
GDPR: Programmatic ad buying plummets in Europe - rexbee
https://digiday.com/media/gdpr-mayhem-programmatic-ad-buying-plummets-europe/
======
perl4ever
This article looks very interesting, but it's full of jargon from the ad
industry that makes it somewhat opaque to me. What I have an interest in is,
what will this do to the stock market on Tuesday?

Also, I find it interesting and confusing that the site puts up a panel on the
privacy policy, which says " _By using our site,_ you agree to these terms".
But then it has an "Accept" button, as well as an "X". So (not that this site
is unique) what does it mean if I don't click Accept (as is my wont)?

~~~
downandout
_what will this do to the stock market on Tuesday?_

I don't know about Tuesday, but you should have been shorting any company that
derives a significant percentage of their revenue from the EU ad market for
the last several months. Online ad revenue from the EU will fall and never
rise again, it's just a matter of exactly how much. The only thing that might
change this is if there is such a public outcry about the negative effects of
GDPR that it gets dialed back. But that seems like a longshot.

~~~
tpm
GDPR will have some negative effects, but why is lowering online ad revenue
(if that is what will happen) one of them? What I mean is, why is that a
negative effect for the whole society, not an industry? Stopping a war has the
negative effect of having to manufacture less war supplies, but the overall
effect tends to be positive.

~~~
downandout
_GDPR will have some negative effects, but why is lowering online ad revenue
(if that is what will happen) one of them?_

It's simple math. The ad industry has gotten so large because complex ad
targeting tools made it possible to deploy ad campaigns profitably. With those
tools extremely watered down due to GDPR, most ads that were profitable on May
24th are not profitable today. Most companies will not sustain these losses
for long, and will simply shift their ad spend to other markets where they can
still make a profit.

Some brand advertisers might stick around in the EU market - Coke, Pepsi,
maybe Apple, etc. But with most everyone else out of the picture, the market
will shrink. It will likely never again be the size that it was on May 24th.

~~~
jeena
_scratching my head_ \- that sounds to me like a positive thing. If a industry
has gotten big by doing something bad (misusing private data or using slaves
as workers) and a law comes along and forbids that practice than I can't see
how this is something negative for the sociaty overall.

------
js8
Can someone ELI5 to me why we can't simply have ads targeted to content
instead of to visitors?

What changed in the landscape that this is no longer possible?

~~~
downandout
_Can someone ELI5 to me why we can 't simply have ads targeted to content
instead of to visitors?_

Native ads do this. It's a huge industry, and will likely get far bigger under
GDPR. But it takes highly specialized techniques to make the numbers back out
as an advertiser. There's a ton of fraud, the bidding strategy is very
different from programmatic/retargeting, the ads that work are different, etc.
Most of the ad industry doesn't know how to do this, and many types of ads
simply won't be profitable on native networks.

From what I'm hearing from my friends that do ecommerce stuff, product ads
targeted to the EU are no longer profitable across the board either. That will
force a ton of review sites aimed at EU visitors to shutdown, along with many
YouTube reviewers. As advertisers pull product ads out of the major ad
networks because they can't make money, the revenue of publishers/content
creators in the product review space will plummet in lockstep. Amazon has cut
affiliate commissions to the point where turning to them is no longer an
option for any site that costs money to maintain either.

GDPR seems to be on track to wipe out vast swaths of businesses serving the EU
market, and not just the "evil" ones it was trying to wipe out. It's a
shitshow, but it was entirely predictable.

~~~
tannhaeuser
Maybe, but ad prices going down, Amazon cutting affiliation commissions,
clickbait race to the bottom etc. has happened over a period of the last ten
years anyway and is unrelated to GDPR. It hasn't exactly resulted in quality
content, or financial stability for content creators, either.

A situation where your average page contains tens of tracking scripts wasn't
sustainable much longer.

If anything, GDPR should be seen as an opportunity to disrupt the quasi-
monopolistic online ad market.

~~~
lajhsdfkl
>If anything, GDPR should be seen as an opportunity to disrupt the quasi-
monopolistic online ad market.

It's amazing to me how people manage to fool themselves into thinking there is
hope when the world is crumbling around them.

If Google can't make ads profitable in the EU what makes you think some tiny
European company will be able to disrupt the ad market?

How would they even do it without tracking? I can see the conversation with
major brands now

EU Ad Startup - "Trust us, the ads you are paying for are performing great. We
are very confident that they are driving conversions on your website."

Brand- "Ok, do you have any numbers to prove we are receiving conversions due
to your ads?"

EU Ad Startup - "No as that would be illegal under GDPR, but please trust our
business."

