Some might argue that disruption of the status quo in digital advertising began in 2006 when Wladimir Palant forked some open source code to create what is now known as Adblock Plus. Nobody knew back then what a force for change his experimental browser extension would unleash. However, during that same 13-year timeframe, we’ve also witnessed the birth of social media, the rise of ad tech, the coronation of FAANG, the emergence of the gig economy, and the list goes on. Change keeps changing, faster and faster.
So what comes next in 2020?
Here is our outlook for the next half-decade or so:
Return to first-party relationships, and the age of “consented commerce”
So here’s the score: Without prior consent, cookies are severely restricted by the General Data Protection Regulation (GDPR), and then there’s that whole thing about how we get user consent …; third-party trackers are already being blocked at the browser level in Safari and Firefox; and the California Consumer Privacy Act (CCPA) is going into effect come 2020. Is targeted advertising doomed?
Not exactly. Less than a decade ago, publishers and brands mainly relied on first-party data about their readers and customers. They had warranty registration cards and reader survey forms and other methods for gathering basic information. Admittedly, it was self-reported data and not tremendously detailed, yet it essentially reflected the tremendous importance of the content creators of the web – publishers and brands had relationships with their readers and customers … and reaped all the benefits that entails.
We believe that current legislative pressure and media attention are suggesting a return to this first-party world. Of course, advertisers will at first bemoan their inability to target with sometimes unsettling precision and to track consumers across devices and even into their IOT-equipped homes. But innovation will fill in these gaps. In fact, we believe that consumers will soon take control of their data and willingly broker their interests and desires (and here at eyeo we’re working on means to foster exactly this consumer capability).
Brands and advertisers will once again be able to target new customers – regardless of which browser they use – but this time via user-consented methods. Instead of an adversarial ‘hide-and-stalk’ relationship (with expensive ad-tech taxes on top), we believe the online economy may be on the cusp of a harmonious new age of “consented commerce”.
GDPR and the CCPA are only the tip of the iceberg. Just as the first Industrial Revolution brought about antitrust regulations such as the Sherman Act (1890) and the Clayton Act (1914), and the formation of a Federal Trade Commission (FTC) gave the US Government powers to penalize and prosecute unfair business practices, so too are the new privacy regulations stepping in to police the “fourth Industrial Revolution” that is the data economy.
Of course, the initial antitrust laws were amended several times during the 1940s, 1950s, and 1970s as government and industry sought the right balance between free enterprise and consumer protections. Similarly, new privacy legislation is still navigating the nuances and unanticipated consequences that have materialized. So once again, government and industry may need a few rounds on the dancefloor before they learn to avoid each other’s toes. Though a few iterations and amendments will smooth our mutual step. Unlike last time, we believe consumers will cut in. And unlike on the dancefloor, they’ll be welcome.
At eyeo we are believers in open source and have faith in the power and wisdom of cooperative communities. So we think that the advertiser community, ad-tech community, trade bodies, and consumer rights groups will all come together to form meaningful self-regulation and cooperative standards that might render these laws less important. The Brand Safety Institute, for example, is doing excellent work bringing parties together to advance a common agenda. Opposing factions will find common ground, and rational minds will prevail.
The Rise (and leveling-off) of Mobile Ad Blocking
This trend is verifiable because we’re already seeing it happen in our numbers here at eyeo: our Monthly Average Users (MAU) on mobile devices increased from 5 million to 45 million in 2019. That’s 900% growth! As mobile screens grow larger and cellular bandwidth gets faster, the urge to push disruptive ad types onto mobile devices seems irresistible. Inevitably, advertisers at first push ads that are ill-suited to mobile devices and consumers will block them in frustration (if not retaliation). That’s why users of Acceptable Ads on mobile are growing so fast.
But this time around we predict that advertisers will wise up more quickly than on desktop and find ways to present clever or entertaining ad types for mobile that are user-consented, and possibly even useful. Just as desktop advertising eventually found an equilibrium (~27% ad blocker penetration rate in US; ~32% in Germany), so too will the mobile ecosystem. And also like on desktop, hundreds of millions of mobile ad-blocking consumers will happily direct their attention to respectful ads in exchange for great content. In fact, numerous independent browser makers now license Acceptable Ads as a way to serve consumers better and differentiate their mobile browsers from the default choices.
Ecosystems – in business just as in nature – always drift towards an equilibrium.
Our outlook for 2020 and beyond calls for radical-but-cooperative change for advertisers and consumers. And we believe all of it – no hot takes here. If I’m wrong, you’ll call me out, won’t you? That’s all I want for Christmas in 2020.