How Data Decentralization Will Shape the Future of Programmatic

The 2020s got off to a rocky start, but as some things languished, other trends gained ground far more rapidly than could have been predicted. One of those trends was an overarching societal and technological push toward decentralization.

One of the primary catalysts for the decentralization trend has been a long-simmering distrust of the monolithic power structures that currently shape our society, from big banks to tech giants to the federal government. This has spurred interest in decentralization in many places, including a growing focus on local elections, widespread investment in cryptocurrency, and a surging interest the various potential applications of blockchain technology. In the ad tech space, decentralization sentiment has been spotted in frustrations over the use of personal data for ad targeting as well as in the push to regulate walled-garden advertising behemoths like Facebook and Google.

Of most relevance to programmatic advertising is the decentralization of data, which will have far-reaching implications for the programmatic industry and digital advertising landscape as a whole over the course of the next decade. Below, we explain how privacy and data regulations are already changing; share how the decentralization of data may shape the future of advertising; and list seven data-decentralization projects with the potential to help rewrite the future of digital advertising for the better.

The Shifting Data Landscape

As discussed in our last blog post, consumer frustration over the widespread use of personal data in digital ad targeting has recently led to several major shifts in data privacy regulation. The most important changes include:

• The EU’s General Data Protection Regulation (GDPR)
• The California Consumer Privacy Act (CCPA)
• iOS 14’s App Tracking Transparency
• The phaseout of third-party cookies from all major web browsers by 2022

Related: 4 Ways We're Preparing for Changes in Data Privacy (& So Can You)

The decreasing relevance of third-party data reflects the decentralization trend in that the largest data companies will no longer be able to amass and sell it as they currently are. Instead, a more decentralized network of first- and second-party data will become the new norm in digital advertising as individuals and the businesses they share their data with become the controllers of that data.

“Many data companies that are reliant on third-party cookies will essentially no longer be able to operate using their existing business model. Companies that rely on ethically sourced [personally identifiable information, or PII,] will be fine as that data comes from things like email address and login information.” —Riley Tompkins, Senior Data Analyst, PrograMetrix

Additionally, zero-party data—that is, information that businesses ask consumers for directly rather than inferring from their online actions—will allow individuals additional control over their own data and advertising personalization.

Envisioning a Decentralized Data Future

The ad industry has a huge variety of opinions on the end of third-party cookies and the loss of data access this shift will represent, but there are many other ways that data can be leveraged by advertisers, marketers, and more without relying on less-than-consensual data collection.

There may even be opportunities for individuals to broker their own data in the way that third-party data companies do currently. Data will increasingly become a form of digital currency in the 2020s.

Related: Audience Targeting 101: How to Show Your Digital Ads to the Right People

Many technologies are already available or currently being built for the exchange of ethically sourced data, and for its activation in digital ad campaigns. For example, Lotame’s Private Data Exchange (PDX) is already up and running: It’s built for second-party data sharing, which will become increasingly popular with the decreased relevance of third-party data.

Some companies, such as Heineken, are embracing a first-party-driven data strategy to “future-proof” their business and marketing  strategies as regulations around privacy and consent continue to evolve. Other companies will follow suit. According to Tompkins, “We will likely see email logins become even more ubiquitous across the web as website visitors won’t be able to be tracked via third-party cookies.”

Private marketplaces will also become increasingly relevant in digital advertising as individual publishers allow marketers to advertise on their platforms using their own first-party data. “The key benefit of private marketplaces is that an advertiser can gain direct access to a premium site and ingest their [first-party] data on the buy while competing for ad space against a smaller pool of bidders,” says Phil Parrish, co-founder and managing director of PrograMetrix. “Private marketplaces are typically accessible in Private Marketplace Platforms (PMPs) that are offered by mainstream DSPs.”

Related: Programmatic Private Marketplace 101: Definitions & Ways to Use PMPs 

Data Decentralization Projects to Watch

There will be many new projects around data decentralization and its impact on digital advertising forthcoming as the data industry is shaken up and innovation begins to surge in response. Below, we share a few projects relevant to the programmatic ad industry to watch in the coming years.

