So, as we look to the future, what are the themes and trends that will emerge? It would be too easy to say, ‘data.’ Rather, I think the big changes will be further down funnel but still related to data. The takeaway for 2019 will be consent management.
Consent management is where data, privacy, and regulation intersect. Simplistically, it is a mechanism for ensuring you have user consent to collect and use the data that is driving your decisions.
Why is this going to be the trend? Two reasons—the first is because consent management is nonexistent in today’s technology stacks (and no, the catch-all ‘do you accept’ button will not be sufficient moving forward for consent management). And, second: a compliance/privacy tsunami will bear down on the entire world (not just advertising) in 2019. Every trend in 2019 will tie back to a company’s ability, or inability, to check the box on consent management.
Prediction: Big changes are coming for companies collecting and trading in consumer data. This will be transformational for those in the location space and will shape the continued reordering of the hierarchy of brands and platforms. Let’s dive in.
2019’s Biggest Trends
The Apple doesn’t fall too far from the privacy tree
Apple is just getting started on privacy, and in 2019 we should all expect that they are going to make an even bigger move. When your CEO goes to the EU to speak about data and privacy being “weaponized,” it’s a precursor to a larger strategic decision for the company. In this case, Tim Cook of Apple did exactly this. Why? Because Apple is smart enough to realize that privacy is not a compliance issue but rather a strategic one. The best companies in the world will make privacy and compliance foundational to their strategies, getting ahead of the companies who are complying because they have to.
There is also a more subtle strategic play associated to this move, and it originates in Ireland. What does the Emerald Isle have to do with data? Well, take a look at where the International HQs of the Valley-based tech players such as Google, Facebook, Twitter, LinkedIn, and others sit—yes, you guessed it: Ireland. In 2019 we will see, at minimum, one big strike at a major tech firm around privacy and GDPR (The General Data Protection Regulation), starting in Ireland. Big companies mean easy targets for catching a big fish exploiting consumer data in relation to GDPR. Apple embracing privacy is a way to distance themselves from the authorities in the EU when the privacy hammer comes down.
Apple is going to be the leader in privacy, and it will be interesting to see who joins them for the ride. Apple can do this against its pseudo competitors like Facebook and Google because they don’t own an advertising business. As Tim Cook watched the executives at Facebook play whack-a-mole with privacy and Amazon deal with antitrust chatter, he realized it’s hard to knock the company sticking up for the little guy. While it’s fair to say that Apple has always had a complicated relationship with advertising, 2019 will be the year that they go all in on privacy.
Are you following?
The most disruptive thing I think Apple will do in 2019 is eliminate persistent location tracking in the background from the application ecosystem. The impact here will be massive. First, a little background: When downloading an application, you, as the consumer, can choose to allow location or not. Location can be ‘always on’ or ‘only when using the application.’ Location is a requirement for a number of applications—weather, ride share, etc.—but is location needed all the time?
This is where the first change will happen. Location tracking won’t go away, but it will be consumer opt-in and in the foreground only. All applications in the store will have background location disabled, cutting the available data from the iOS ecosystem in half, if not more. Applications that rely on data should take this as a warning of a more onerous data policy on the horizon that will start with location data but won’t end there. Privacy advocates, regulators, and government officials will applaud Apple’s focus on privacy, allowing Apple to gain favor with regulators and politicians to cash in at a later date.
While Android has 80% market share of the global handset market, iOS is a core source of data for many in the marketing and advertising space. Facebook, Google, Snap, and Twitter won’t be the only ones who suffer from this—there are hundreds of companies in the marketing and advertising space that depend on this data.
Location aggregators, those who sell data outside their walls to companies, could see their supply shrink by as much as 30% in 2019. This supply crunch will happen not only because of Apple’s moves but also due to a decision by consumer apps to stop selling their data due to the negative PR that just isn’t worth the number on their balance sheets.
