Is Oracle’s privacy settlement the canary in the coal mine for Digital Advertising and Ad Tech? 

The digital advertising game has changed. If you want evidence, look no further than Oracle’s recent $115 million data privacy payout.

Last month, Oracle agreed to pay out that vast sum to customers after settling a case around questionable data practices. But Oracle didn’t just write a check and move on – they shut down their advertising business in a decision to distance itself from a business that was too risky to sustain.

For years, Oracle has been growing the size and scope of its advertising data business, through their acquisitions of firms such as Datalogix and BlueKai. Datalogix tracked consumer purchases via loyalty programs and allowed brands to target specific customer segments based on actual purchases. Datalogix helped the consumer goods industry  evolve towards “purchase based targeting”, and fueled collaboration between consumer goods companies and grocery stores.

BlueKai gathered data on people based on their activity across the web, building segments and inferences such as “travel enthusiast”, and “mom”. These audience segments could be sliced and diced by brands, and importantly, brands could activate those audience segments across web inventory to deliver their ads. When BlueKai and Datalogix came together under Oracle, it created the powerful combination of behavioral and purchase data, with an activation layer.

It was like the Snuggie, everyone wanted it.

But Oracle threw in the towel. The environment has changed—dramatically. The FTC and State AGs are cracking down on what they describe as “surveillance capitalism”, and Oracle may have seen the writing on the wall.

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Oracle’s data business was just the start

Today, data is the lifeblood flowing through a system of data brokers, publishers, brands, advertising platforms, customer platforms and measurement companies. Often the data collection is transparent and tied to the value exchange behind brands and their customers. But a lot of the time, it’s opaque – big chunks of the technology that makes advertising work, such as Ad Networks, Exchanges, Demand Side Platforms, and Identity Resolution businesses are also registered as data brokers. Which means that in addition to connecting buyers and sellers of ads, they collect and sell data.

It’s only a matter of time before regulators understand and untangle the ad tech ecosystem.

Regulators’ approach

The regulators’ approach first focused on data types and we saw enforcement action in health data, location data, and vehicle data, and calls from the FTC Chair, Lina Khan, that web browsing data is personal data and should be subject to opt-in consent.

Secondly, there’s a focus on ecosystem players, with data brokers squarely in the cross-hairs. An example is the legislative effort around the California Delete Act, which grants Californians the right to demand that data brokers erase their personal information.

Thirdly, a focus on how data is being collected and used. Is data being collected with transparency into its intended use? Are businesses collecting only the data they need? And are privacy choices being respected? Consumer facing brands get caught up in this third pillar of enforcement just as much (and likely more) than ad tech providers.

The thirst for first-party data

The risk is exacerbated with the recent rush to collect more first-party data, and the eagerness to feed data-hungry algorithms and AI initiatives. The intention is correct – brands should be investing in first party relationships with their customers. But data relationships should be built on principles such as transparency and accountability from brands, and choice and control for consumers.

To build and maintain trust with your customers is immensely more important than regulators tightening their grip. As the awareness of data dignity grows, the stakes grow increasingly higher. Brands must accept some responsibility and accountability for how data flows through the advertising ecosystem, and demand better practices.

Now more than ever the days of paying lip service to being “customer-centric” are over. It’s time to actually put the customer first.

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