How to balance privacy & sustainability for successful digital advertising

In this special blog post, we're thrilled to introduce a guest contributor whose valuable insights are a result of our exciting marketing collaboration. Mateusz Krempa, Chief Operating Officer at Piwik PRO is a Warsaw School of Economics graduate with over eight years of management experience. He is responsible for the optimization of revenue streams and oversees everything related to the existing business portfolio, including customer service and account management

Privacy and sustainability are vital trends in the ad tech industry – both have risen in prominence in recent years. These two concepts go hand in hand in helping you cultivate an ethical approach to your business strategy. 

Consumers today expect companies to respect their privacy and provide them with a choice in what happens with their data. Customers are also growing conscious of how their actions impact the environment, both online and offline. They perceive sustainable, transparent organizations that respect user demands as ones that have values beyond financial goals.

However, according to IAB Europe’s 2023 Brand Safety Poll, privacy, transparency, and sustainability are now bigger challenges for digital advertisers than brand safety. Advertisers, publishers, and vendors need to drastically adjust their approach to gain consumer trust, stay competitive, and grow their business. 

How do you combine privacy-oriented and sustainable practices with providing the best user experience? By putting the users at the front of your strategy.  

Let’s explore the state of privacy and sustainability in advertising and assess how the ad industry should move forward. 

What is privacy in digital advertising and how does it affect the industry?

There has been a longtime regulatory concern about digital advertising, mainly due to the industry’s reliance on third-party cookies. According to Hubspot, the most common reason for using ad blockers is that users view ads as annoying or intrusive. GWI’s research shows that users view brands negatively if they display too many or irrelevant ads or block access to the content they’re trying to see. 

The list of privacy issues in advertising is long and includes:

• A lack of transparency in how data is used 
• Invalid consent or lack of it 
• Improper lawful basis for processing data
• Poor data governance
• Cross-border data transfers of personal data, especially after the invalidation of the Privacy Shield that enabled the transfer of EU personal data to the US

Some solutions that have been introduced include: 

• Enforcement of privacy laws that require organizations to:
• Disclose methods and purposes of their data collection
• Collect valid consent for specific data processing purposes
• Have control over the data and what happens with it
• Refrain from transferring data to countries without appropriate safeguards or legislation
• The demise of third-party cookies in all major browsers, including Chrome, where the deprecation is due to happen in 2024
• Restrictions on third-party user tracking, such as Apple’s App Tracking Transparency or Firefox’s Enhanced Tracking Protection 
• Wide adoption of ad blockers in response to the plague of intrusive ads. As of 2022, 37% of internet users worldwide have adopted ad blockers

How does sustainability in digital advertising affect the industry?

Just like with privacy, the need for sustainability in digital advertising is driven by consumers. Their expectations have increased remarkably due to recent climate events, such as wildfires, floods, air-quality dangers, extreme heat, and drought. According to a survey by GreenPrint, 75% of consumers are concerned about the environmental impact of the products and services they buy. 

However, people tend to be skeptical of the sincerity of brands that claim to be environmentally friendly. In the same survey, 78% of respondents said they don't know how to identify environmentally friendly companies. 

This pushes the need for action. Consumers want companies to validate their sustainability claims through independent sources, both on the organizational and product levels. Organizations today need to be transparent about the implemented sustainable measures and areas still requiring their attention. 

In the end, being sustainable means better satisfying consumers’ expectations. Putting the consumer at the forefront is always a win for a business. 

The issues with being sustainable in digital advertising

The climate impact of digital advertising isn’t as apparent as in other industries, but it takes massive amounts of electricity to run servers, power connections, and generate ads. Recent estimates suggest the environmental footprint of digital advertising amounts to 1% of global energy consumption. Each ad impression produces around one gram of carbon, making it the most significant factor contributing to programmatic advertising’s carbon footprint. 

Despite the immense environmental impact, the industry lacks a commonly adopted measurement for carbon footprint that companies could use as a benchmark. Another issue is the lack of regulations and standards that could enforce sustainability practices across the industry. 

The challenge for brands resides in balancing communication for a more sustainable future with the potential to grow sales and market share for the brand. There are different roles and expectations across the supply chain: 

• Advertisers need transparency in what happens with their ads. They want to know their money is being used effectively and that they are reducing their carbon footprint.
• Publishers need to generate revenue by showing high-quality, effective ads on their sites.
• Ad tech vendors have the opportunity to help both advertisers and publishers make their operations more energy-efficient.

