HomemarketingMarketing Power Set to Shift as EU Telecom Giants Get Green Light...

Marketing Power Set to Shift as EU Telecom Giants Get Green Light for Joint Platform

The bid by four of Europe’s largest telecom companies – Deutsche Telekom, Orange, Telefonica and Vodafone – to develop their own digital advertising platform has been given unconditional approval by European regulators.

The development of their own “privacy first” advertising platform has been in the works for two years. It will aim allow the four businesses to develop a competitor to major tech companies including Amazon, Apple, Google and Meta which dominate the digital space in the the western world.

The European Union’s anti-trust division has ruled in favor of allowing the jointly controlled, full function digital advertising platform to proceed. Regulators spent more than a month reviewing the presentation, stating that it would “raise no competition concerns” within the European Economic Area.

The proposal submitted to the E.U. includes the development of “a privacy-led digital identification solution to support the digital marketing and advertising activities of brands and publishers.”

Each of the four companies will take an equal 25% stake in the newly formed joint venture holding company which will be based in Belgium and run under independent management.

Initial testing

The platform, developed by Vodafone, was tested last year in Germany under the name TrustPid, working with publications from both Axel Springer and RTL alongside German advertisers.

It aims to offer more transparency for users around how it handles their data, featuring “explicit user consent” from the brand and publisher and an opt-in basis for users.

Those who opt-in will generate “a secure token derived from a hashed/encrypted pseudonymous internal identity linked to a user’s network subscription, which will be provided by participating network operators.”

The token, which lasts for 90 days, will allow the brand or publisher to recognize the user without revealing identifiable personal data while delivering display ads across sites and apps. Users will also be able to review the brands and publishers they have given consent to and withdraw that consent when they wish.

“The platform is specifically designed to offer consumers a step change in the control, transparency and protection of their data, which is currently collected, distributed and stored at scale by major, non-European players,” the companies explained in a statement.

An unsustainable setup

The announcement comes within weeks of the E.U. releasing a report which described the current setup of the digital advertising sector across Europe as “unsustainable” and in need of reform in order to lessen the power held by the tech giants. With TrustPid set to proceed, it offers a potential alternative that was previously lacking, according to the report.

It was commissioned to examine how the digital advertising sector had evolved over the last 15 years and to curate evidence that would inform the development of future privacy policies while creating “a more balanced” ecosystem.

The intention to produce a study on the sector was initially announced in September 2021 which used Quant analysis, literature reviews, digital ad spend analysis and interviews to produce the findings.

An advisory board was also set up featuring ad tech professionals such as Wayne Blodwell, Bob Hoffman, Mikko Kotila, Michael Veale and Clare Melford. They were tasked with reviewing and offering feedback on different drafts of the study.

In the report, the E.U. found the current conditions for the market to be “unsustainable” for individuals, publishers and advertisers. It claims that the data collection, profiling and tracking produces “unintended consequences” on security, democracy, the environment and data protection.

“There is little independent evidence to support claims that the use of extensive tracking and profiling yields a significant advantage compared to digital advertising models which don’t do this,” stated the report. “This strengthens the position of players who have the most control over and insight into people’s behavior online and weakens the ability of others, especially advertisers and publishers, to communicate directly to their customers.”

The study also claims that there are “gaps” in regulation that enable the tech companies to continue with their data collection practices with a need for more transparency and accountability. It also states that individuals should be given more control over how their personal data is applied to ad distribution, a long-standing issue that will be heightened when Google ends the use of third-party cookies, scheduled for 2024.

Highlighted throughout the report are “key issues” identified by both publishers and advertisers while it also highlights how “complex” digital advertising buying has become.

Whoever holds the data keys still makes the rules.

Michael Nevins, chief marketing officer for Equativ

“The combined revenue of the largest European publishers has stagnated over the past 10 years, while Alphabet (Google) and Meta’s revenues increased by more than 500% during the same period,” the report stated, claiming that evidence found this to be “due to lack of transparency and large and growing imbalances in bargaining power” rather than with existing regulation on privacy and data protection.

“Whoever holds the data keys still makes the rules,” said Michael Nevins, chief marketing officer for adtech firm Equativ, which highlighted that the “power dynamic” and walled gardens of the tech giants “force” advertisers into using their targeting tools and they “pushed” users into exchanging their data for access to services.

“Moving towards a privacy-first, fair trade model will help ensure a better balance that supports the entire open internet, including harnessing contextual approaches to put more control in the hands of users and independent publishers,” he added.

A lack of alternative models

To determine whether alternative models could be effective, the team behind the study carried out a review of different digital ad models related to the use of modeling and profiling, sensitive data and third-party data sharing. This included desk research, expert interviews and a review of tools that allow people to view and control their shared data. In September 2022, a workshop involved 41 stakeholders and experts on the progress of the study.

While reviewing alternative models, the study admits that it is “unclear” of the effectiveness of contextual advertising and local profiling models.

It also outlines the probability that Google’s Privacy Sandbox proposals would become the prominent digital advertising model due to Google’ reach. The review described the use of a subscription model as “privacy-friendly” for publishers but that the effectiveness of new tools to drive revenue (such as micropayments and news aggregation) had yet to be proven.

Emma Newman, chief revenue officer for PubMatic highlighted the need to consider how closely integrated each layer within the online ecosystem was, and the impact of any disruption to one element could have overall.

“The open internet is essential to ensure everyone has equal access to the same level of digital content and services,” she added. “The open internet is open because it is powered by its own network of buyers and vendors who drive essential advertising revenue. But as many marketers continue allocating as much as 70% of their budgets to walled gardens, a restricted flow of vital spend and funding is weakening the chain and putting its survival at risk,” she added.

Newman also warned ad buyers to consider media quality and whether ad placements helped to support sustaining “a healthy online ecosystem” over chasing cheap clicks and cost-efficient reach.



Please enter your comment!
Please enter your name here

Most Popular

Recent Comments