AdTech and Data Privacy

Nowadays consumers are constantly confronted with different ads while scrolling through digital platforms. Although sometimes these recommendations are useful, they also pose some risks related to data privacy.

AdTech, or advertising technology, refers to several types of software tools used by brands and advertisers to deliver and manage digital advertising campaigns with the goal of reaching consumers more easily. During the 1990s, there were many companies, institutions and even Internet aficionados that began developing their first public websites. Although at the time the investment in digital advertising was very little, it has increased over the years and digital ad spending is predicted to reach US$515,277m this year. Its main advantage is considered to be the fact that it enables a more exact and tailored targeting of potential clients through the use of cookies and other online monitoring tools. In whole, AdTech provides the technology which enables and facilitates the collection and use of data by advertisers in order to guarantee that their content, goods and services are relevant and most of all, consumed.

There are some types of AdTech solutions, for example:

Demand side platforms

A demand side platform (DSP) is an automation tool which basically connects to ads; meaning that it allows an advertiser to buy advertising. It enables ad buyers to buy and bid in real time to show their ads and manage their ad inventories, allowing advertisers to target their ideal client groups by selecting the ad they wish to purchase. Facebook Ads Manager, Media Math and Choozle constitute some examples of demand side platforms.  

Supply side platforms

Differently, a supply side platform (SSP) is designed to allow publishers to make their advertising inventory available by connecting them with multiple ad exchanges, demand side platforms and ad networks all at once. For instance, Sharethrough, PubMatic and OpenX are all examples of different supply side platforms.

Ad exchanges

An ad exchange is a highly automated online system that provides a marketplace which includes demand side platforms and supply side platforms in order to improve and facilitate buying and selling online advertising spots. These platforms operate similarly to the online stock trading platforms. Some ad exchange platforms include Index Exchange, Smaato and SmartyAds, among many others.  

Search engine marketing platforms

A search engine marketing (SEM) platform is another representative example of AdTech. Search engines, such as Google, allows advertisers to buy ad space for specific keywords. This means that when an individual searches for a specific product or service online, they will see the ads alongside those search queries. For instance, a chocolate company might place ads which appear in the search results for “best chocolates in Lisbon”.

There is a multitude of benefits connected with the use of AdTech. For instance, it allows advertisers and agencies to manage their integrated campaigns in a successful and effective way. Moreover, it is also useful for companies to manage their budgets efficiently and to optimize their digital advertising return on investment. Furthermore, the AdTech environment also enables marketers to strategically plan their advertising campaigns.

Society has become predominantly digital and brick-and-mortar and digital commerce are completely different. In the latter, it is possible to gather and store personal data, the consumers preferences and their online behaviour. Additionally, the data collected can include the referring website, demographics, information on the visitor’s device, interaction with advertising content, among others.

Overall, advertisers want consumers who are likely to purchase their goods to see their ads, and individuals want to see ads which are relevant to them. Nevertheless, using AdTech for online consumer profiling and data exploitation collected through software tools raises a number of legal challenges, notably concerning data privacy.

In 2016, with the adoption of the GDPR (General Data Protection Regulation) by the EU (European Union), consumers became more aware about their personal data and its high value.

For instance, in France the CNIL (Commission Nationale Informatique & Libertés) fined Google 50 million euros for not being compliant with the GDPR. More specifically, it was determined that Google’s privacy policy did not meet the transparency and information criteria and it had not obtained valid consent for targeted advertising, since users were provided with insufficient information for their consent to be valid, informed and specific.

A different case took place in Germany, where the Bundeskartellamt prohibited Facebook from combining user data from different sources, for example WhatsApp and Instagram, with the goal of improving its targeting advertising. Consequently, it was found that most users were not aware that Facebook did not have a lawful basis for this kind of data processing. In conclusion, although targeted advertising and AdTech are one of the core economic activities of online platforms, as it was highlighted in the Proposal of the Digital Services Act,  it is of paramount importance  to eliminate unlawful and unaccountable processing of personal data, which can increase the possibility of harmful risks to users. Moreover, companies should focus on protecting their consumers privacy and being more transparent. To sum up, advertisers and brands should comply with the legal and regulatory requirements and compliant AdTech solutions should be developed.

The Insights published herein reproduce the work carried out for this purpose by the author and therefore maintain the original language in which they were written. The opinions expressed within the article are solely the author’s and do not reflect in any way the opinions and beliefs of WhatNext.Law or of its affiliates. See our Terms of Use for more information.

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