~~~
camillomiller
Which is how the paper and TV ads industry worked for more than half a
century, forcing brands to push creative limits in creating campaigns that we
regard sometimes as a pinnacle of arts and media culture. Just because the
Internet lets you laser focus a campaign by profiling the shit out of people,
it doesn’t mean that is how things should work.

~~~
lajhsdfkl
> Which is how the paper and TV ads industry worked for more than half a
> century, forcing brands to push creative limits in creating campaigns that
> we regard sometimes as a pinnacle of arts and media culture. Just because
> the Internet lets you laser focus a campaign by profiling the shit out of
> people, it doesn’t mean that is how things should work.

How did the paper and tv industry work? Oh yeah, advertisers would crowd
around and bid up the largest players. Small niche products would receive
little to no revenue and die quick deaths.

That is what I suspect will happen in the EU. Without tracking Advertisers
will be unable to know how their ads are performing. Without metrics such as
conversions which require end to end tracking advertisers will need to rely on
the reputation of the platform.

Products such as google and facebook will receive significant attention from
advertisers. The tiny blog you enjoy reading that is barely scraping by will
receive very little.

~~~
usrusr
Small niche products thrived on their inherently high precision in content-
based targeting. When their niche had ad buyers. (edit: actually I meant "if",
niche content providers _without_ much on-topic ad budget are a winner of
tracking-based targeting)

The more recent capability of targeting those niche ads also on random click-
bait sites didn't exactly help those small niche products.

(Edit, for clarification: with unrestricted tracking, if you publish to a
niche with good ad money, the few ads that you do show, for a tiny fraction of
the ad budget of your niche, become the information source used for drawing
much of your niche's ad money to ads displayed to your audience on unrelated
sites. Your ad-network should practically "steal" your content-targeting
information to divert on-topic ad money to entirely unrelated sites)

~~~
kinsomo
> Your ad-network should practically "steal" your content-targeting
> information to divert on-topic ad money to entirely unrelated sites

Do you have a link to support that? I believe it, but I'm looking for an
article that explains it well. I read one that had a good example of an
advertiser basically telling the operator of a high-quality, premium site that
he's only going to use them to gather audience targeting information so they
can be targeted at cheaper sites.

~~~
usrusr
The tiny "share on facebook" button, a google analytics script and so on, you
don't even need to show an ad to associate my browser identity with the topics
on the site I am visiting. But ads can certainly serve the same purpose.

Maybe you misunderstood what I meant (my wording wasn't exactly perfect), I'm
not talking about some dramatic ad-fraud scheme: without tracking-based
targeting, all ad-money about scuba-beekeeping (just making up some really
small niche) would go to the few sites dedicated to pleasures scuba-
beekeeping. This is how Google started their dominance, they were the best at
automatically matching scuba-beekeeping advertisers to scuba-beekeeping
websites. Content-based targeting.

With tracking, ad-networks show a small, cheap ad (or even just some tracker
the site includes without monetary compensation) on the scuba-beekeeping site
and take a note that the browser identity a target for scuba-beekeeping. Ads
about scuba-beekeeping will now appear to that browser-identity on random news
sites and the like while the niche site won't see a cent for the targeting
information.

All in all, if the "native" ad market (the one addressable by content-based
targeting) of a site has above-average value per eyeball, a site will tend to
lose more from cross-site targeting than they will gain from showing ads
unrelated to their content (but related to whatever their visitors have
visited before), if the "native" ad market is lower then they may win. Visit
frequency also plays a role, if the content-targetable sites take only a small
percentage of their users' browsing activity, a no-tracking scenario would
cause a bidding war amongst on-topic advertizers, if they take a large chunk
of their users' browsing, inbound tracking targeted ads (about other topics)
could easily more than make up for the losses in on-topic ads.

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MiscComment3209
This is completely unsurprising.

Ad buyers are uncertain about what the fallout of the GDPR is and are taking a
"wait-and-see" approach to advertising. That's causing the price drop, since
fewer people are buying. When the dust settles, and they know how to proceed,
it will return to normal.

If I could predict how quickly it would bounce back, I'd be tempted to get
involved in the exchange market.

~~~
onion2k
_When the dust settles, and they know how to proceed, it will return to
normal._

Unless there _isn 't_ a corresponding drop in product sales. That would show
the ads aren't driving sales, and there's no good reason to go back to
spending on them...

~~~
zormino
But then it's not about new sales, but rather brand loyalty and maintaining
market share. If coke or pepsi stopped advertising, I'm curious how long it
would take for them to take a hit if the other kept advertising. Maybe it
would be fast, maybe it would take a generation, but either way it would
happen eventually.

~~~
alkonaut
But this drop is only for online ads, correct? So unless they buy fewer ads
overall, what has happened now is that companies moved their ad money to
print/broadcast/posters and other traditional media?

------
isostatic
Good. Adverts are a drain on society, they increase prices of goods which are
advertised, and mean you as the product/consumer end up paying more than the
service/website gets, as the adverts take a cut.

Look at television in the US, or even in the UK on non-BBC channels. You watch
something for an hour, you get 40 minutes of actual use out of it, you get
massive breaks in the narative which reduces your enjoyment, and you waste 20
minutes of your life.

Does this mean you get free tv? No, you're still paying. The only reason that
$CORP spends $1 advertising to you in your program is because it will make you
spend more than $1 with them at some point in the future.

When you watch advert TV, you're selling 20 minutes of your life not for $1,
but to shift your $1 expense now to a $2 expense hidden elsewhere in the
future.

Far better to save 20 minutes, and that $2 in the future, by spending $1
upfront, and being the customer, not the product.

