President Biden has signed a substantial executive order aimed at promoting competition and reining in big tech. This is an explainer on what types of practices that new EO might curtail and why contextual is a safe and stable alternative.
When President Biden rolled out hisExecutive Order on Promoting Competition in the American Economy in July, it was read by many as a sign that the administration is gearing up to tackle big tech. That's a pretty safe assumption given that concern over the expanding reach of big tech platforms like Facebook, Google, and Amazon is perhaps one of the last remaining issues of bipartisan consensus in the country. However, while the EO does carry provisions that feel aimed at big platforms, any attempt to alter the way businesses like Facebook and Google monetize the internet is going to have repercussions across the entire digital ecosystem. In this quick explainer, we'll look at some of the provisions of the President's executive order that could impact the way digital advertisers do business.
Data In Danger
Critics ofdigital advertising and advocates for online privacy have long used the term “surveillance” to highlight what they see as the intrusive nature of third-party data gathering and behavioral targeting practices. In the past, regulators have shied away from appending this descriptor but the new executive order puts it front and center. The order directs the heads of all relevant federal agencies to use their authority to address issues of competition with particular regard to, among others, “unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy.”
While the executive order doesn't lay out specific policy recommendations, it does give broad discretion to key agencies like the FTC, FCC, and the Department of Commerce to take a harder look at standard data collection practices and to build policy to curtail them. (Some in Congress have threatened to go even further,banning “the surveillance business model” altogether). Previously, the threat to third-party data has come primarily from private businesses like Google, which recently took some of the pressure off by postponing the deprecation of third-party cookies. But while tech platforms take their foot off the gas, the EO makes it clear that the administration is moving full-speed ahead. Advertisers should expect new rules that will limit the ability to collect third-party data and curtail audience platforms' ability to target based on it.
More Platforms Require More Resources
The stated goal of the Competition EO is to reduce the competitive advantages of major tech platforms that currently hold dominant market share across many industries including digital advertising. If it is effective then it may lead to the rise of a wider array of advertising and marketing platforms and greater diversity in the digital ecosystem. It's too soon to tell if the EO alone will have the power to deliver on this goal, but one thing is clear. Many advertisers have built their entire marketing operation around a comparatively small number of tools platforms, if the EO is successful, they too will need to diversity.
Currently,Google commands 28.9% of all digital ad spending in the US and Facebook captures 25.2%. Amazon, another hegemonic player across multiple industries,commands 10% of all spend and is rapidly climbing. In this environment, it makes sense that marketing teams are often heavily weighted toward the skills and experience needed to build and optimize campaigns on these key platforms. In the more diversified world, the EO seeks to create, marketing teams will need additional versatility to master a wider range of new platforms and tools.
Stability in Context
While the EO promises to shake up digital advertising at the regulatory level, it doesn't necessarily mean bad news for advertisers. Greater competition in the space could drive down costs or produce more efficient solutions. However, it's likely that there will be some disruption as government agencies grapple with their new mandate to curtail the use of personal data. While that situation sorts itself out, contextual advertising offers a potential safe harbor.
Unlike some of the new solutions that might emerge out of mega-platform gavelkind,contextual targeting is already pressure tested and operating at scale. Transitioning marketing resources away from audience and behavioral targeting and into contextual will allow marketing teams to continue reaching consumers at scale and delivering influential timely messages through a period of potential instability.
The Takeaway
Ultimately, it's too early to tell what policies will result from President Biden's EO. Agencies are still considering how to implement the directive and turn it into tangible policy. Whatever specific rules emerge from this period, it's clear that the practices that have governed data collection to date are under scrutiny and likely to be curtailed. While it's difficult to predict regulatory and legislative actions, the direction of policy is clear and savvy advertisers will use the time to prepare.
Whether by the hand of Google, Congress, or the Commerce Department, it's likely that third-party cookies will eventually fade taking loads of valuable consumer data with them. Marketing teams will need to orient themselves toward a range of new tools and solutions that can approximate some aspects of the current data-driven ecosystem, or invest early in tools that don't rely on the kind of data that's currently under threat. How advertisers respond to the portends of this Executive Order will determine the degree to which they thrive in the digital ecosystem to come.
