At this point, it’s not news that years of ongoing changes in data privacy regulation have created massive amounts of change in the way that data is being used (or not used) across the advertising industry.

As IAB Tech Lab CEO, Anthony Katsur, often says, “Just like energy, finance, or healthcare, advertising is now a regulated industry.” As part of this trend, publishers face challenges in creating sustainable revenue growth.

Navigating Data Privacy in Advertising

Whether it’s the continuing decline in ad revenue that digital publishers are grappling with or the never-ending struggle that the streaming television industry is having to reach profitability it’s clear that owners and publishers of media are feeling the effects of these changes.

One of the areas where these changes are most visible is within the publisher’s data technology stacks. Increasingly, publishers are centralizing the many data sources they need for monetization within their data warehouse. While this evolution brings the promise of insights and connectivity, publishers also need a purpose-built application layer to help them activate and get the most value from their data.

DMPs: From Central Role to Obsolescence

For years publishers relied on DMPs to be at the center of their monetization efforts. As cookie-based monetization becomes less and less dependable and publishers’ distribution channels continue to fragment outside of the web these systems have failed to develop new solutions for key functions like app and historical data collection, 2nd-party audience enrichment, and programmatic activation.

This leaves most legacy DMPs relegated to web-based data collection, audience segmentation, and simple ad-serving activation. Additionally, traditional DMPs were not built with important capabilities such as data clean rooms, identity resolution, and PETs which are extremely important in our privacy-centric world.

Data Warehouses: A New Hub for Monetization

Many DMPs have responded by integrating large data sets through mergers and acquisitions to help fill gaps around identity, some are playing catch up by trying to build more privacy-centric features like identity and clean rooms, and others have decided to completely go out of the business. A response to this lack of innovation by DMPs in recent years has been more organizations investing in their data warehouse to centralize their various audience data sources. The question is, is the data warehouse alone enough?

The Missing Piece: Purpose-Built Applications

As we talk to customers in the market it’s clear that they need applications that can work with their data warehouse to create efficiencies and grow their revenue. One of the biggest challenges is actually activating data.

Data warehouses often rely on applications and integration providers to make data more actionable which leaves publishers building expensive custom solutions and navigating complicated operations.

Similarly to how the Composable CDP movement has stepped up to help marketers evolve how they activate data in their warehouse, media owners and publishers (and new companies like retail media) need solutions that are purpose-built for both the era of privacy as well as ad monetization use cases.

Embracing the Future of Audience Monetization

Audience monetization platforms of the future need to be able to combine the streamlined audience building and activation (in both programmatic and direct)  that legacy DMPs relied on, while also allowing for more complex tasks like normalizing various data sources, running complex identity resolution models and collaborating within data clean rooms.

As free and scaled 3rd-party cookie data goes away the monetization is shifting to the publishers and media owners who are investing appropriately in their 1st-party-data, and there’s a major opportunity to create profitable growth. Investing in technology to help power this growth is crucial and will separate the winners from the losers during this period of change.

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Last year, for Data Privacy Day, fellow privacy lawyer Farah Zaman, pondered whether the recent focus on data privacy in advertising would continue.

Well, another year around the sun, and data privacy is still a hot topic in ad tech. Data privacy and compliance are at the forefront of every publisher’s list of concerns. With cookie deprecation finally here, how could it not be? Whether ad tech is thinking about testing the Privacy Sandbox or alternative IDs, or even the lack of federal privacy regulations — data privacy remains a hot topic for the industry.

Here are five trends in data privacy where we’ll see a lot of action (or not).  

5 Data Privacy Trends to Watch in 2024

The My Health Data Act and its Implications on Sensitive Data

This will be the year of reckoning for how we use sensitive data, focusing on using health-related data. 2023 brought us Washington’s My Health My Data Act (and its Nevada copycat), as well as multiple comprehensive state laws requiring an opt-in for collecting or using sensitive data (including sensitive data inferences). In 2024, those laws will either go into effect or regulators will start to enforce them. 

In Washington, where private citizens can bring lawsuits against companies that violate their rights under the law, I expect to see almost immediate enforcement as class action lawyers will look to cash in on a new income stream. Everything from creating addressable audiences for pharmaceutical and healthcare companies to measuring the ad’s effectiveness will become more difficult in 2024 without consumer consent. While this problem is limited to a handful of states for now, this number will continue to increase in the next few years so that a state-specific approach (geo-filtering audiences) will no longer work. Companies will have to look to other options, which brings me to my second point.

Who Doesn’t Love PETS?