How can you be privacy-focused in digital advertising 

There are a few steps for organizations to make their advertising more privacy-oriented:

• Research the existing technological adjustments for ads, third-party tracking and data collection. 
• Review and familiarize yourself with governance standards and policies that you should follow to understand how you should alter your ad strategy.
• Create and maintain transparent data policies and inform users what data you’re collecting, why and how you will use it. 
• Establish a consent and preference management program to collect valid consent and respect users’ data choices.
• Provide value exchange behind sharing data and communicate it clearly to win users’ trust and create a great experience for them. 
• Revisit the tools you’re using in advertising. Choose privacy-compliant vendors that don’t use data for their own purposes and help you minimize the amount of data you collect. 
• Prioritize privacy-friendly tactics, such as using first-party data, contextual advertising and solutions such as walled gardens and Privacy Sandbox over more invasive advertising techniques.
• Use a few methods and don’t over-rely on one solution. By combining them, you can maximize the effectiveness of advertising and go beyond the limitations of any method.

How can you be sustainable in digital advertising

Digital advertising needs regulation to help companies follow their climate commitments. Through regulations, certain small changes can become the norm and enable a better footprint across the industry.

For now, there are sustainable practices you can apply across your organization. Here are our recommendations:

• Holding businesses accountable for their marketing messages and actions is a way to move environmental initiatives forward. The goal should be to promote sustainability across the whole industry and expect all entities in the supply chain to do their part. Everyone should stay informed, educated and ahead of developments. 
• Incentives build trust while reinforcing a green mindset. You can participate in industry-wide programs and initiatives that standardize sustainable practices across digital advertising. Importantly, organizations shouldn’t expect consumers to take their accomplishments at face value, but rather take action and fulfill their sustainable promises. 
• Vendors should disclose carbon impacts upfront so advertisers can make informed decisions. For companies and brands, transparency means having to clearly and honestly communicate their sustainability efforts. Make sure the claims in your ads are credible and that you follow through on them.
• Publishers, advertisers and brands need to collect accurate and timely data on the impact of their ad campaigns to measure their carbon footprint and analyze what contributes to it. Use carbon calculators for digital advertising agencies, such as those by Good-Loop and AdGreen.
• Organizations should look for ways to optimize their ad campaigns to lower carbon emissions while retaining ad revenue goals. The process should focus on eliminating inefficiencies across the stack, removing ineffective ads and adjusting the format and channels they are displayed on. Some ways to optimize ad resources involve: 
  • Reducing the number of video ads responsible for heavy carbon emissions – Many videos will remain unseen to ad-blocking users or disturb the user experience. 
  • Using compression tools to reduce ad sizes – Smaller ads mean less energy consumption.
  • Leveraging the “srcset” attribute so browsers can determine the suitable image variation to load.
  • Reducing the number of touchpoints within the AdTech stack – For example, integrating directly with DSPs and DMPs or using green PMPs (private marketplaces), such as eyeo’s Acceptable Ads Marketplaces.
  • Using dynamic creative optimization to adjust campaigns and reduce resource waste.
  • Leveraging AI to streamline ad production and create multiple creatives at scale
    
    Check out the IAB Sustainability Playbook for other sustainability-friendly solutions for advertisers.

Build a solid foundation

The future of digital advertising is shifting, and previously dominant trends simply won’t cut it anymore. The new standards and methods we discussed today are becoming the norm. And even though these changes are profound, they provide more room for novel, practical ad approaches. 

While many actions have been taken to push for more privacy in ad tech, there is still a need for meaningful, industry-wide enforcement of sustainability. When thinking about sustainability, the ad tech industry should leverage lessons learned from privacy regulations, which helped introduce privacy-friendly solutions into product development.

From the users’ perspective, sustainability and privacy are on the ethical and moral spectrum of “the right thing to do.” You can use sustainable and privacy-oriented practices to help cultivate your brand’s transparency and consistency and stay genuine in the eyes of the consumers.

You have an opportunity to better understand what your audience wants and give it to them. You need strong, trust-based relationships with consumers to build a solid foundation and prepare a sustainable, effective privacy-facing strategy. Collective actions and responsibility within the industry can bring about a shift that consumers, advertisers, and other supply chain members will benefit from. Ultimately, what the user wants should be at the core of what the ad industry provides to be successful and balanced.