~~~
donatj
> they increase prices of goods which are advertised

I think that's completely false. The price of things goes down with volume,
and if no one knows about something its going to be far more expensive than
something everyone uses.

Advertisings entire purpose is to increase the volume sold, which lowers the
price.

[http://www.altfeldinc.com/pdfs/BASICECONOMICS.pdf](http://www.altfeldinc.com/pdfs/BASICECONOMICS.pdf)
is actually decent reasonably short and enlightening read if you find yourself
with some time.

~~~
danmaz74
> Advertisings entire purpose is to increase the volume sold, which lowers the
> price.

Problem is, if everybody does advertising to compete for market share, the
prices go up globally, because the entire ads industry consumes resources.

But for now we haven't figured out any better model. We might in the future,
or we might not.

~~~
isostatic
Netflix seem to be doing very well without adverts

How much does a website typically earn from my visit (with adblock etc)? I
haven't had a site with adverts since 2000 so no idea

Sky in the UK gets something like 80% of revenue from subscription, but still
have adverts on top of that, trying to extract every last penny. Thats why I
won't subscribe -- plenty of other choices for entertainment. If your time is
worth say £15 an hour, having 2 of you watching a 40 minute program and 20
minutes of adverts costs you £10. Given the income ratio is 8:1 revenue, your
£24 subscription brings in £3 of advertising money to sky per month, if you
watch 1 hour a day, that's 10 hours a month, or your time being worth 30p an
hour.

No thanks.

~~~
SilasX
Netflix can also restrict access to paying users. Can every site out there do
the same (while maintaining a viable business)?

~~~
isostatic
How much does a site earn from an average visit?

------
pavlov
Targeted ads are like a cancer on the web front-end. It started out
unnoticeably with one mutant script infecting a page, and now we’re at the
point where the majority of client network traffic from accessing a news
article goes to ad peddlers and trackers — the cancer has overtaken the host.

A chemotherapy that starves the cancer’s food supply by 25-40% overnight
sounds like a success to me.

(Edit: USA Today decided to actively remove the cancer tumors and created an
adless site for EU visitors. The results are amazing: load time shrunk from
45s to 3s, network requests from 500+ to only 34! Source:
[https://twitter.com/fr3ino/status/1000167643431784449?s=21](https://twitter.com/fr3ino/status/1000167643431784449?s=21)
)

~~~
freeflight
NPR even went as far as offering a text-only version of their site:
[https://text.npr.org/](https://text.npr.org/)

~~~
ohtwenty
That's been up for quite a while, actually, to help low-bandwidth and screen-
reader users.

What's new is that they're redirecting to it if you're EU (like myself)

Edit: It's a pity there's no real archive in the text version, as far as I've
been able to tell. No way to scroll down to yesterday's news or anything.

------
627467
Yet another great benefit from GDPR.

First I call this the "great unsubscriber" due to the great number of (since)
forgotten newsletter i got unsubscribe from. And Now this.

As european consumer (despite being outside europe) i ca only see benefits
with this new regulation.

~~~
MikkoFinell
Yes it's fantastic. Now if we only could ride the momentum of this and slam
something equally as punishing on Facebook, then we could be heading towards a
renewed golden age of the internet.

------
nannePOPI
Targeted ads are great. Things cost less because there is more competitions
between suppliers and they don't have to pay a lot per piece, since they can
target only the specific people who needs the thing they sell. This is GREAT
for people with small business and low budgets... but we know now that Europe
only care about the big business and billionaire overlords. Also with targeted
ads you don't have to hear/read about products you will never care for a
moment in your life.

~~~
wlll
I feel like the GDPR is working for me to help prevent companies treating my
data like it belongs to them.

I guess I'll have to check under the bed for my missing billions.

> Also with targeted ads you don't have to hear/read about products you will
> never care for a moment in your life.

I don't have to look at irrelevant adverts at all because I use an adblocker.
Something I started to use because of the battery sucking CPU fan abusing
privacy invading toxic wasteland that is the online advertisement industry.

The tech industry in general, and online advertising companies specifically
proved over many years they couldn't be trusted to look after people's data
and privacy, so forgive me if I don't shed a tear for the shitbags who now
have to stop exploiting me and my family's data.

