GDPR has negatively impacted advertisers and internet users suggests Canadian Marketing Association
The GDPR was enacted to protect the rights of online users and minimize the amount of data companies can legally hold, but a study by the Canadian Marketing Association (CMA) argued that it had by inadvertently negatively impact all aspects of the online ecosystem.
Although the GDPR has caused consternation among brands and marketers, it has been widely seen as a beneficial change for users’ rights online. The CMA report says it’s not just publishers and advertisers who have lost out, but user experiences have been impacted by a range of unintended consequences. It also claims that small and medium-sized enterprises (SMEs) have been disproportionately affected.
Small organisations, he says, have not been able to compete with large companies, which can devote significant resources to effective GDPR implementation: “In the world of online advertising, companies have chosen to advertise or partner with larger tech companies because they have the means to better meet GDPR regulatory requirements.
“A week after the GDPR was implemented, a study found that market concentration had increased by 17% as websites decided to no longer work with smaller vendors. In general, small online sellers are face additional hurdles due to their reliance on data from a variety of sources.”
In the UK, advertising spend with SMEs tends to return much more to the economy than spend with their biggest rivals. One of the unintended consequences of regulation is therefore that it slows economic growth by stifling SMEs.
More importantly, it suggests that the chilling effect on advertising is driving organizations’ willingness to launch subscription products or adopt direct payments. The suggestion is that consumers are ultimately denied free access services that would have been ad-supported: “An additional impact – which is just beginning to emerge in the online world – is that if consumers consider introducing new charges or increasing current prices to compensate for lost revenue. Many online services and content that consumers rely on are paid for, at least to some extent, by online advertising fueled by data collection techniques.
The report’s authors cite a study by Vox, which claimed that a completely ad-free Internet would cost users C$44 per month.
Lack of access
The report also cites the burden of GDPR compliance as the reason why some organizations block EU users from accessing their sites. It is most visible through the continued blockages of access to some US newspapers’ sites, with the implication that they don’t think it’s worth it. The report states: “Faced with the burden of compliance, some organizations outside the EU have chosen to localize their data feeds, stop serving the EU market or adjust their operations from another manner.
“It has had an impact on trade and investment in the EU. Privacy professionals have identified GDPR requirements for cross-border data transfers as their most challenging task; 10% said these challenges led their companies to choose to localize data, discontinue service, or completely halt data transfers to and from the EU. »
Investing in GDPR compliance has also reportedly led to budget cuts elsewhere, with a survey of over 400 European business leaders in 2019 finding that “a worrying number of businesses are cutting spending in other areas , including projects to create new innovative products (23%) or to fuel growth through internationalization (22%).
These ongoing costs also do not reflect the time and money that organizations have spent preparing for and implementing GDPR in the first place.
Perhaps most depressing of all, given these highly visible impacts on advertisers and consumers, the report suggests that very few consumers noticed any tangible positive differences. The only difference people have noticed seems to be the ubiquitous cookie permission notices the sites use when the user arrives, with none of the less obvious changes moving the needle.
GDPR was a potential solution to data creep and misuse – the report refers to its Canadian alternative, PIPEDA, as another without the unintended consequences. Data protection is vital and necessary; users are extremely concerned about online privacy but, as this study suggests, they don’t know exactly how their data is collected, stored and used. Meanwhile, the trade-off for this lack of visible improvement seems to have had a chilling effect on innovation and small business growth.
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