The EU’s new data privacy law has put a small army of tech firms that track people online in jeopardy and is strengthening the hand of companies such as Google and Facebook in the €173bn global digital advertising industry.
The General Data Protection Regulation (GDPR) brought in by the EU in May is designed to protect personal information in the age of the internet and requires websites to seek consent to use personal data, among other measures.
The ability to track internet users has attracted hundreds of companies that harvest and crunch user data from websites with or without the consent of the site owner. GDPR poses a challenge to those groups as they all need consent to use the data. Uncertainty over whether every link in the supply chain is GDPR-compliant is pushing some to leave Europe altogether.
Concerns about GDPR should, however, benefit Google and Facebook as customers are more likely to give consent to carry on using sites, allowing the US companies to keep amassing and analysing vast amounts of GDPR-compliant data that advertisers will pay to use.
National newspapers are also likely to keep their readers and believe they can benefit by eventually charging advertisers more for online slots in the knowledge they are compliant with the new EU rules.
“But if consumers feel confident that their data is being protected and they understand how it is being used and it’s done with permission, ultimately that should be a good thing for clients and for us,” said Mark Read, joint boss at the world’s biggest ad agency, WPP.
For every euro spent by an advertiser, about half may go to ad tech groups, according estimates. When an internet user pulls up a page multiple bid requests are sent into the advertising system touting facts about the person such as demographics and interests, as well as the nature of the site they are viewing.
That personal data can then pass through a dozen or more ad tech firms before a company or ad agency bids at an auction for space on the website and an advert is loaded. It is that spread of personal data that risks breaking the new EU privacy law.
Doubt about compliance is threatening the myriad ad tech middlemen and is also prompting advertisers and publishers to rethink how they share their user data.