Privacy Signals, AI in Advertising & the Democratic Dilemma

For reasons that completely baffle me, the digital advertising industry congratulates itself for taking steps to eliminate third-party tracking cookies from the ecosystem, while replacing them with something equally bad from a consumer privacy perspective: various private signals that allow for one-to-one targeting.

Okay, that’s a lot to unpack, so let’s break it down. GDPR, CCPA, et al are a direct result of consumer blowback against constant online tracking. Private citizens felt that their every move was captured, recorded, packaged, and sold to anyone willing to pay. They weren’t wrong. Can we blame them for hating that level of snooping?

Inside the industry, we saw things differently. While consumers objected, we celebrated the age of data. Almost 100 years after John Wanamaker complained that 50% of his advertising was wasted, the digital advertising industry had devised a way to ensure every dollar an advertiser spent was targeted at a qualified user. We called it one-to-one advertising. 

Outside observers had a different name for our activities: surveillance capitalism

Surveillance capitalism, data-driven marketing, whatever you want to call it, we can all agree that it is essential to the constant bombardment of messages that influence consumer behavior. Some have deployed it to the point where consumers are prodded to buy things they don’t need (and will return to the retailer at some point at considerable loss), incur unmanageable levels of consumer debt, and rent self-storage units to put the stuff they buy but have no room for in their homes. 

And that’s just the start. Authoritarian figures and conspiracy theorists also use one-to-one messaging to proliferate their extreme beliefs that pose a serious threat to democracies all over the world.

So it’s no surprise that privacy regulations sprung up. But how effective are those regulations if we replace tracking cookies with other private signals (e.g. hashed emails, User ID resolution graphs) that allow for the same type of one-to-one targeting?

Let’s Face It: Cookies Were Not Effective

I find the private signals craze that has seized the industry to be rather puzzling. Big-time marketers, such as Kraft’s Julie Fleischer, made no bones about the sub-par quality of cookie data, telling attendees of a data conference that 90% of the data for sale is “crap.” Mind you, she said this back in 2014, when the so-called data revolution was in its heyday. Other studies during that time showed that up to 50% of audience segments for sale failed to reach the target audience. The cookie was never able to live up to its promise, as I wrote in 2022.

But we ignored the cognitive dissonance and dug into the tactic, relentlessly targeting consumers who felt like reading an article about a new car model with ads for new autos, based on the assumption that they must be in market for a new auto. Into countless auto-intender segments they went.

Consumers weren’t happy about it at all, and a few — Max Schrems in Europe and Alastair Mactaggart in California — began successful campaigns to regulate the collection and sale of user data. 

They were hardly outliers. Consumers began installing ad blockers, adopting VPNs, and downloading encryption software in a desperate attempt to protect their privacy. All they wanted was to be left alone to browse the internet in peace.

Given the consumer’s utter distaste for the incessant tracking, one must ask: Why did we go down this road?

The False Promise: One-to-One Marketing

To put it simply, we were led astray by a myth that one-to-one marketing was both possible and embraced by the consumer. We believed that everything the consumer did online — every click, visit, page view, video watched — revealed clues to the user’s predilection, brand preference, potential to buy, political outlook. 

By collecting, storing and analyzing every piece of data generated, we sought to influence what consumers buy and how they vote at scale. 

Worse, we believed that consumers saw the benefit of all this intrusion. We told ourselves that consumers expect highly personalized experiences and it was our job to provide them. After all, modern advertising demands relevance.

There are alternatives, of course, which we’ll explore in later articles.

The Great Accelerator: AI

The whole data revolution and one-to-one marketing scheme had a valuable technology in its corner: machine-learning based AI. AI has been an integral part of programmatic advertising and user profiling from the very beginning. The industry deploys it to analyze who clicked on what ad, who visited which page, and to select which impression out of billions to fill with an ad. 

A more recent form of machine learning — generative AI — is now a topic du jour. It is viewed as a way to take one-to-one marketing to the next level, creating ad copy and images in real-time based on the user behind it. What could possibly go wrong?

This Keeps Me Up at Night

As someone who is deeply committed to digital advertising, our failure to learn from past mistakes keeps me up at night.

Our industry has never really questioned the notion that one-to-one marketing is a worthy goal. Rather than learn the lessons of the consumer rebellion that led to GDPR, CCPA, and countless other regulations, we are embarking on a new style of consumer spying based on a new set of private signals. Today we are leveraging those signals to bully people into buying stuff they don’t need as well as instill in them irrational fears in order to prompt them to support anti-democracy candidates.

Why are we repeating the same mistakes? And make no mistake about it, the “alternatives” to third-party cookies function in the same way; they log a consumer’s private behavior and use it to follow them around the internet. Today we stand on the dawn of cookie-free advertising, tasked with reimagining the world. Instead, we are dangerously close to a colossal failure of imagination. Our focus is on identity resolution graphs and hashed emails — the exact kind of tracking we had with third-party cookies. Call it surveillance capitalism 2.0.

We can — and must — do better. Doing better means resisting the siren call of one-to-one marketing. Until we jettison that fantasy, all of our industry’s brain power and financial investments will do nothing more than recreate surveillance capitalism, ultimately leading us back to the place we currently find ourselves: facing any citizens and governments demanding that we stop abusing privacy.