California just passed the most sweeping consumer privacy protections in the nation. Under the new law, which Gov. Jerry Brown signed on June 28, companies can continue to collect personal information. But as of January 1, 2020, they have to tell California residents what kind of information they’re collecting, why they’re collecting that data, and how they plan to use it. And if someone says no to the sale of their personal information—or even, in certain cases, asks to delete it altogether—the company has to comply.
In these respects, the California Consumer Privacy Act is similar to the EU’s General Data Protection Regulation (GDPR), which went into effect just a month earlier. A key difference is that in California, companies don’t need people’s permission to collect their personal information. Also, the California law doesn’t apply to many smaller businesses.
So how does all this affect digital advertising? It doesn’t.
And if you’re anticipating this is the beginning of the end of programmatic advertising, we’re far from it. As I had mentioned a few months ago when Facebook decided to pull third-party data from their site, this is a step in the right direction.
The typical consumer doesn’t realize that most online ads are sold through a marketplace that runs billions of auctions per month, and millions per minute. Advertisers don’t see the underlying data because they don’t need to. They can target an audience by age, location, behavior and so on without any exposure to someone’s personal information.
That’s not to say advertisers never use customer data in their advertising. Many do, and they often buy it from third-party providers. Presumably those are the sorts of commercial transactions in the new privacy law’s crosshairs.
But successful digital marketers don’t need to rely on this kind of information.
Consider what we know about third-party data. For one thing, the quality is often questionable, to the point where it can really mess up a campaign. And legislation aside, it’s getting harder to use this kind of data on reputable open-source advertising platforms. Google now allows third-party data for segmentation only, not for creating audiences for ad targeting. And back in March, Facebook kicked third-party data providers off its platform in the wake of the Cambridge Analytica scandal.
Who was using those third-party targeting tools, anyway? According to Facebook, they were primarily consumer goods companies without a direct retail channel. Data brokers promised a way for these brands to put their ads in front of consumers they knew little about, for a fee, naturally.
It shows how important it is for every advertiser to do their homework on the target audience, even if that audience is unfamiliar. You just can’t skip this step. To have third-party aggregators choose your audience is to take a sizeable leap of faith—and to cut some pretty big corners.
The way to know an audience is to get granular. Think about what they need to hear. Figure out what they want, when they want it, and how they need to receive it.
Then develop your messages. Test them to see what works. And by test, I mean hundreds of them. Even if they’re not perfect, just run them and see what happens. Remember, we’re not talking about a high-stakes, one-shot, multimillion-dollar television spot. This is the Internet. You get many chances to win.
This brings me to my final point: In digital advertising, consumer data is not the key to success.
You are. Your team is. By finding out what works for your business and for your customers, without getting muddied up by someone else’s solution.
Look, data is important. But not every kind of data, and not in every facet of marketing. For digital ads, the technology exists to take an okay message and make it a great one without knowing anything at all about who’s online.
Today, thanks to AI-powered algorithms, you can automatically run hundreds of thousands of tests every day, against an almost unlimited number of variables, to serve targeted ads at the lowest possible cost. With this kind of rapid iteration, successes and failures reveal themselves right away. If an ad doesn’t convert, you can tweak it and try again. All of this is possible without using any personal data.
This approach really works—tons of companies are doing it successfully—without all the cost and risk of third-party consumer data.
California’s new privacy law is generating some uncertainty and debate. Because it’s a bill and not a ballot initiative, legislators will be refining it in the months to come. But some aspects of the law are fine as they are. To the extent that it breaks digital advertisers’ dependence on consumer data, we just might come out ahead.