Publishers in the Age of ePrivacy: Beyond Catastrophic Scenarios

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Nico Pizzolato

Senior Lecturer at Middlesex University

The introduction of the ePrivacy regulation is creating anxieties in the sector, as evidenced by the catastrophic scenarios evoked by sector spokespersons. The uncertainty that the legislation will open is a concern, but publishers and tech companies are beginning to experiment with innovative solutions for a new world in which the relationship between data, advertisement and content will not be the same anymore…

While much debate has so far focused on the GDPR – a law already set in stone and that will inexorably come into effect in May 2018 –  the advertising industry is now paying more attention to the accompanying ePrivacy legislation. This bill is currently waiting for final approval but it has already been configured to mirror the ethos of the GDPR, as lex specialis to the wider framework, and contains provisions that have proved, to say the least, controversial within the advertising industry. Responding to a public survey, the EU has established that users are “overloaded with requests to provide consent” to cookies. Thus, the proposal would make the data processing more transparent, by asking for data consent in the settings at browser or device level. The law also forbids the process of users’ data by entities that have not obtained consent, therefore affecting players who rely on third party cookies and behavioural analysis.

The IAB (Internet Advertising Bureau) has been capturing the sector anxieties in an analysis predicting the shrinking of the whole sector by 50% and, because of the difficulty interposed on the behavioural advertising, a drastic fall in revenue for all the players, in particular publishers. They would have to rely arguably on paid subscriptions at a time in which only 30% of European users are amenable to that and only for a nominal and insufficient amount: €3.80 (Data IAB/Gfk). The catastrophic consequences, according to IAB, will be a major blow to a multi-billion industry and the end of “free and balanced media”. Overall, they view the perceived effects as “a recipe for economic, social and political disaster”.

These apocalyptic concerns stem for the uncertain scenarios that the ePrivacy legislation would open. European consumers, by and large, are not yet well informed about the trade-off between user data, advertising and free content that has characterised the internet so far. A PageFair Survey has brought to light a low confidence among publishers that users will provide consent for their data to be transferred to a third party. The spread of ad-blocking had anyway made these issues current for publishers and advertisers, so arguably the EU legislation is just an institutional manifestation of a mood that already existed among the public.

Publishers Respond to ePrivacy

However, in front of this purported bleak scenario, ePrivacy regulation is prompting publishers to experiment with new business models. After having flirted with unpopular, and soon to be illegal, ‘ad-blockage walls’, publishers are creatively experimenting with paid content formulas. The Guardian is harvesting contributions from users by appealing to readers to fund its journalism. The message is tailor-made for The Guardian’s readership in terms of support for an open, independent information, which is at the core of the newspaper’s brand and which evokes Wikipedia’s fundraising style. Both The Guardian and the Financial Times now label sponsored pieces as paid content and designed them as native advertising. The Atlantic, an American publisher, but with many European readers, has introduced a premium membership for $12 a month, called The Masthead, that provides privileged access to subscribers and enrols them on a mission to support a “sustainable future for journalism”.

These examples show that the response of the industry might be more creative and changes, eventually, more beneficial than the sector spokesmen currently believe to be the case. The need to experiment with new solutions will potentially reconfigure and renovate the whole industry. In a previous blog post I mentioned the rise of consortia asking customers for a single login. Teavaro’s IDConnect is among the innovative solutions of the industry that leverage first party data, within the new rules of consent.

According to Teavaro’s CEO and co-founder, Robert Bergmann:

“The GDPR, ePrivacy and the prospective lack of data synch up mean that the advertisers in the next future cannot on behalf of their clients buy audience and use data as efficiently as they currently are and they would have to redefine the process to establish how things work. Initially their clients would say, we need to reach the audience and to spend the money because these are all big-budgeted campaigns and they usually budgeted in advance, thus they would shift the money to where they know it’s going to work, the usual suspects, Facebook and Google. This, until they figured out how to do this in a more efficient way. It’s unlikely that fighting these defacto duopoly on legal terms, with anti-trust laws would be effective, as long as they are not bluntly overstepping the line. Overall — according to Robert Bergmann — the changes are going to happen by shifts in behaviour of consumers.”

ePrivacy will produce a shift of habits on how advertisers and publishers communicate and where users spend their time in digital, perhaps more quickly that frozen surveys indicate. This will change the landscape and help new solutions to emerge, but does not have to fulfil the doomsday scenarios – halving the size of the industry, costing thousands of jobs and spelling the end of independent media – currently prophesied.

Posted by Nico Pizzolato

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