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The Great Data Race

A data race is taking place in the media and advertising industry. In the years to come, companies will be able to harvest even more personal data. But does the consumer want the targeted ads she gets as a result?

Background

New technology and the ability to gather and analyse large volumes of data are changing the ways in which advertisers reach consumers. Consumers were once split into demographic groups, which were targeted via mass media. Today we are bought and sold one by one on global ad exchanges. This results in marketing which is highly targeted and which presupposes that the advertisers have a thorough understanding of our habits, interests, tastes and network of contacts, in order to have the greatest impact.

With the proliferation of the Internet of Things, companies will be able to harvest even more personal data. Data from sensors and wearables will not only be valuable to advertisers, but also to insurance companies, employers and health providers, for instance. In the years to come individuals will be subject to extensive profiling in an ever-increasing array of new contexts.

Key challenges

Information asymmetry: When consumers have no knowledge of the massive collection of data that is taking place on the web, they cannot demand services that offer better privacy. The uneven distribution of information results in a competitive situation, which encourages the market players to use methods increasingly invasive of privacy. The information asymmetry that characterises the market is a form of market failure.

Weaknesses of consent: Internet users want quick and easy access to online services. They will almost automatically accept everything they are asked to accept. Making the processing of personal data subject to consent does not function as intended in many cases. By letting individuals decide for themselves, the individual is also left to stand alone against big and powerful players who are in reality able to dictate what the individual must consent to.

Lack of choice: Consumers are often left with the choice either to accept that online services collect their personal data for the marketing purposes, or not to use the services at all. However, if processing is subject to consent the consent must be based on genuine choice. It is not fair to deal with individuals with an attitude of: "you are not welcome here if you do not consent". This practice undermines the essence of consent.

Lack of control: The system of selling and buying ads on automated auctions has made it almost impossible for publishers to know who will display ads on its site, and who will track its web site visitors. Therefor it is hard to see how publishers could comply with the transparency requirements in the Data Protection Directive. If a publisher can not give data subjects the information that is required by the Directive, the processing is not allowed.

Manipulation and hidden discrimination: No industry in the world knows more about us than the advertising industry. Yet, we have very little insight into how these companies use the information they collect about us. This makes us vulnerable to manipulation and hidden discrimination. Automated marketing, controlled by algorithms, may cement existing prejudices and stereotypes.

The platform war

European publishers are consolidating and building platforms for distribution of personalised content and ads to face the competition from Google and Facebook.

  • Schibsted, Norwegian publisher with subsidiaries world wide, is building their own ad tech platform. Their aim is to have all major Norwegian publishers on board.
  • Axel Springer, German publisher, has launched a news aggregator platform, Upday, in partnership with Samsung. Upday has around 1200 publishers on board.

Do people want targeted ads?

  • Three quarters of respondents prefer random adverts, while only a quarter prefer personally targeted adverts.
  • Eight out of ten either strongly or somewhat agree that the collection, analysis, and sharing of personal data by online agencies for commercial purposes makes them uncomfortable.
  • Seven out of ten feel they have little oversight regarding what sort of data is being collected about them, or how online

 Call for action

  1. More transparency: The advertising market must be more transparent. Publishers, intermediaries and advertisers must inform users of what data is collected, how it is collected, how it is used and whether the information is being traded to other companies.
  2. Real choice: Users of Internet services must be given genuine choices when they are asked if they want to give their consent. They must be able to say «yes» or «no». In this, publishers and other providers of Internet-based services must lead the way.
  3. Responsible profiling: We must raise the awareness of the possible adverse effects of profiling. We must encourage the industry to develop privacy-friendly targeting systems. We must set limits as to how long data can be stored for profiling purposes to prevent companies from building up comprehensive and exhaustive profiles of individuals. Large-scale personal data storage also brings security risks.

Conclusion

European data protection authorities must work together to exchange experience, coordinate measures for the sector and attempt to harmonise requirements imposed on relevant players. Data protection authorities in Europe must also work more closely with consumer and competition authorities to safeguard the interests of individuals. Together we must strive to increase transparency and openness in the advertising market, ensure genuine freedom of choice for users and give the user more control over his or her own personal information.    

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