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CCPA is Creating Winners and Losers

By Keith Huntoon

President & Co-Founder

CCPA’s impact is being felt far beyond California. Other states (notably Washington) are following suit and there is continued interest in protecting consumer privacy at the federal level.

Most businesses are trying to comply with CCPA to some degree, but interpretation of the law varies from company to company. To get an idea of the different interpretations, the Washington Post has a fascinating article that highlights some of the simpler, and more complex, implementations by major companies in our industry.

In reaction to CCPA, and to get ahead of more draconian regulations at the state and federal level, a number of advertising associations have developed the Privacy Forum of America to help craft Federal Legislation. In addition, the Interactive Advertising Bureau [IAB] announced the creation of Project Rearc at it’s Annual Leadership Meeting two weeks ago.  Project Rearc’s goal is to develop guidelines for identification and targeting in a cookie-less AND mobile ID-less world.

None of us knows exactly how all of this is going to shake out, but I predict a few winners and losers.

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Winners!

Consumers

Consumers having more control and insight into their data is ultimately a good thing, though indirectly there could be some long-term concerns. More on that below.

Walled Gardens

Facebook, Google, Amazon, Discovery Comms, Netflix, Verizon Media, etc. These platforms have massive amounts of first party data from which to develop highly targeted audiences. If I’m a digital advertiser, where else will I go for scale and accuracy? I think we’ll see CPM’s on these platforms rise throughout 2020 and skyrocket during holidays.

Privacy Compliance Providers

OneTrust, Truyo, Amperity, etc. This market is still very young and the best providers are yet to be determined, but I believe many companies are going to outsource privacy compliance to experts. The pace of change is too fast for companies to adequately react.

Attorneys!

Legal ambiguity has led to big legal fees over the past year for many. If Private Right of Action comes into play, I’m quitting my day job and going to law school.

Direct Mail Marketers

Direct mail is not sexy and requires a ton of advance planning to be successful. With that, Direct Mail generates consistent returns and higher lifetime value [LTV] than pure digital for virtually all of our clients. Our next blog post will focus specifically on how brands can use direct marketing to fuel sustainable growth while enhancing consumer privacy.

Losers

Digital Ad-Tech Companies

Companies relying on third-party data sharing, particularly online data or location-based targeting, are susceptible to CCPA and future privacy initiatives.  Many digital ad-tech players are exploiting whatever interpretations/loopholes they can to maintain the status quo but IMHO that’s not a sustainable PR or legal position. I believe there are rough waters ahead for many.

Digital Publishers

If you are relying on ad-tech to sell inventory at higher CPM’s, you may need to look elsewhere.

Digitally Native Brands

Many have relied on digital to drive brand awareness and customer acquisition. Less accurate targeting and attribution will likely lead to high Customer Acqusition Costs [CAC] for most digitally-native brands. How many of these brands will be able to take the hit and/or pivot to multi-channel marketing like Wayfair, Doordash and Harry’s?

Non-Profits

CCPA exemption aside, non-profits rely on the digital ad-tech for audience development and targeting which will increase their Donor Acquisition Costs. Not to get too deep in the weeds, but many non-profits receive grants based on how efficient they convert funds raised to their mission. If their Donor Acquisition Costs increase, not only will they have less money to spend on their mission, they may not qualify for grants necessary to keep their doors open. Not good.

Consumers

Consumers may win with improved privacy, but this comes with a cost: If acquisition costs increase, some brands will disappear while others may raise their prices. If Donor Acquisition Costs increase for non-profits, they will have less funds available to support programs designed to help Consumers in a myriad of ways.

Thoughts? Do you see different winners and losers? Comment on the LinkedIn post below.


Published on Feb. 26, 2020