PETs will get a fresh look. There has been talk of privacy-enhancing technology for the last few years. With the rise in restrictions on sensitive data, companies will start to invest more into understanding the viability of PETs to help them reach audiences in a privacy-protection way (rather than engaging in privacy theater). 

Regulators are also interested in this technology. Still, we should expect them to look at these solutions critically and employ experts to help them determine whether (from a mathematical perspective) they can use them to deliver and measure advertising without revealing individual user data. *Note: Data Clean Rooms are not PETS; they must leverage PETs to offer a privacy-safe solution.

Experiments in Consented Data

I have yet to see a widespread effort to get opt-in consent for using sensitive information in the states that require it. Likewise, I haven’t seen companies take advantage of the ability to ask California consumers to opt-in to the “sale” of their data 12 months after opting out. However, the continual tightening of the faucet on data may push companies to have a change of mind. Companies may offer financial incentives or other benefits in exchange for consumer consent. Similar to companies experimenting with the “pay or ok” model in the EU, the shift in regulation will cause companies in the U.S. to think about whether business models here need to shift to weather these changes. 

Audits, Assessments, and Accountability

Most state privacy laws include some combination of audit requirements, internal assessments, and accountability. Companies that share or make data available to other companies are required not only to have the right to audit those companies to confirm compliance with their contractual restrictions, but regulators expect them to actually exercise those audit rights (something that does not happen with widespread consistency today). 

Companies must prepare to conduct and respond to audit requests, which means having information and documentation together. This has been a work in progress for many companies. Starting in March, these audit requests may also come from the CPPA (California Privacy Protection Agency) for companies subject to California’s laws. Likewise, regulators are discussing a new package of regulations requiring companies to assess their cybersecurity posture and the risks of using automated decision-making. Companies that do not have a process for evaluating themselves and providing that documentation to partners and regulators will have a lot of catching up to do in 2024.

All State, No Federal

 I’m going to keep this short and sweet. More state laws. No federal law.

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In 2024, users’ data is under lock and key. Not literally, of course, but with the fall of Chrome’s cookies and stronger privacy regulations popping out of the woodwork, it will be much harder for publishers to reach their desired audience. 

We knew this was coming, but theorizing something and experiencing it are two different beasts. Is the ad tech industry ready to slay this dragon and thrive in a privacy-compliant world?

Optimism exists, but as our contributors warn us below, the industry has its work cut out for it before achieving any success in this new privacy-first world order. 

While reflecting on 2023 and preparing for the uncharted waters ahead, we turned to some of the industry’s leading voices on privacy — from the buy and sell sides, and even in between — to dispense their privacy predictions for 2024.

There are fair warnings ahead — the slow burn to federal privacy laws, the lack of addressaibility, the wait and see mindset. But it’s not all grim — the convergence of ad tech and martech, testing Privacy Enhancing Technologies (PETs), data collaboration, and more.

Another Year, Another Stand Still on Federal Privacy Regulation

“Consumer demand for privacy continues, and targeted advertising is at the top of the list of concerns. However, the US is still unable to get federal privacy regulations across the line. Instead, the patchwork of state legislation continues to grow. Large technology platforms will tighten privacy features, and there will finally be fewer cookies by the end of the year. 

Buyers, sellers, and ad technology providers must invest resources to manage the increased operational overhead required for compliance. Leading publishers will also test new technologies to securely match info on consented users (like clean rooms), require more extensive employee training on compliance, and develop exciting new probabilistic matching solutions. These solutions will use advanced contextual signals, first-party data, and smaller sets of deterministically matched audiences to build new resilient targeting and measurement solutions.” – Maria Breza, VP, Ad Quality Measurement and Audience Data Operations at SXM Media

Rapid Fire: The Rise of PETs and Consented Data 

“The future of PETs. There has been a surplus of chatter about privacy-enhancing technologies for the last few years. Yet, with the rise in restrictions on sensitive data, companies will start to invest more into understanding the viability of PETs to help them reach audiences in a privacy-protection way (rather than engaging in privacy theater). Regulators are also interested in this technology, but we should expect them to look at these solutions with a critical eye. They will employ experts to help them determine whether (from a mathematical perspective) publishers can use them to deliver and measure advertising without revealing individual user data.

*Note that clean rooms are not PETS; they must leverage PETs to offer a privacy-safe solution.

