GDPR spells the end of programmatic advertising as we know it

Mark Roy, chairman of REaD Group, believes that the new legislation will limit the use of AI, whatever Google, Facebook et al might try to do to stop it

Programmatic advertising is where the purchasing, selling and placement of online ads is done by algorithm. It is cost efficient because it effectively makes the role of ad sales redundant, but at the same time control over which ads appear where is limited.

This multibillion pound industry which has completely changed the face of digital advertising is largely controlled by US tech giants such as Google, Microsoft, Facebook, Oracle and Yahoo, for whom it has generated enormous profits. For websites that depend on advertising, however, the opposite has occurred. Revenues have plummeted as programmatic has become pretty much the only game in town.

However, this is all likely to change with the arrival of GDPR, according to Mark Roy founder and chairman of communications agency REaD Group and former chair of the Direct Marketing Association (DMA).

I do think that programmatic and lot of AI will fall by the wayside

"I do think that programmatic and lot of AI will fall by the wayside," he says. "If you put a data asset into the ether and allow thousands of organisation to tap into it or validate or use it then it's impossible to comply with the Regulation on the right to erasure. The consumer will come along, as is their right, and ask ‘how is my data being used and who is using it' - and it's impossible to know that."

The GDPR gives EU citizens more control over what happens to their personal data, requiring active consent in many cases. While organisations may be able to spin this by restricting premium services to those who open in for data collection (a la the cookie law), obtaining consent for programmatic advertising is likely to prove "a major challenge", Roy says.

But surely these American giants aren't going to stand idly by and watch as their cash cow gets penned in by the EU legislators? After all, individually these company's lobbyists represent a powerful presence in the corridors of the European Commission and Parliament, and combined that power could prove irresistable. Roy says they are certainly acting confident.

"There are a lot of American organisations wandering around the UK data industry at the moment, telling us ‘don't worry we'll sort it out'," he says. "But when we ask what the hell does that mean, they don't answer they just say ‘don't you worry, it will be fine'."

This will be an interesting struggle to watch, Roy says, not least because under Trump the US is pulling in the opposite direction to the EU and most of the rest of the world when it comes to data protection and privacy, recently striking down Obama's fairly limited attempts to bring the US more in line with Europe.

And the Europeans, on the face of it at least, are resisting US pressure, as evidenced by the Max Schrems case over Facebook's transfer of personal data to the USA, which brought about the demise of the Safe Harbour agreement, and also the ongoing court case over that company's use of customer data from WhatsApp.

"Bearing in mind that this whole thing started because of Facebook WhatsApp, with European citizens' data being dragged across to the US and used in any way they want, and with Mr Zuckerberg saying 'this stuff belongs to me rather than you', at the end of the day I cannot believe the Europeans will let the Americans get away with it," Roy says.

"I think also if they saw an end to programmatic and they saw an end to a lot of AI in this ethereal world outside of customer relationships then actually they'd be delighted."

So if that's true, what will take its place? Roy predicts a much more limited use for algorithmic advertising, with consumer consent dialled in, and a return to a more personal touch in advertising mediated by people rather than machines. This is because, legislation aside, trust is becoming a key differentiator.

The issue of trust is fundamentally important

"It wasn't all bad back then [in the 1990s when the previous data protection rules were drawn up], there was much more human interaction and we can learn from that. The issue of trust is fundamentally important. We're all consumers and all want to buy from people we feel comfortable with and that don't think will rip us off or sell our ID.

"I think programmatic will deliver in environments for customers where you have proper levels of consent, but this idea of it being out here in the wider environment it is not compliant and it's really not what consumers want."