New data privacy rules proposed by the European Commission could have a devastating effect on the digital ad market and wider economy, according to a new report by IAB Europe. The study claims that the digital ad industry could be effectively halved in size if the regulations come into force next year.
The EU published a draft ePrivacy Regulation earlier this year that will overhaul the way that consumers consent to how their data is used. The new rules, set to pass into law in May 2018, will allow users to make a single decision at the device level, which will then apply to any other apps and websites that they use.
IAB Europe has revealed that the new measures will not take into account how data is often used differently across various websites and claims that a simple binary decision will likely lead to the vast majority of users opting out when asked for consent. This could potentially be a huge blow to the advertising industry.
Recent research by IHS Markit showed a 12.3 per cent rise in digital ad revenues year-on-year totalling £38.1bn. However, the sector relies on behavioural data to inform its strategies and campaigns, so the new regulation could reduce this figure by 50 per cent. IAB Europe also fears that millions of jobs could be threatened by the new legislation.
Nearly seven out of ten users are happy for their browsing data to be used to serve brands for advertising purposes, according to a survey of 11,000 people in 11 EU countries by research firm GfK, while 83 per cent prefer high-quality, free content funded by online ads. More worrying is the fact that 92 per cent would reduce their internet use if forced to pay for content.
“These findings should give MEPs very significant cause for concern as they consider the proposed ePrivacy Regulation,” IAB Europe CEO Townsend Feehan said. “The alternative to data-driven advertising isn’t just less targeted advertising — it’s a digital ad industry half the size that it is today. That has huge consequences for Europeans’ experience of the internet, for the EU economy and for the existence of a free and balanced media.”