General Data Protection Regulations (GDPR) came into force across Europe on May 29 and have since severely restricted popular forms of digital marketing. However, it has also created new opportunities which may be life-saving for online publishers who have been struggling with declining ad revenue for the last decade or so. Many see GDPR as a blow to the digital marketing industry but, in reality, it’s a great opportunity.
There are two ways of delivering an online ad: behavioural targeting and content-based. Behavioural targeting involves identifying individuals by their web surfing patterns, working out what their interests are from those patterns and then delivering "targeted advertising" which match those interests.
It’s not new: behavioural targeting was pioneered in the United States by the Sears Catalogue in the 1920s, which analysed customers by their purchase patterns. The web simply made it possible to analyse more people in more detail. However, it has never been popular with consumers, who complain that it feels "creepy" when a company seems to know so much about you. It became an online privacy issue because companies emerged who specialised in tracking people around the web through hidden techniques, building secret profiles of them, and selling that information to all and sundry. Over the last 15 years, a vast "profiling" industry has arisen, with profiles on more than two billion people which have driven targeted advertising.
Content-based advertising is the traditional form of advertising we see in print and TV. Instead of placing an ad in front of someone because of who they are, you place it amongst related content. The logic is that if someone is reading Build-A-Car magazine, they are probably interested in building cars, so it’s a good outlet for ads selling car parts.
Content-based advertising is the foundation on which TV, radio and print have survived and grown for the last 200 years - and is also why Google is so rich. Content-based advertising is what you see every time you run a search in Google. Search advertising works by positioning ads against searches. Advertisers select the searches they want their ads matched to and, when someone makes that search, Google presents the ad. In 2017, this earned Google €100 billion.
Content-based advertising works. It has always been much more effective and cheaper than targeted advertising. Targeted advertising has had more publicity not because it is more effective, but because it is more controversial.
Content-based advertising works better on the web than on TV or print and the reason is "recency." If someone is typing into Google "buy a book online," it’s a fair bet they want to buy a book online right now. If you can advertise your online bookshop at that moment, you’ve positioned your ad directly in front of someone while they are looking for what the ad sells. t really doesn’t matter what their web surfing patterns have been for the last five years, what their demographic is or anything else about them. What matters is that – right now – they are looking for what you’re selling.
In digital marketing terms, this is called "recency" and is the biggest determinant of how effective any ad will be. It’s also easy. Research has shown the design of the ad, artwork, font, layout and other graphical elements make no difference. The only thing which matters is what the ad says. If it describes what the person is looking for, they’ll notice and they’ll click. This success is not confined to Google’s search. If someone is visiting a website on how to plan a wedding, every advertiser understands it’s a good place to advertise wedding products.
GDPR is not the end of online advertising, but it is the end for targeted advertising
Traditional publishers like newspapers have been struggling with declining online ad revenue for years. A key part of their problem is that targeted advertising depends on other companies to track consumers as they move between websites and then target the ads. The publisher is reduced to being a mere channel and only gets a small percentage of the ad revenue. By contrast, content-based advertising is their bread and butter. They know how it works and how to tune their content to attract a readership which suits their advertisers. The decline of targeted advertising puts publishers back in control and represents a significant business opportunity for them.
Content-based advertising is also better for advertising agencies. It’s been around forever, there are well-understood systems for doing it, and most built their business on it. It doesn’t require fancy mathematics, dubious spying techniques or advanced (and expensive) computing power. It merely requires identifying outlets whose content matches your advertiser’s interests and then writing a small amount of compelling copy. Ad agencies have been doing this forever and understand it very well.
GDPR is not the end of online advertising, but it is the end for targeted advertising. Targeted advertising was creepy and made consumers nervous and led to so many privacy violations the EU took steps to effectively ban it. That’s better for everyone and other countries are now following the EU’s lead. On the other hand, content-based advertising is respectable, well-understood and effective. Thanks to GDPR, the future of digital advertising is a return to tradition.