------
nielsbot
Not holding my breath but I hope something like this happens in the US.

~~~
yborg
It's much more likely the current US administration will attempt to retaliate
against the EU in some way in order to get this rolled back.

~~~
viraptor
Why would they? Is the US Gov expected to protect the online advertisement
business for some reason?

~~~
tjoff
The US did vote against net neutrality just so that citizens could be abused
for money, this seems par for the course?

~~~
qeternity
The US did not vote for this. A panel of unelected bureaucrats did.

~~~
casefields
Correct. An independent federal agency run by 3 republicans and 2 democrats.

------
ajb
Everyone mourning the death of targeted ads:

It's perfectly possible to do targeted ads without collecting personal data!
You just keep personal data where it belongs - on the user's computer/phone -
rather than stealing it.

Keep the personal data in local storage, have the logic that chooses ads run
locally, and you have targetted ads without invading anyone's privacy.

I don't know if that satisfies the GDPR - not a lawyer. But it would satisfy
me.

~~~
xamuel
Careful about unintended consequences. I saw a project where someone built a
version of "Asteroids" where certain fake asteroids would appear or not based
on ":visited" css or something. Then by recording where players shot at, the
site was able to infer which of various websites you had visited.

~~~
ubernostrum
Mozilla experimented with the idea you're replying to -- a system that would
download a bundle of disparate ads from a central server, and then decide
based on information in the browser which ones to show. Take away active
content from the ads, or (very distant second best) sandbox them, and you can
do targeting without the advertisers or even the distributor being able to
figure out why a particular ad was shown.

------
xstartup
Why aren't subscription prices going up for EU only customers? Please if
you've customers in EU, do not blend the prices.

Add fee of lawyers (and future litigation/compliance risk damage) into EU
customers' subscription fee.

------
sanxiyn
It works!

------
manibatra
I always wonder how many of my decisions have been subconsciously influenced
by ads. At the moment the only stuff I feel like spending money on is tech
stuff. Probably because the only place I visit on the web is tech forums. My
spending on other stuff has dropped down drastically ever since I took a
hiatus from Facebook.

------
cm2012
Temporary, probably, as people sort their stuff out. Nature abhors a vacuum
and ad spend will reach the demand asymptote.

------
clay_the_ripper
Solution is simple: don’t do business in the EU. problem solved. Let the
companies who can be bothered to expose themselves to litigation and spend $$
on compliance service those customers.

------
ma2rten
The article makes it sound like this more due to a glitch in DoubleClick Bid
Manager than anything else.

~~~
tannhaeuser
Yeah that's ad tech companies and their investors and/or shareholders getting
concerned with their valuation.

------
xstartup
Funny, that most evasive ad networks pop networks operate out of EU.

EU has never done anything about them.

~~~
lima
> EU has never done anything about them.

They just did...

~~~
zerostar07
i think he meant "invasive pop up ad networks". These are not necessarily
tracking you (in fact most likely not as they are low tech), and gdpr doesnt
do anything about them.

------
adamnemecek
Hallelujah!!

------
mirimir
Could someone please ELI5 how programmatic ads _could be_ compliant with GDPR?
I can vaguely imagine how Google could be compliant. But generally, there are
just so many players. How could PII transfers even be tracked?

~~~
ec109685
You can capture consent on your first party site (enumerating each of the
networks and letting user opt out) and pass that to advertising networks:
[http://advertisingconsent.eu/](http://advertisingconsent.eu/)

~~~
danieldk
I think the more difficult part is that you also have to be able to retract
consent. So a first-party site has to offer this possibility as well and pass
that to the advertising networks, which will have to remove the relevant data.

Of course, this is technically possible. But apparently everyone has been
sleeping during the two-year grace period.

~~~
mirimir
Right, tracking will be tedious. That's a lot of transactional data, I think.

------
swiley
Wow this is fantastic! Maybe we’ll have a web with no 3rd party adds one day!

------
jacksmith21006
Is this not going to hurt the EU businesses that purchased the ads?

------
kerng
Yes!

------
Jdam
Interesting to see how many websites will close due to a drop in ad revenue. A
paywall won’t save your small news site.

------
tannhaeuser
Wow! What are sites supposed to do to place non-targetted ads (traditional
content-based banner ads)? AFAIK, ad networks (if there are still any left)
and ad customers still want tracking pixels or other instruments to measure
(unique) impressions, which would also need consent under GDPR. OTOH, you
could say that DoubleClick and Facebook ad impression figures aren't really
more transparent or fraud-resistant than no stats at all since nobody can
verify those anyway - except your own trackers, that is

~~~
alkonaut
Traditional banners would be fantastic. I’m hoping for a future where a
fraction of sites move to traditional print style ads, some fraction moves to
paid content, and a huge fraction simply moves to the waybackmachine. If
tracking ads support a business it’s not a business it’s a scam.

