Digiday Research: Companies monitor revenues and user opt-ins post-GDPR

Over half of companies expect a decrease in revenues
GDPR allows regulators to fine a noncompliant company 4 percent of its revenue or €20 million ($23 million), whichever is larger. However, these fines are unlikely to be applied immediately. The more immediate threat is companies losing revenues due to GDPR. One theory is the predicted loss of audience data will reduce the price of CPMs. Fifty-two percent of the companies Digiday surveyed expect GDPR to negatively affect their revenues.

In fact, it’s already happening. Since GDPR took effect, European ad exchanges have seen a 25 to 40 percent drop in demand. Tronc shut down many of its media properties’ European sites rather than risk noncompliance. Some companies have even left Europe entirely. Ad tech firm Verve shuttered its European operations after realizing the cost of being GDPR-compliant would make its business unprofitable.

Revenue losses are expected to be modest
Nearly three-quarters of companies surveyed by Digiday that expect to lose money estimate losses will be less than 25 percent of their total revenue. No one expected their companies to lose more than 50 percent of their revenues due to GDPR.

Two publishers, the Los Angeles Times and Chicago Tribune, have prevented European users from accessing their sites, but they’re unlikely to experience a steep decline in revenue. The LA Times and Chicago Tribune receive about 85 percent and 90 percent of their desktop traffic from North America, respectively, according to SimilarWeb data.

GDPR affects platform giants, too. GDPR will limit Facebook’s ad-targeting capabilities, which will hurt revenue. Goldman Sachs predicted Facebook will lose $2.8 billion — still only 7 percent of Facebook’s revenue — because of GDPR. Google’s losses are expected to be less, at a mere 2 percent, according to Deutsche Bank.

User opt-ins will pose a problem
One of the biggest changes under GDPR is that businesses must ask users to opt in to sharing their data instead of using preticked boxes to get consent. The companies surveyed by Digiday were optimistic that users would opt in to sharing their data, with half expecting at least 50 percent of consumers to opt in.

Publishers and e-commerce retailers might have an easier time obtaining consent due to their direct relationship with consumers. But ad tech vendors, specifically those that focus on tracking and retargeting, are in a precarious position for getting consent. Few consumers, if any, have heard of them and will therefore be less likely to share data with them. Research from PageFair found that companies believe just 3 percent of users will allow themselves to be tracked across the web by any party. Given the average consumer’s limited understanding of online advertising, discovering that Yahoo is sharing their data with over 100 vendors isn’t something most will agree to.