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Programmatic Growth Plummets in wake of GDPR

The enforcement of GDPR (General Data Protection Regulations) on 25th May has caused a tailspin in the online data world, predominantly that of media. GDPR states that a user’s data can only be used if they have given a company explicit permission. For companies that aren’t compliant, the result may be a €20 million fine, or 4% of global revenue (whichever is greater).

The impact of GDPR has been particularly evident when it comes to programmatic buying. Programmatic media buying relies on algorithms and heavy data signals in order to serve ads in real-time. It is built on the principle of serving the right user, the right ad, at the right time. As such, data is at the very core of programmatic, and even before GDPR was enforced, there was early speculation that it would result in decreased programmatic spending (according to a report by Vibrant Media).

Since the new GDPR laws have been implemented, according to a Digiday article, two-fifths of media buyers (42%) say that GDPR is resulting in a drop in programmatic spend, with brands telling their agencies that the reputational risk of a GDPR-infringing programmatic campaign is enough to put such strategies on hold. Programmatic ad exchanges are echoing this observation – since the morning of 25th May, European and demand volumes have decreased in some cases by 25-40%.

GDPR has also had an effect on publishers – even beyond the European borders. Titles such as LA Times and Chicago Tribune have shut down their European sites, while other publishers (e.g. The Times) have said their programmatic inventory will no longer be available on open ad exchanges (and will only be available through direct buys).

Digital Trends, a consumer-facing digital media company, has used GDPR as an opportunity to package ‘GDPR-Compliant Advertising Options’ and sell these to other digital media agencies. This includes structured packages for desktop display, mobile and video inventory, across multiple verticals (gaming, automotive, movies & entertainment, etc.). This is a demonstration of how there are workarounds of the short-term impact of GDPR on programmatic exchange buying.

Google is one of the programmatic exchanges that has been able to recover comparatively quickly. Google’s ad exchange is the largest inventory source across the digital world and receives user content faster than smaller ad exchanges. As a result, it is able to deploy more targeted ads, according to data reported by the Wall Street Journal.

There have also been some initial problems with Google’s own DSP, DoubleClick Bid Manager (DBM). In the past few days, Google has contacted DBM clients to inform everyone that it is completing its integration with IAB framework (method for gaining consent and compliance), and until it has done so, there will be disruption across DBM campaigns that are buying across 3rd party European inventory (via ad exchanges). Some agencies are directing some frustration at Google, due to lack of guidance, and a case of being ‘too little too late’. As Google’s exchange is the biggest digital exchange out there, some agencies are reportedly claiming they should have done more given the significance of GDPR and the fact that it has been 3 years in the making.  Google have expressed their concern and stressed the seriousness of the issue and have also made efforts to work with other tech vendors/exchanges for alternative options for consent outside the IAB. One example of how Google is helping is that DBM has agreed to an Appnexus-wide whitelist of vendors so that users can continue their programmatic buying at (relative) scale.

All Response Media viewpoint

Advertisers and agencies are all aware of the challenges with programmatic, but the regulation has prompted further thought about audience targeting and the quality of the data underpinning it. GDPR has, somewhat indirectly, opened discussions about other targeting solutions. Some media owners have limited their programmatic strategies to include retargeting (uses 1st party data) and also contextual targeting (targeting content/environments as opposed to audience data). Another hypothesis could be that the amount of premium publisher inventory (packages deals sold by select publishers) is likely to increase, as this is inventory from hand-picked publishers and we have more control over where the ads display. It also relies on publishers to be GDPR-compliant, which is a movement they are all making.

GDPR could also mean that as publishers are pumping more of their inventory through private market-place deals, and less so on the open exchanges, there will be more demand for this packaged inventory and as such, a rise in the costs for the data/inventory.

Most believe the above issues will last weeks, if not months, however, it will be interesting to see how long it will take programmatic growth levels to recover, and what impact this will have on short-term targeting strategies implemented by agencies and media owners alike.