For some advertisers, the uncertainty around Europe’s looming data protection regulation is reason enough to halt programmatic ad buying that’s reliant on data.
Deutsche Telekom and e-commerce business Otto Group are among some of Europe’s biggest advertisers set to cut programmatic budgets after the General Data Protection Regulation takes effect on May 25. Advertisers are well aware of the challenges with programmatic, but the regulation has prompted discussion about audience targeting and the quality of the data underpinning it.
A week before GDPR’s arrival, there’s a growing sense among advertisers that programmatic could be too risky. They’re worried GDPR’s restrictions on data usage could make automated buys less effective and more expensive.
It’s safer — at least in the “very short term” — to minimize programmatic budgets, said Gerhard Louw, who leads international media management at Deutsche Telekom. The telecommunications firm will curb the amount it spends on programmatic ads during the first few weeks after the regulation is enforced, said Louw.
“Brands don’t want to be in the headlines,” said Louw. “If there’s a problem, then it’s not our partners that will be in the headlines — it will be the brand. Although we as a large advertiser feel well-prepared, the many gray areas of interpretation in the new law is making us somewhat nervous so close to the deadline. That seems to be the same for many advertisers, and even our agencies and technology partners. … I’d rather take the cautious route and wait to see if there are any big reactions. Performance might take a dive, but I’d rather that little blip than headlines saying we’re not compliant, or our advertising isn’t legal under GDPR.”
Other brands across Europe, like Otto Group, also plan to put programmatic budgets on ice in the immediate aftermath of the regulation’s arrival. “The big challenge from my perspective is what Google and Facebook are doing to make GDPR work for themselves because that is going to have a big impact on the work advertisers have to do to prepare for it. It’s a big topic for us at the moment,” said Kerstin Pape, head of online marketing at Otto Group, at the Programmatic Pioneers Summit in London this week. Google’s recent decision to stop marketers from pulling data from the DoubleClick ad server for cross-platform reporting and measurement is an example of how those sudden changes can ripple through to advertisers, said Pape.
The duopoly’s last-minute preparations for GDPR are causing marketers like Pape to scramble just when they thought they had everything worked out. Cooling on programmatic is therefore a way for those advertisers to see how the duopoly’s reactions to the regulation affect how ads are bought and tracked on those platforms.
Infectious Media has seen advertisers not its clients poised to pull back on programmatic ad spend. “Advertisers thought they had it all sorted [for GDPR] three months ago, and now they’re like, ‘Oh, crap, we’ve not thought about that,’ which is natural,” said Attila Jakab, managing director at Infectious Media. He said: “The recent change from Google shows how the technology companies have left [GDPR preparations] until the last minute, and the problem with that is it has huge implications on everything that advertisers are trying to do, whether that’s with analytics or attribution. There’s a whole range of technologies and services that depend on this ecosystem working.”
A prominent high street retailer and an insurance firm in the U.K. have both decided to limit their programmatic activity, said a media director who spoke to Digiday on condition of anonymity. In both cases, programmatic spending on display has been limited to retargeting. This makes it less than 5 percent of overall budget, said the executive, which is a significant drop from what it was prior to the decision. Overall media budgets have remained the same for both advertisers, said the executive, as spending has been redirected into social, offline and alternative online inventory like audio.
The long tail of cheap programmatic ad inventory is likely be the first to go from post-GDPR media plans, said Karin von Abrams, principal analyst at eMarketer. The more expensive programmatic inventory will still see good sales, as much is sold directly, just via programmatic pipes, said von Abrams. Contextual targeting could replace some programmatic campaigns steeped in audience data, not all of which could be legally obtained under the regulation. Total spend might not be hit too sharply, either, von Abrams said. If, for example, brands elect to “spend on fewer, more expensive ads to ensure brand safety in relatively premium environments, spend could remain quite high.”
Publishers, provided they’re able to articulate programmatic’s value to advertisers post-GDPR, could be in prime position to benefit from the move to contextual ads. One potential scenario that agency executives have frequently discussed is an advertiser braced for a dip in performance after it reduces its programmatic spend, but conversions or acquisition costs remain relatively the same.
Sohel Modi, O2’s head of programmatic audience, wants to find a way to give more to publishers and less to third-party suppliers he feels “get a cut but aren’t doing the job.” Agencies are “talking to the client and the publisher,” he said, but “we need to do away with that model, and as brand owners get closer to the publisher. … If we’re spending £100 [$135], we have to expect the majority of that to go to that publisher because of the quality of their inventory. To do that, we have the right people; we need verification for everything to know what is out there.”
Download the Digiday guide to GDPR for checklists, research and more you’ll need to know before May 25.
With Roku leading the pack, study says 94% of households are reachable through CTV
Connected TV remains on the rise in programmatic advertising, fueled by the popularity of Roku, Samsung and Amazon devices.
Digital investors take time out as British Pound plummets
Don’t expect an M&A frenzy, despite Sterling’s historic low, as volatility cools investors’ appetites.
Member ExclusiveMedia Briefing: The pros, cons of three pricing models for publisher, sportbook content deals
Publishers and sportsbooks are looking for new payout models beyond the standard cost-per-acquisition structure, which is priced on average between $200-500 per new customer.
SponsoredHow FAST channels are redefining primetime opportunities for advertisers
Sponsored by Vevo With the competition from content providers continuing to build, the traditional primetime TV slots are no longer guaranteeing the mass audiences they once did. Television viewership is evolving, and the primetime window of 8–11 p.m. is less broadly reflective of younger audiences’ content consumption habits. In 2022, attracting TV viewers is a […]
The New York Times looks to gaming product to grow subscriptions
The Times' use of games as a subscriber funnel is part of a renewed focus on gaming sparked by the company's acquisition of Wordle in January.
Inside the NFL’s youth-focused social strategy
As part of the NFL Content Creator Network, the league is engaging with fans in new, innovative ways via gaming or just through creative social media activations.