Consumer Empowerment and the Future of Advertising

By Dan McAdams, Sr. Director, Developer Relations at Tapjoy

Throughout the early parts of the 21st century, consumer data became an important currency amongst advertisers looking to target high-value consumers. Billion dollar companies were formed on the basis of helping advertisers collect, parse and make sense of the 2.5 quintillion bytes of data produced by humans every day. But then, somewhere along the way, a curious thing happened: consumers pushed back.

Whether through the use of ad blockers and privacy-safe web browsers or by proxy through governmental regulations, consumers decided that enough was enough. Their data belonged to them, and it should be up to each individual — not to any single platform, ad-tech company, or advertiser — how their data should and could be used. Data collection has gone too far, they were saying, and they would no longer stand for it.

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The fight over consumer data is just one battleground in the ages old push-and-pull between advertisers and consumers. For decades, advertisers appeared to have the upper hand, often dictating when, where and how consumers were exposed to brand messages. But in the last decade or so, due to larger trends involving the fragmentation of media, the ubiquitousness of mobile devices, and the emergence of the data economy, the pendulum has swung in favor of consumers.

Today, consumers have greater control over the advertising experience than perhaps ever before. They speak with their wallets and through their actions to let brands know that they are only willing to engage with advertisements that reach them on their own terms and in their own way. Advertisers that have adjusted to the new consumer empowerment have experienced skyrocketing growth, while those that refuse to acknowledge consumers’ growing influence within the ecosystem have languished.

By looking at some of the current trends shaping the consumer empowerment of today, we can begin to understand what the state of advertising will look like tomorrow.

Consumer demand for privacy will lead to more direct relationships

Apple’s shift away from its Identifier for Advertisers (IDFA), consumer privacy laws such as GDPR and CCPA, and the phasing out of third-party cookies on websites all point to one thing: that consumers are demanding increased transparency from the brands and advertisers they do business with.

The advertisers of tomorrow must behave more ethically and responsibly when it comes to data collection, security, privacy, control and accountability. The pillars of good data governance are based on individual’s rights to control their own data. Therefore it will become more difficult if not impossible for advertisers to target consumers based on third-party data that consumers did not directly opt in to providing.

On the other hand, consumers will gladly opt-in to sharing their data if they trust that companies will act with integrity and if there is an equal return in value for doing so. Businesses will adjust by establishing more direct relationships with consumers that enable them to gather their own, first-party data, leading to the growth of direct relationships via memberships, subscriptions, personalized coupons, access to premium content and services, and more.

Consumers will expect their cut of the advertising value exchange

In the traditional advertising model, advertisers pay publishers and media companies in order to to reach their consumer audiences. Most of the ads they pay to place are interruptive, unwanted, and, as a result, largely ineffective. Consumers prefer to skip, block or simply tune out the ads so that they can get back to their media activities as quickly as possible.

Consumers will, however, engage with ads when they’re ready to shop for a particular item. And when they do, they expect to receive their share of the value exchange between advertisers and publishers. Rather than all of the money going to the publisher, why shouldn’t consumers receive their share, in the form of discounts, rebates, or rewards?

We see this happening in the growth of rewards programs like Rakuten, Dosh, and Ibotta — programs that offer cash back whenever a consumer purchases items ranging from groceries and take-out to big-ticket items such as furniture and vacations. These programs cater to the growing consumer empowerment by connecting consumers with advertisers in the time, place and manner of their own choosing. They put consumer preferences, not advertiser needs, at the top of the priority list, and we can expect to see more programs like this in the future.

The new value exchange will shape consumer behaviors 

Not only do today’s consumers expect to be rewarded for shopping at certain merchants, but they expect to be rewarded for their time and attention as well, and they’re even willing to change their behaviors in order to do so.

One innovative example of this is the currency-based Sweatcoin app, which aims to make people healthier by rewarding them for walking. Sweatcoin converts each step you take into a currency that can be spent on products and services from participating advertisers. Thus far, Sweatcoin has converted more than 12 trillion steps into currency, and academic research has confirmed that it leads to a 20 percent increase in physical activity, while connecting consumers with advertisers of their choosing.

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Another excellent example is the cryptocurrency Basic Attention Token, or BAT. Consumers can earn BAT for free by downloading a special web browser called Brave and simply browsing their favorite sites as they normally would. Brave can either cut ads out of the web browsing experience altogether, or users can allow it to insert ads that reward them. Consumers can control exactly how many ads they want to see, and whether or not they want to hide sponsored images, while earning 70 percent of the ad revenue that Brave receives. The entire process is completely private (no data is ever collected) and secure (no hint of browsing activity ever leaves the user’s device).

These are just a few of many examples showing how a re-invented advertising value exchange places consumers at the top of the pyramid. If the recent past is any indication, we can expect to see many, many more examples of consumer empowerment affecting the advertising industry in the years to come.