can know things about our customers.
This is why we’re heading into a privacy winter in Martech and AdTech, no one knows what is happening with at times very personal data that is being collected and shared by more than 1,600 data processing companies in Adtech alone.
When it comes to governing data that brands use, the challenges grow. Most marketers are collecting the vast majority of digital data somewhere outside of their business. Have a data warehouse in AWS or Azure? Or store your email communications in a marketing automation platform? What about the storage of data in a visualization tool? In 9 out of 10 situations the company that is using the data doesn’t directly manage it, and neither does the customer, it’s usually the cloud platform that is responsible.
Because of this lack of transparency, consumer attitudes to tracking are quickly changing. The Pew Research Centre suggests that 70% of US adults say their personal information online is less secure now than it was five years ago. When Apple rolled out ATT last year 96% of users chose not to be tracked, and DuckDuckGo – the privacy-focused search engine recently exceeded 100 million daily queries on average.
Emerging out of an increasingly private web are new types of Martech companies. Startups like Observable enable companies to clearly see the kinds of data they are using and make changes to it from all levels. Others like Plausible, a cookie-free web analytics tool, and Blotout a privacy-focused CDP are early-stage companies with high traction that are staking their value proposition on the view that marketers are wanting tools that ensure consumer privacy and consent is upheld. It’s in this environment that the value proposition changes as marketers become increasingly wary of being in breach of data privacy regulation.
Brands are also seeing the value of associating with strong data privacy practices. A recent report from MediaMath suggests that 84% of consumers are more likely to trust brands that use data in a privacy-safe approach. In the same survey, about 70% of people say they would be willing to share personal information if it leads to a better online experience. It’s not like people are totally scared of sharing online information, it’s about the value a consumer gets back and how much they can trust who they are dealing with.
There’s also increasing interest in building ethical frameworks for data management. Yet the conversation on liability has to go beyond the topic of how we protect the data we own and store to the data we’re collecting on behalf of every other service. Expect more questions about data protection when brands are looking to acquire technology.
The way data is operationalized in a company will also change. Audits and trust frameworks will become an everyday reality for people working on consumer data in the industry. I expect new privacy-focused roles to be placed in brands as these topics become more important. We’re really at the beginning of a titanic shift into greater scrutiny on the data we use day to day to power brands.
So are we heading into a “privacy winter”? As the marketing technology landscape matures, the definition and enforcement of data protection and consumer privacy will become clearer creating whole new and hopefully safer ways for brands, technology companies, and advertisers to interact with people. I’m optimistic that this change will bring us a new paradigm for privacy, catalyzing whole new categories of marketing technologies and new thinking about the role of data protection as a positive way to build brand trust. Links: GDPR ruling against IAB Europe.What happens next with IAB.Facebook and Apple’s privacy change. Data protection presentation (Dr Johnny Ryan).eMarketer state of ad targeting report.Pew Research: Consumer privacy.MediaMath tracking report.GDPR analysis.Observable.Blotout.
📈Chart Of The Week
The rise of content collaboration. In the annual Okta business of work report, content collaboration apps have overtaken security as the most popular products companies were using in 2021. This includes products like Atlassian’s Confluence, Notion, Dropbox, and Google Workspace. The steep rise in collaboration apps is mostly driven by remote working, creating new ways for what it means to work together. I’d say the entire category of work collaboration is still very early. Link
📰 Latest Developments
LinkedIn’s AI platform. Announced this week, the platform is built on top of the company’s rich data repository of professionals and integrates AI and data visualization tools into one ecosystem. It’s called DARWIN. Link
The Wordle acquisition. A simple internet game that serves no ads, collects no data, and was created for a friend was acquired by the New York Times in the high seven figures. It is precisely this combo and the ease of sharing your results on social media that made this game a huge viral hit overnight. Link
The potential of a SHEIN IPO. It looks like one of the fastest-growing eCommerce retailers might be looking to go public. This is interesting in that the Chinese company’s largest market is in the US, and it got there through its unique way of social selling, leveraging influencers and the company’s ability to tap into the under 15’s market. Some analysts suggest that the company is creating as much revenue as Spotify right now. Link
The economics of a data business. The often-overlooked business model of selling data products is producing the largest companies in the world. Everyone is collecting data, but what would it take to build a business model to monetize it? Link
The web3 stack. The most comprehensive and clear breakdown of the technology layers in the web3 ecosystem. There’s a huge influx of startups building web3 technologies as centralized services that abstract and help people make use of various blockchains. This is kind of like ambicentralisation, both decentralised and centralised at the same time. Link
Should we move on from personalisation? As the category of technology and strategy matures, people are asking what’s next, but is it something called “individualization”? Link
🔢 Data & Insights
Advertising in gaming. Two thirds of gamers wouldn’t mind receiving advertising in-game, an indicator of how the ad economy might evolve in 3D space. The gaming industry as a whole is relatively small, which is why ads have never taken off in any real way. Link
The Wunderman 100. The metaverse workforce, digital shopfronts and something called “brandalism”. Link
McKinsey on payments. How did the commerce landscape change in 2021? Link
Building a citizen developer program. What does it look like to build a business function with low code products? Some interesting perspectives on governance, tools, and process. Link
The narrative device. A beta app that takes two themes and writes a paragraph on them. What’s interesting about this tool is that it’s more focused on enabling human creativity instead of replacing it. Link
NFTs and Loyalty. There’s been a lot of chatter about the potential use cases for NFTs in the context of loyalty programs. The social and incentive structures are very different to your typical loyalty program, but the most successful NFT startups can catalyze the kind of stickiness and advocacy brands need. Link
✨ Weird and Wonderful
Make sense of marketing technology.
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