While some consumer apps will stop proactively selling their data externally, this will be compounded by the operating systems (and the media’s) fixation to hunt down those that are leaking data without consent. Case in point: the Weather application that was exposed earlier this week by the WSJ. One by one, applications and their data will be removed from the ecosystem, creating a larger and larger supply crunch.
Don’t believe me? Ask anyone who is looking for data what the ecosystem looks like 10 months after GDPR came into effect. Supply is scarce, and prices are high. This is the point in the article where I remind you all that you are now on a 12-month countdown to the California Consumer Protection Act (CCPA)—which is GDPR USA—whose end result will be the same on the data ecosystem.
Trends To Follow
Separation is natural
The second trend, which will be a bit slower to develop, will be a separating of the ecosystems—no longer will you create one product for Android and iOS. The functionality inside of the OS is changing based on a combination of privacy and regulation, and Google can’t be as aggressive here due to their dependence on the ad business. Look to see an eventual splitting where you will have entire businesses created on Android vs iOS and vice versa.
I am intrigued to see if there will be a company that can win by embracing just one OS. This again is where Apple comes into play. With iPhone sales starting to wane due to the slowdown in China, Apple needs to figure out how they can stimulate new demand, most importantly in emerging markets. It’s right in front of them, and a quick look at Samsung’s history gives them a playbook from which to draw.
Samsung not that long ago was the #1 handset in China but lost its way to local competitors such as Huawei. In five years, Samsung went from the #1 handset in China (20% market share) to only having 1% of the Chinese market. One percent!
Guess what share of China Apple has … 10%. They need to make a move here before 10% becomes 1%. This, too, is where privacy comes back to the forefront. If you are in a battle with Chinese firms for market share, there is only one card that you can play in today’s environment. Espionage. Today, every major telecommunications firm in the world is pausing implementation of technology from Huawei due to its association with the Chinese government. Wouldn’t privacy and consumer control be a convenient way for Apple to maintain and grow share in 2019 and beyond? I think so.
Managing data management
Here come the data management platforms (DMPs). This space has been heating up for over a year now, but 2019 will be even more aggressive. DMPs have been living in a world of data lakes that are quickly turning into data swamps due to the lack of consent from users. This puts enormous pressure on these firms to implement consent management solutions in 2019 to ensure compliance.
In 2019 as we head closer to CCPA, we will see a massive increase in M&A activity to drain the swamps. This has already started with firms moving to position themselves with tools that adapt to this new world. Here is a summary of some moves just over the last few quarters:
Salesforce / Mulesoft
LiveRamp / Acxiom
Salesforce / Datorama
SAP / Qualtrics
Oracle / Grapeshot
There will be a few more moves that transpire in the early days of 2019—the most obvious being the beauty show that LiveRamp is putting on now. The disposal of Acxiom in July was clearly based on the valuation of Mulesoft ($6.5B), which was valued at 2x the entire Acxiom LiveRamp company. Sell Acxiom ($2.3B), trade as a pure play, improve valuation, clean up house, hire a bank, sell. Done. Current market cap of LiveRamp as a standalone company is $2.68B.
All of these moves on the chess board will better position the top players to bring consent management into the core of their strategic approaches to 2019 and 2020. While, yes, the Apples, Googles, and Facebooks of the world may be the first to move, this will not be the year for the smaller companies to sit back and wait to see how the changes impact the larger ecosystem.
Remember, the clock is counting down to 2020 for CCPA, and we all know that legislation doesn’t wait just because you haven’t figured out yet how to adjust your business to meet new regulation demands. A recent survey by PwC of U.S. businesses showed that less than half of the retail sector (46%) was confident they’d be ready to meet the demands of this pending legislation. I’m sure retail isn’t alone—everyone is more exposed than they even realize. So, buckle up, everyone, because the compliance management tsunami is just starting to roll, and we’re all going to be swept up for the ride whether we like it or not.
Article first published in Street Fight Magazine January 8th