How the ad industry is adapting to privacy regulations

Consumer privacy has become a major focus in the digital advertising industry. New regulations and growing public concerns over data collection practices have forced companies to rethink their strategies. As leaders in this field, it is our responsibility to adapt and evolve. It’s not enough to just comply with regulations. We must always serve the best interests of consumers.

By adopting a “privacy-by-design” approach, we can address the growing apprehension surrounding excessive data collection, build trust and foster long-term consumer loyalty — the cornerstones of economic success in the advertising industry.

Insights into the shifting privacy landscape

The recently released IAB State of Data 2024 report (registration required), titled “How the Digital Ad Industry is Adapting to the Privacy-By-Design Ecosystem,” offers insights into how the industry is responding to privacy changes. It surveyed and interviewed over 500 data and advertising decision-makers at brands, agencies and publishers.

The report highlights the strategic changes and innovations prompted by the need for privacy compliance and sustainable, consumer-friendly approaches. 

• Up to 95% of decision-makers anticipate ongoing legislation and signal loss in 2024 and beyond. 
• Two-thirds predict the implementation of more state privacy laws, reducing their capacity to personalize messages to consumers. 
• This shift toward a privacy-first environment has led to significant organizational restructuring for over 80% of companies.

Adapting to the new normal: Investments in training and expertise

To adapt, companies are investing significantly in training staff on data privacy (78%), creating dedicated teams for business transformation and seeking external expertise through new hires and consultancy partnerships. 

Analytics departments are being impacted the most, along with legal and compliance, ad operations and programmatic teams, due to their heavy reliance on data.

Dig deeper: Why marketers should care about consumer privacy

The market is facing sweeping declines in accessible, high-quality data. 

• About three-in-four advertising and data leaders expect the ability to collect and leverage integral consumer data, including device signals and location, to be continually reduced. 
• While 60% expect the same with demographics, user preferences and behavior. 
• Confidence in data accuracy from key partners is also falling, including from social media (59%), programmatic (57%) and ad serving companies (52%).

These challenges have profoundly impacted media planning and buying. 

• Nearly nine in ten ad buyers report shifts in personalization tactics, ad spend and their mix of first-, second- and third-party data. 
• Over three-in-four cite selection changes in media channels and KPIs, along with more seller-direct deals. 

Ad spend that taps into first-party data and engages audiences at scale, such as CTV, paid search, social media and retail media, is being prioritized.

Enhancing data quality through first-party data and AI

To improve data quality:

• 71% of brands, agencies and publishers are increasing their first-party datasets, with an average anticipated growth rate of 35% in the next 12 months. They are collecting an array of consumer data points to enable robust profiles, including contact info, device signals, transactions, content consumption, location, demographics and interests.
• One-third are also leveraging AI and machine learning to enhance these datasets.

However, it is important to note that first-party data is not immune to potential future restrictions. As privacy regulations evolve, collecting and using first-party data may face increased scrutiny and limitations. Companies must remain vigilant and adaptable, ensuring their data practices align with the latest privacy requirements and consumer expectations.

Beyond first-party data, companies are investing in analytical methods that are less dependent on tracking, such as media mix modeling and multi-touch attribution. Contextual advertising is seeing a resurgence, with 66% of current contextual ad buyers planning to boost investments.

More direct deals with publishers are being struck to appear in trusted environments and leverage their first-party data. However, as with any data-driven approach, monitoring and adjusting strategies as privacy landscapes shift is crucial.

Dig deeper: An approach to unlocking first-party data strategies

Balancing privacy and economic growth

Adopting privacy-by-design is a strategic move to prioritize consumer interests and uphold our role as industry leaders. By integrating privacy into operations, you can mitigate worries about data collection, bolstering consumer trust and loyalty, which are vital for economic success.

It is crucial to achieve a balance between protecting consumer privacy and driving economic growth. This approach respects individual rights, supports innovation and enables a competitive marketplace.

Ignoring privacy risks can lead to regulatory fines and undermine public trust in advertising, potentially harming consumer engagement and economic performance. Keeping up with evolving privacy standards is critical to maintaining a positive market position and ensuring long-term success.

The industry faces hurdles, notably the lack of clear regulatory guidance and technological structure to support diverse business use cases. A privacy framework that prioritizes consumer rights while enabling companies to efficiently target relevant ads to consumers and provide effective measurement and attribution is essential.

Privacy-by-design is more than a compliance requirement; it’s a commitment to aligning business practices with modern values of privacy. Implementing it requires careful thought and planning to ensure that privacy measures are deeply integrated and not hastily added. This could dilute their effectiveness, compromise consumer trust and lead to potential revenue and profitability loss.

Dig deeper: How to build customer trust through data privacy and security

A call to action: Leading the charge in consumer privacy

Integrating privacy into your operations strategically mitigates backlash and positively influences public attitudes toward advertising. Embracing privacy-by-design as a collective effort can ignite innovation and growth within our industry.

By pioneering new advertising models and technologies that prioritize consumer privacy while driving brand engagement, we can significantly enhance our industry’s standing and unlock economic opportunities.

The time has come for the advertising industry to champion consumer privacy. As highlighted in the IAB State of Data 2024 report, embracing privacy-by-design as a strategic imperative is crucial for building a more sustainable, trust-based ecosystem that benefits consumers and businesses alike. 

This transformative journey requires collaboration, innovation and an unwavering commitment to putting consumer privacy at the forefront of our efforts. Let us seize this opportunity to redefine the future of advertising and pave the way for a more prosperous, privacy-conscious era.