After GDPR effect? In A Post Cookie World, Blockchain Is Rising

The European General Data Protection Regulation (GDPR) was rolled out in May this year. It introduced far-reaching implications for companies which process personal data related to EU citizens. Even those far outside the EU could not fail to notice this change. Email inboxes were overflowing with opt-out reminders. Cookie banners now obscure many websites, forcing users to agree to a privacy policy so that they can browse the content on the site.

Although the GDPR document itself clocks in at 88 pages, the majority of what it covers can be summed up in one word — consent. If companies are processing personal data, it must be done with the explicit, informed consent of the individual.

For some forms of marketing, such as email subscriber lists, this involved minimal changes. Individuals already have to take the active step of providing their email addresses, and usually it is pretty clear why they are asked to do so. However, for the digital advertising industry, consent is far less straightforward.

Consent and Cookies

For many years now, digital advertising has relied on the use of tracking cookies, also known as third-party cookies. While first-party cookies are used by websites to improve user experience — for example, by remembering language preferences — third-party cookies are installed by ad networks. They track the online movements of a user, serving up targeted advertisements based on the browsing history of the user.

The extent to which these kinds of cookies are used can be surprising.  Even the reasonably reputable New York Times uses nearly a thousand third-party cookies on its website, according to Cookiepedia.

The use of tracking cookies is where the GDPR makes things difficult for the digital ad industry. Research shows, unsurprisingly, that only around 5-20% of individuals would consent for third-party cookies to track their online movements.

Image source: limerickleader.ie

In particular, for a consent to be deemed valid under the GDPR, each single purpose of the data collection must be listed explicitly, with an explicit consent provided for each purpose.

Furthermore, in the convoluted supply chain of digital advertising, user data has often been passed around between different ad platforms and resellers. However, the GDPR requires that individual consent is obtained by each separate party processing the data.

All this complexity in obtaining consent has led to some in the industry to conclude that a consent model is “unworkable.” But under the terms of the GDPR, any company involved in data processing of EU citizens without the required consent can face fines up to 4% of global revenue, or €20 million, whichever is higher.

Many publishers and platforms are now moving towards generic adverts instead of targeted ones. Generic ads don’t require consent, in the same way TV or newspaper advertising doesn’t require consent.

The use of generic ads is less attractive for the industry. They generate less revenue as they achieve fewer clicks than targeted ads. However, generic ads also diminish the user experience. After all, ads that are not relevant to the user are just taking up page space.

The Blockchain Solution

Blockchain is already showing significant potential in the area of digital identity, as well as managing the process of consent for its use. This potential can also be applied to the field of digital advertising.

Blockchain provides the ability to actively reward users in the form of digital currency for their consent to view advertisements. With such explicit permission, publishers are free to show targeted ads to users — without contravening the terms of the GDPR.

The business model of Zinc, a new blockchain-based digital advertising protocol, is constructed around this rewards-based framework. In exchange for transparent consent to view targeted digital advertisements, Zinc will reward users with its own ZINC digital tokens.

ZINC tokens may be used as payment, for example, to unlock special features or premium content within apps using the Zinc ad serving platform. In this way, users are no longer passive participants; they become valued and active members of a globally compliant advertising supply chain.

Blockchain provides many other benefits to advertisers than just GDPR compliance. By obtaining consent from an engaged user community, the user data aggregated and analyzed by the ad platforms is of inherently high quality. This is a departure from the old model where data is bundled and passed between parties in the ad supply chain, so the quality of user data cannot be assured.

Image Source: Zinc.co

A further benefit of blockchain is the reduction of fraud, which is rife in the world of online advertising. In an attempt to drive up ad revenue, ad platforms and publishers may engage in dubious practices to create false clicks and views. This is often done programmatically, using bots or other software to generate fake traffic or background clicks. Human-operated “click farms” also exist, where people are employed to do nothing but click on ads.

A Win-Win-Win Scenario

From a user perspective, the introduction of the GDPR can be seen as good and bad. It is true that providing consent creates a more open and collaborative online environment. However, if publishers are forced into showing only obtrusive generic ads, this makes the online experience disengaging.

Now, the power of blockchain is being used to create an advertising ecosystem with multiple benefits. Users become active participants receiving rewards, publishers can demonstrate better compliance and increase revenue through targeted ads, and advertisers get more clicks, conversions and reduce wasted spend on advertising fraud.

Image source: onetrust.com

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