Guest blog post by Nick Stringer, Chair of the European Interactive Digital Advertising Alliance (EDAA).
Amid the recent (and continuing) redrawing of the European data privacy landscape, it is of crucial importance for the digital economy that the freedom to deliver advertising matched to the interests and preferences of people (otherwise known as online behavioural advertising (OBA)) is preserved. The collection and use of data to provide relevant advertising means that industry can continue funding a wealth of content, services and applications making them widely available to consumers, often at little or no cost. It is also important that industry self-regulation – designed to give people greater transparency over the collection and use of data as well as control over their advertising privacy preferences – also plays an important role.
Making sure the ad-funded business model of the internet remains intact
In recent years, brands have been increasing the proportion of their marketing budgets allocated to digital, which has been playing a pivotal role in feeding the growth of the internet. Advertising is the main source of funding for most websites and social networks (The Guardian, November, 2016). According to a recent report “Paving the way: How online advertising enables the digital economy of the future” by IHS and sponsored by IAB Europe:
“… advertising is by far the most important source for funding journalistic content with 75% of all their [the publishing industry] online revenues coming from advertising. In 2014 alone, publishers active in Europe generated revenues of €30.7 billion from online advertising, or 30.4% of all advertising revenue. Similarly, the buoyant mobile content market depends on advertising. In 2015, paid-for app revenues have been replaced by advertising as the top revenue source. By funding the Internet, online advertising provides European consumers with a wide range of educational, scientific, informational and entertainment services at little or no cost.” The online advertising industry also makes an impressive contribution to the overall EU economy: “In terms of gross value added (GVA)… €22 billion is directly attributable to online advertising in the EU-28” and considering its multiplier effects “the contribution of online advertising increases up to €113 billion”.
Balancing consumer privacy concerns.
People acknowledge and understand that advertising plays an important role in making digital content, services and applications widely available. However, many of those same people also value and want control over their privacy.
The European Self-Regulatory Programme for Online Behavioural Advertising (OBA), run by the European Interactive Digital Advertising Alliance (EDAA) – established in 2011 – aims to strike a balance between the important role advertising plays in funding online content and services and providing consumers with greater transparency and control over their privacy. Today, with the direct involvement of over 165 businesses across Europe, from local SMEs to renowned international companies, the programme represents one of the single biggest collective achievements of the advertising industry. At the heart of this programme is a global icon to identify ads that are delivered to consumers through OBA. This icon is a consumer-facing, interactive symbol that links consumers to an online portal, youronlinechoices, where they can find easy-to-understand information on the practice of OBA. The online portal is also a mechanism for exercising informed choice; by using it, consumers may manage their advertising privacy preferences by ‘turning off’ OBA for some or all companies participating in the programme.
The launch this week of the latest 2016 edition of the ‘European Advertising Consumer Research Report 2016’ commissioned by the EDAA and TRUSTe shows that awareness of the icon continues to rise across Europe. The report also demonstrates that those who?have seen the icon are choosing to find out more, with at least one in four consumers in 14 of the 15 European markets surveyed clicking on the icon. This indicates that consumers are actively engaging with the icon and want to learn more about OBA. The programme also has a positive effect on consumer attitudes. When presented with information provided by clicking on the Icon and having the opportunity to manage their privacy preferences, more than 2 in 5 respondents (44%) reported being more favourable about the concept of OBA. The research report shows that the programme has delivered a sustained and growing impact on the favourable perceptions of OBA amongst European consumers.
In 2017, the policy environment looks poised to continue to create market uncertainty for those in the online ad industry and therefore those services it underpins. This evolving data privacy landscape should allow for innovative industry self-regulation – in particular an initiative designed to provide greater transparency and control, and which responds to new technologies, evolving commercial models and changing user behaviour.