A confluence of technological and legal developments can usher in significant changes to the multi-billion dollar digital advertising industry.
The online advertising ecosystem is currently dominated by targeted behavioral advertising – the practice of tracking people’s online behavior across websites by placing cookies or other trackers on their devices, creating a profile based based on their perceived interests and then serving them ads tailored to those interests. profiles.
The backbone of the industry, as currently configured, is the use of third-party cookies and similar tracking technologies. When a person visits a website, a third party, with the permission of the website operator, may embed a small text file, called a cookie, in the browser. This cookie will then track the person’s online behavior, including the other websites they visit and what they do on those sites (for example, the products they buy or review), in addition to the queries they she enters her browser.
With data about the individual’s online activities in hand, digital advertising companies can deliver advertisements targeted to the individual’s interests.
Business trends to limit online tracking
At the same time, Apple’s Safari web browser, several smaller web browsers, and a handful of search engines already offer consumers the ability to block advertising cookies and cross-site tracking by default. One company, Brave, is looking to further subvert the digital advertising model by sharing ad revenue with users who choose to see the ads.
In the mobile app space, Apple’s new app tracking transparency framework now defaults to blocking device identifiers for advertisers and requiring customers to affirmatively opt in to tracking. The consent mechanism is displayed prominently in a large pop-up screen and asks if the user wants to allow the app to track their activity on other companies’ apps and websites.
Apps on Apple’s App Store must now also disclose what data the app developer links to a user and, if applicable, what data it uses to track users. Google recently announced that it will soon require Android app developers to make similar disclosures about how they collect and share user data.
Consumer choice is also at the center of efforts undertaken by the Global Privacy Control project, a group of technologists, researchers and consumer advocates working to develop a technology specification that would allow users to set privacy preferences for all sites. web and apps they visit, across all browsers and devices.
New legal requirements making it mandatory to opt out of advertising
These private sector developments follow new data privacy laws passed in California and Virginia. Starting in 2023, the two laws, the California Privacy Rights Act and the Virginia Consumer Data Protection Act, will give consumers the right to direct companies not to allow their personal information to be shared with third parties to serve targeted advertisements. .
These opt-out rights do not specifically prohibit companies from engaging in first-party advertising, that is, serving targeted advertisements based on information obtained from the website or application. ‘a company. Yet, in practice, the ability to engage in first-party advertising may arguably also be at risk as both laws give consumers a distinct right to opt out of certain consumer profiling activities. Additional regulatory or interpretative guidance is needed to better understand the scope of these profiling refusals.
Pressures on third-party cookies and other forms of internet and device tracking do not necessarily signal the end of targeted advertising. Companies are adapting. In the past few months alone, several companies have announced plans to monetize data collected from visitors to their own digital properties.
For example, while Google will remove support for third-party cookies that allow digital advertisers to serve ads based on individuals’ unique behaviors across the internet, it is testing a product that will offer to sell ads using information about groups of individuals with similar interests. based on data collected from their use of Chrome and Google-affiliated products (e.g., YouTube).
Similarly, Adobe has a new software platform that will allow businesses to deliver targeted advertisements using data collected through Adobe products.
Changing business practices and new privacy laws are putting pressure on targeted behavioral advertising as we know it. But these changes present opportunities for innovation in the digital advertising industry.
This column does not necessarily reflect the opinion of the Bureau of National Affairs, Inc. or its owners.
Garrett Lance is a partner in the office of Sidley Austin LLP in Washington, DC, where he focuses on privacy and cybersecurity law.
Sheri Porath Rockwell is a partner in the Century City office of Sidley Austin LLP, where she focuses on privacy and cybersecurity law.