GDPR: Will Facebook have the last laugh?

Facebook and online media publishers are set to gain a bigger share of the US$200 billion advertising industry, thanks to the EU's data privacy law.
24 August 2018 | 19 Shares

Mark Zuckerberg questioned at the European Union headquarters in Brussels. about the data privacy scandal. Source: JOHN THYS / AFP

Data is becoming more and more important in today’s world of business. If you’ve got the right data, you can create the right products for your customers, target your advertising perfectly, and craft messages that are most appealing to specific groups in the market.

Data makes it all possible, and advertisers are more and more willing to pay for access to the right kind of data, especially if it has been obtained legally and is being used in a way that meets all statutory obligations.

Thanks to the European Union’s General Data Protection Regulation (GDPR), the US$200 billion digital advertising industry seems to be favoring Facebook (and other tech/advertising giants such as Google and Amazon). Facebook, however, owing to its strong targeting capabilities, stands to gain the most.

Wait, how does the GDPR favor Facebook?

Well, the GDPR doesn’t exactly favor Facebook. The regulation applies to all companies in the region, big or small.

However, when you factor in behavioral science parameters such as human logic and decision making, you’ll realize that the odds are stacked in favor of the social media behemoth.

To put things in perspective, let’s consider the following situation:

You’ve bought a new cell phone and you’re looking for an app to help you do something (say, to record your calls). Now, when you download and install something, you’re likely to spend a lot of time carefully inspecting the permissions the app wants and the functionality it offers. If anything seems off, you’re likely to remove the app in a jiffy and look for another one.

However, on the same device, installing WhatsApp, Instagram, and Facebook come naturally. You’re not going to bat an eyelid when the app asks for certain permissions. In fact, you’re likely to breeze through the installation process so you can post a new update.

Now, here’s the important part. Facebook, like everyone else, has updated its Terms of Service, and using its apps and services allows it to collect your data — and use it to ‘enhance’ your experience.

Of course, the company is only using that data to provide users with a rich experience, and has the best interest of its users at heart, in whatever they do. But the social media giant is more likely to have better data on its users and help marketers more specifically when targeting ads, compared to other businesses who aren’t as trusted as Facebook.

But Facebook isn’t the only one that gains

According to Reuters, Facebook isn’t the only one that benefits from the GDPR. Google, another digital marketing behemoth, benefits just as much.

Then, there are traditional news portals that benefit from the provisions of the GDPR too. People tend to trust their news provider a fair bit because of the relationship they’ve had with these reputable organizations — most lasting for more than a few decades.

Data privacy laws being what they are today, all these platforms in a few years will grow into digital marketing giants, claiming a much larger share of the US$200-plus billion dollar digital advertising industry without any great effort of their own.

Smaller players, like mobile ad firm Kargo, mobile geo-location based advertiser Verve, and cross-device user data firm Drawbridge have all ceased operations in Europe in the midst of the disruption created by the GDPR.

Customers who spent a part of their ad-budget with these companies will now have to look for other options, possibly among one of the more popular social media, internet, or online media companies.

And while Facebook is well represented when it comes to advertisers, online media publishers are quietly making plans to get their name (and newfound capabilities) in front of those with a budget.

Three of the leading UK newspaper groups – News UK, The Guardian, and The Telegraph have joined forces in the Ozone Project to sell their online inventory, or ad space, together, offering advertisers access to 39 million users.

“By 2020, Ozone could add circa GDP 30 million (US$38 million) per annum – not a trivial contribution to a national newspaper newsroom,” analysts at consultancy Enders Analysis told Reuters.

While there’s a fair bit of speculation on the quantum of benefit that will accrue to those that are trusted by customers, the GDPR definitely seems to be playing a transformative role in the advertising industry.