Experiments in consented data. I have yet to see a widespread effort to get opt-in consent for using sensitive information in the states that require it. Likewise, I haven’t seen companies take advantage of the ability to ask California consumers to opt-in to the “sale” of their data 12 months after opting out. However, the continual tightening of the faucet on data may push companies to have a change of mind. Companies may offer financial incentives or other benefits in exchange for consumer consent. Similar to companies experimenting with the “pay or ok” model in the EU, the shift in regulation will cause companies in the U.S. to think about whether business models here need to shift to weather these changes.” – Jessica B. Lee, Partner, Co-Chair, Privacy, Security & Data Innovations at Loeb & Loeb LLP.

The Era of CDPs

“Given that regulation naturally means fewer options to easily monetize customer data, centralization for storage and coordination of data will require a hub. Ad tech and martech further converge into madtech via the CDP. There are three main areas where this is paramount: 

1. Segment Creation – Today, not enough marketers can leverage their marketing attributes to build segments from 0 and 1PD. Most platforms still require engineering to code the necessary attributes. There will be a requirement to democratize this task so publishers can build custom audience segments they can use more easily. Outside vendors have a greater likelihood of building extensions that handle this function.
2. Data Collaboration – Moving data from platform to platform is complex today. However, there are several technical solutions to make this less burdensome. Building data collection and interactivity infrastructure will become a big business in 2024. The CDP is also at the center of these innovations, insomuch as they’re a required integration partner for this tech.
3. Insight Data – Data and research companies may start to push market and behavior data to the CDP. Today, the data flows in the opposite direction, and brands and agencies send customer data to data and research organizations for monetization. Given the prediction on segmentation and data collaboration capabilities, it would be intuitive for brands to centralize the whole process of insights, segmentation, and transfer in their platform of choice – the CDP.

If the above occurs, we will see even greater adoption of CDP’s, but it’s unlikely that CDP’s will create these mechanisms for collaboration. We may see  vendor extensions into the software that enable these functions.” – Therran Oliphant, SVP, Head of Data & Technology NA at EssenceMediacom

The Decrease in Addressable Users 

“Expect to see the industry truly start to take privacy seriously in 2024. To date, most of the industry is trying to extract as much value out of a shrinking group of addressable users, and in 2024, that number will get so small that it will force many to find new ways to reach audiences.

The group of addressable users will shrink because of the end of cookies and the removal of IP addresses, regulations, and other changes. The industry will need to find replacements for the direct addressability of the past that is privacy-preserving and scalable, and not many current technologies cross that bar. There’s lots of work to do.” – Paul Bannister, Chief Strategy Officer at Raptive

In-App Mobile Advertising Deals With Post-IDFA User Acquisition

“Privacy continues to be top of mind in the mobile advertising ecosystem. Mobile app developers adjusting to post-IDFA user acquisition on iOS must adapt yet again and learn how to run UA campaigns without relying on GAIDs as Google rolls out its Privacy Sandbox. As it adjusts, our industry must find creative ways to navigate the challenges and mitigate the impact on ad revenue. Brand advertisers will also face challenges activating their first-party data, as matching it with supply-side data will become impossible without identifiers.” – Linda Ouyang, VP & GM, Global Supply & Exchange, Digital Turbine

The Plight of Measurement and Addressability

“The cookie is going away. Those who act like it’s already gone are in the best shape. Success boils down to two things – addressability and measurement. Addressability isn’t terribly challenging as identity graphs and clean rooms provide tools to reach desired audiences at scale across partners. The industry is still navigating successful measurement. The result can and will be partially modeled but must pass a CFO and FP&A smell test for believability at the highest levels.” – Jay Friedman, CEO of Goodway Group

A Year of Experimentation and Testing

“As we venture into 2024, the advertising industry is poised to significantly shift toward a ‘Privacy-First’ approach in personalized advertising. This year will consist of constant experimentation and testing, a period where the performance of campaigns may see fluctuations and instability. Marketers will need to adapt swiftly, exploring new methodologies for targeting and measurement.

Companies will increasingly tap into AI and machine learning, creating hyper-personalized content that respects user privacy. This involves leveraging aggregated and anonymized data to serve relevant ads, ensuring individual privacy remains intact.

Additionally, 2024 will witness a surge in transparency tools, empowering consumers to monitor and control how brands utilize their data. This will cultivate a deeper sense of trust and compliance.

In this era of experimentation, the advertising world will strive to meet privacy norms and seek to enrich the user experience. To adapt to these changes, the advertising industry must be nimble, ready to embrace new ways of targeting and measuring, ensuring advertising remains effective and respectful in an increasingly privacy-conscious world.” – Angelina Eng, VP of Measurement, Addressability, and Data Center at IAB. 

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