From Spam To Security: How The Digital Advertising Industry Is Entering An Era Of Digital Integrity

By Thomas Pasquet | February 13, 2020

As seen on Forbes

It seems absurd in retrospect, but there was a time not that long ago when young cellphone owners would pay not-insubstantial amounts of money for ringtones. That is, they'd spend money to change the sound their phone made when someone called them, usually to a popular song. (This was an era when people still let their phones ring.)

Ringtones were a fun, mostly harmless auditory accessory to the first era of cellphones, but they resulted in staggering cellphone bills for some parents. Children would buy ringtones with reckless abandon, racking up hundreds of dollars in extra cellphone charges. According to an article published by CNN, U.S. ringtone sales went from $68 million to $600 million from 2003 to 2006, a nearly ninefold increase.

Ringtones would prove to be a short-lived phenomenon; just a few years later, the market would be a fraction of its former size, as the novelty of the song snippets wore off. But the rise and fall of ringtones can teach us an important lesson about the importance of customer consent—a lesson the digital advertising industry would be wise to learn from as it enters an era of digital integrity.

One of the reasons ringtones failed, in addition to them just going out of style, was telecommunications companies began requiring a double opt-in process to purchase them. Parents were upset about high cellphone bills, and cellphone providers ultimately adopted new ringtone policies. When a child tried to buy a ringtone, the service provider would notify the account holder (the parent) and ask them to approve the purchase. The sky-high phone bills quickly came to an end, and ringtones were no more.

The cultural history of ringtones illustrates how industries often lag behind consumer behavior when it comes to consumer protection, brand safety and fraud eradication.

The online advertising industry has followed a similar trajectory. The first online banner ad was introduced 25 years ago (which is only a generation ago in human years but an eternity by internet standards). The ad was a banner at the footer of Wired magazine's website, and it sparked enormous interest. Click-through rates were an unheard-of 44%, and the ad was heralded as a marvel of advertising innovation.

Little did we know that one ad would spring the creation of a $330 billion annual global industry—or that that industry would become riddled with corruption, deceit and theft.

The first banner ad didn't have much by the way of tracking or measurement. But as online advertising grew, brands, publishers and adtech providers discovered they could track consumers' behavior with unprecedented depth and accuracy. As the online advertising industry grew, marketers began inundating users' web browsers with tracking cookies and collecting hordes of data on them—often with no respect for the users' privacy.

The industry eventually became what it is now, which I believe is a haven for unethical business practices in which brands and publishers essentially steal from consumers, taking their data without even giving them a say in the matter. Nowadays, when consumers visit a website, the website often collects their personal data without their knowledge. In the rare case a website does tell visitors it's collecting their personal data, it often does it in an underhanded manner—hiding the disclosures in a wall of fine-print text or making users "accept" a privacy agreement before they can access the website's content. Consumers have no agency under this system.

That's not much of a choice at all. Without a proper choice, users can't rightfully consent to data tracking.

Fortunately, there are signs that the pendulum is swinging back the other way and that the advertising industry is (finally) taking user consent seriously. In 2018, the EU implemented the General Data Privacy Regulation (GDPR), a strict set of data privacy laws that require publishers to get expressed consent from users before collecting their data. In the U.S., California implemented its own set of data privacy regulations, the California Consumer Privacy Act (CCPA), as of January 1, 2020.

On a consumer level, more and more people are becoming increasingly protective of their data and demanding marketers be more respectful of their privacy. Cookie usage has dropped by as much as 30% in some European countries since the passage of GDPR, for instance. We can expect the same thing to happen in the U.S. with CCPA going into effect.

I believe that the only companies that will succeed in this era of digital integrity are the ones that adopt a policy of radical transparency and provide users with a legitimate choice about their data. That means offering them a choice between an ad-free subscription experience, a targeted advertising experience in which they agree to certain data tracking in exchange for a more personalized experience, and a nontargeted ad experience in which they opt out of ad targeting and receive more, less relevant content.

A certain percentage of users will inevitably opt out of data tracking, making it harder for you to serve them relevant advertising. However, no matter what they decide, users will appreciate and respect your brand for being honest with them and providing them agency over their personal data.

It took the advertising industry 25 years to reach this era of digital integrity, and many advertisers didn't arrive here willingly (how ironic). However, I believe they must adapt if they hope to succeed in this new landscape. Otherwise, they risk going the way of the ringtone.

Majid Baber