Nick Stringer,Internet Advertising Bureau UK, director of regulatory affairs, and European Interactive Digital Advertising Alliance (EDAA), chairman, suggests how businesses can invest in ways to be more transparent with the data they collect and use, as it stares down the barrel of more restrictive and burdensome regulation.

Cast your mind back to Exchange Wire’s ATS London 2011 event (if you were there!). That’s another world for a fast-moving UK ad tech market. At the event the IAB presented an overview of the public policy and regulatory landscape affecting digital advertising (focusing mainly on privacy). It included five key challenges for the sector:

1. Data-driven ad business models are under the political and regulatory spotlight at EU level.
2. They are often viewed as not transparent and undermining privacy, driven by an active civic society and consumer lobby.
3. The role and value of these models is not well understood by law-makers.
4. The issue is bundled together as ‘internet privacy’ – muddled with other non-advertising privacy issues.
5. Innovative privacy-enhancing solutions can only be delivered by industry itself to enhance transparency and user control – a ‘privacy by design’ approach.

Three years on, and on the eve of ATS London 2014, we need to ask ourselves some important questions: is the advertising sector taking the issue of privacy seriously? What lessons have we learned from the so-called ‘cookie law’? Is industry staring down the barrel of more restrictive and burdensome regulation?

The lessons of the ‘cookie law’

ATS London 2011 took place at a time when the sector was grappling with the complexities and inconsistencies of the revised ePrivacy Directive (or ‘cookie law’ as it is often referred to). The strong industry disapproval to this new legislation was all too clear, not just at the conference itself, but from the vast swathes of commentary and analysis.

The experience of the new law - changing the ‘notice and opt out’ approach to processing cookies (NB: it applies to all device technologies being used to process data, not just cookies) to one based upon ‘consent’ – was a warning to us all.

A strict transposition/interpretation by the UK Government could have introduced an unworkable opt-in regime but, in the end, it implemented one that is ‘light touch, business-friendly and sets a benchmark in Europe’.

However, the nature of a European Directive means that it needs to be implemented into the national laws of all EU countries. The outcome was a patchwork of different rules creating a fragmented approach for both consumers and digital businesses.

Ed Vaizey, MP, UK Communications Minister, described it as “well-meaning regulation that will be very difficult to work in practice” (here he is talking about digital advertising and privacy at the IAB’s 2011 Engage) and even elected MEPs have since acknowledged that they got this wrong. But let’s be very clear: law makers were reacting to concerns and aimed to give consumers more control over the likes of cookies.

However they ended up framing legislation that did not strike the right balance between empowering consumers to safeguard their privacy and disrupting their access to enabling the very content and services that those same consumers want.

Data-driven advertising remains at the forefront of the privacy challenge

Nevertheless privacy remains one of the most significant challenges in the digital era. Concerns are now more main stream, driven by the Edward Snowden state-surveillance issue as well as high profile issues such as the European Court of Justice’s recent decision requiring Google to remove, on request, personal data from its search engine results in cases where it is “inadequate, irrelevant or out of date”.

Data-driven advertising models remain at the forefront of the challenge and, as a result, remain under the spotlight of policy-makers and regulators. The growing tide of data collection, use and exchange drives the perception that things are out of control and that further regulation is needed.

Thus attempts by law-makers to regulate data will not go away but, at the same time, businesses need legal and commercial clarity when processing data. The European legislative institutions have – for over two years now – been debating the reform of existing data protection law, one of the most significant opportunities to streamline the law across markets and thereby create the certainty that businesses and consumers require.

However, despite these laudable goals, the proposals risk getting the balance wrong again and creating an over-prescriptive and burdensome regime for advertising data, particularly for third-party businesses. In broadening the scope of personal information (i.e. bringing more advertising data into the ‘regulatory net’) and requiring explicit consent for its processing, the risk of an opt in regime looms again.

The potential outcome would render many of today’s advertising business models unworkable (particularly third-party ones). As we all are probably well aware, not only would this compromise the development of the sector but it would deprive publishers and small businesses with much needed revenue.

Across Europe the IAB, as well as the broader digital and media industry, continues to advocate for a more proportionate approach. We can expect new data protection legislation in 2015.

Investing in privacy

However, businesses have the opportunity to step up and invest in ways to be more transparent with the data they collect and use, and many are doing so.

Since 2011, an EU wide initiative has been in place to provide consumers with greater transparency and control over behavioural or interest-based advertising.

In consultation with the European Commission, the initiative involves – in a nutshell - an icon that appears in or around display advertisements, as well as on web pages. When a user clicks on the icon he or she can find out more about the information collected and used for this purpose.

The icon also links to ways for internet users to manage their interests, such as via privacy dashboards or ad preference managers. It also links to a pan-European website now available in 26 different EU languages – www.youronlinechoices.eu – with helpful advice, tips to help protect privacy and a control page where you can turn off behavioural advertising.

While the principles of transparency and control remain valid, work is underway to adapt this initiative to the mobile environment. The initiative, joining up with similar ones in the USA and Canada, is administered by the European Interactive Digital Advertising Alliance (EDAA) and further details can be found at www.edaa.eu.

The regulatory ‘direction of travel’

The EU behavioural advertising initiative is a ‘must’ for ad businesses. Those that show leadership and vision now will benefit commercially in the longer run as marketers will require participation and compliance.

Privacy-empowering solutions should be integrated within products to provide consumers with greater transparency and control. The next few months will be critical: not only are the data protection reforms likely to be finalised in 2015 but there will soon be a new European Commission (in addition to the already newly elected European Parliament). This will determine the regulatory ‘direction of travel’ for our sector and it should be at the forefront of minds throughout ATS London 2014.