Ocean Protocol 

Ocean Protocol treats data as “a new asset class,” helping data owners and consumers publish, find, and use data in a secure and privacy-compliant fashion. Their “datatokens” help data make the leap from raw information to an asset, enabling data wallets, exchanges, and co-ops with assistance from decentralized finance (DeFi) technologies. This setup is intended to let marketers buy and sell private data while preserving its privacy. From the company:

“Society is becoming increasingly reliant on data, especially with the advent of AI. However, a small handful of organizations with both massive data assets and AI capabilities attained worrying levels of control which is a danger to a free and open society. We aim to unlock data, for more equitable outcomes for users of data, using a thoughtful application of both technology and governance.”

Brave

Many people have recently switched from Google to DuckDuckGo, a search engine that puts privacy over personalization, in response to reports of Google’s anticompetitive advertising practices. Brave takes things one step further than a search engine, offering a full browser built to compete with Chrome. It’s designed to block online surveillance with “Brave Shields” while loading pages faster and using less battery. From the company:

“Much more than a browser, Brave is a new way of thinking about how the web works. Brave is on a mission to fix the web by giving users a safer, faster and better browsing experience while growing support for content creators through a new attention-based ecosystem of rewards.”

Decentr

Similarly to Ocean Protocol, Decentr recognizes data as analogous to value. The project wants to make your data digitally tradeable, allowing you to pay less for the things you buy online. From the company:

“Data is the new currency. Companies have been selling your stolen data for over a decade now—raw user data that actually belongs to you. Decentr returns the control—and value—of your data to you, the user. You retain the payable value assigned to the secure data you generate on Decentr. You use this data value to offset purchases made via our platform, making goods and services cheaper for you.”

InfoSum

Infosum is an “identity infrastructure provider” aiming to connect data without sharing it, which can help with data onboarding, identity resolution, data partnerships, and building collaborative data networks. This lets advertisers execute people-based marketing campaigns and find complementary data sets to expand their reach while individuals retain control of the sharing of their data. From the company:

“Your data stays in its own isolated standalone cloud instance known as a Bunker. Once your data is uploaded, it never moves again and only you can ever access the Bunker. Permissions enable you to grant different levels of insight access. Your data is automatically normalised to our global schema. Because all datasets go through this process, they all speak the same language, irrelevant of their original taxonomies.”

Killi

Killi not only wants to include individuals in the transactions marketers make to acquire their data, they also offer a “Killi Unveil” product designed to let internet users view and edit the information in their online profiles. From the company:

“With Killi, companies are able to purchase first-party compliant data while users are able to profit from their data for the first time ever. Our company gives consumers a seat at the table, in a space that has previously only been occupied by tech giants and big companies. Killi’s Fair Trade Data simultaneously supports compliant marketing and redistributes wealth back to owners of the data.”

Fractal

Fractal wants to help users regain control of their data from Facebook and Google, which currently profit most from their online activities while retaining an unhealthy amount of control over advertisers wanting to access that data. From the company:

“Due to today’s entirely duopolistic ad market structure, advertisers are basically forced to rely upon the fact that the information being purchased is not only accurate but reliable, also having almost no control over the prices they pay for user data and access. The asymmetric relationships between users and advertisers and the ad market duopoly are wholly unbalanced, and an entirely new approach is needed in order to regain equilibrium.”

Swash

Swash is a browser plugin intended to let individuals turn their own data into passive income—or, as they put it, “get paid to use the internet.” They operate on decentralized, open-source technology that supports end-to-end encryption, ensuring that they won’t have access to any personally identifiable data on the platform. From the company:

“Once you’ve installed Swash, you don’t have to do anything. Swash does it all for you. It works in the background, so you can earn from the value of your data as you browse. Swash makes sure you’re rewarded for the value you contribute online, leading to a new, fairer, and more balanced digital economy.”

The sum of all these parts is that marketers and advertisers will still be able to access and activate a great deal of online data for digital ad targeting. Even better, those purchases will benefit the people who actually generate the data, rather than the large third parties that previously relied on the tracking of online behavior. As we’ve said before, we believe the changes to data privacy and online tracking will benefit advertisers and the programmatic industry as a whole in the long run. We hope the projects and ideas mentioned above begin to help elucidate how.