tag:econsultancy.com,2008:/topics/legal-and-regulations Latest Legal content from Econsultancy 2018-04-16T14:59:54+01:00 tag:econsultancy.com,2008:BlogPost/69945 2018-04-16T14:59:54+01:00 2018-04-16T14:59:54+01:00 Companies around the world are worried about the GDPR: study Patricio Robles <p>Those fines likely explain why, according to <a href="https://www.netapp.com/us/media/netapp-gdpr-survey-findings.pdf">a survey</a> conducted by NetApp, which polled over 1,100 C-suite executives, CIOs and IT managers, companies around the globe <a href="https://www.businesswire.com/news/home/20180411005738/en/45-Days-76-U.S.-Organizations-Concerned-Meeting">are worried</a> about the potential effects of the GDPR on their businesses. </p> <p>44% of the companies NetApp surveyed fear that they could lose revenue because of a failure to comply with the GDPR. In the US, the percentage is even higher, with just over half of companies expressing this concern.</p> <p><img src="https://assets.econsultancy.com/images/0009/3584/netapp-gdpr.png" alt="" width="800"></p> <p>Globally, half of companies also worry that a failure to comply with the GDPR could result in reputational harm, a fear that doesn't seem misplaced given the fallout from <a href="https://www.econsultancy.com/blog/69902-facebook-is-in-real-trouble-what-it-could-mean-for-marketers">Facebook's Cambridge Analytica scandal</a>. Econsultancy's <a href="https://www.econsultancy.com/reports/a-marketer-s-guide-to-the-general-data-protection-regulation-gdpr">own GDPR research</a> shows a starker picture, with 70% of brands very or somewhat concerned about the damage to brand reputation associated with non-compliance.</p> <p>But the concern around GDPR compliance cuts way deeper than revenue loss and reputational damage. Globally, 35% of companies fear that the financial penalties possible under the GDPR could imperil their very existence. In the UK and US, over 40% feel this way, according to NetApp.</p> <p>Unfortunately, while awareness of the GDPR is relatively high, two-thirds of companies are not confident they'll be in compliance with the GDPR when it goes into effect. Beyond the general complexity of the GDPR, there's a seemingly good explanation for this: well under half (40%) of those polled by NetApp indicated that their businesses are confident they know where their data is stored.</p> <p>According to NetApp, “Understanding where data is stored is the first step for businesses towards GDPR compliance.” In other words, it's hard to comply with the GDPR if you don't know where the data you're required to protect actually lives.</p> <p>Econsultancy's GDPR research is perhaps more optimistic than the NetApp figures, with 33% of clientside marketers saying they already have a plan or framework in place for compliance and 50% saying that whilst they don't yet have a plan, they are working on one.</p> <h3>A silver lining</h3> <p>The good news for companies is that despite any challenges they face in complying with the GDPR, the opportunities will arguably far outweigh the costs. As Kieran Flanagan recently explained, <a href="https://econsultancy.com/blog/69870-gdpr-why-the-opportunities-far-outweigh-the-costs">the GDPR will help companies deliver better user experiences and use their data more effectively</a>.</p> <p>“If you focus on this as an opportunity to improve how you handle data and how you engage with your prospect and customers, you'll see that this is a step in the right direction,” he suggested.</p> <p>What's more, given the likelihood that rules similar to those promulgated by the GDPR are eventually likely to be enacted in other parts of the world, including in the US, companies that make the effort and investments necessary to comply with GDPR should be well-positioned to deal with new legislation. This is likely to be especially true for businesses <a href="https://econsultancy.com/blog/69935-companies-should-consider-embracing-the-gdpr-even-where-they-don-t-have-to">that embrace the GDPR as a global standard</a>.</p> <p><a href="https://www.econsultancy.com/reports/a-marketer-s-guide-to-the-general-data-protection-regulation-gdpr"><img src="https://assets.econsultancy.com/images/0009/3207/gdpr_report.png" alt="gdpr" width="615" height="243"></a></p> tag:econsultancy.com,2008:BlogPost/69947 2018-04-16T13:39:46+01:00 2018-04-16T13:39:46+01:00 Five things we learned from Mark Zuckerberg's Capitol Hill testimony Patricio Robles <p>Here's what we learned from Zuckerberg's <a href="https://www.washingtonpost.com/news/the-switch/wp/2018/04/10/transcript-of-mark-zuckerbergs-senate-hearing/">two days of testimony</a>.</p> <h3>Many lawmakers know very little about technology</h3> <p>It was readily apparent that many of the lawmakers questioning Zuckerberg had, at best, a rudimentary understanding of the digital technologies associated with Facebook. Specifically, lawmakers seemed to struggle to get their heads around digital advertising ecosystem and how data is collected and used to target advertisements to consumers through digital channels.</p> <p>This worked to Zuckerberg's advantage, particularly on the first day of his testimony. Instead of hitting the Facebook CEO with meaningful if not insightful questions, Zuckerberg was able to spend much of his time educating lawmakers on concepts familiar to professionals as well as tech savvy consumers.</p> <h3>There's a lot Mark Zuckerberg claims he doesn't know</h3> <p>While it's clear that many lawmakers could use a digital crash course, it also became clear that there's a lot Facebook's CEO apparently doesn't know about his own company's operations. Zuckerberg told lawmakers “I'll have my team get back to you”, or some variation of that, <a href="https://www.wired.com/story/mark-zuckerberg-will-follow-up/">dozens of times</a>.</p> <p>The Facebook chief's apparent lack of knowledge raised lots of eyebrows and some observers suggested his lack of knowledge was feigned ignorance in some instances.</p> <p>Take, for example, U.S. Senator Roger Wicker's <a href="https://www.news18.com/news/tech/does-facebook-track-your-activities-even-after-you-log-out-zuckerberg-doesnt-know-1714507.html">question</a>, “There have been reports that Facebook can track user's browsing activity even after the user has logged off the Facebook platform. Can you confirm whether or not this is true?”</p> <p>The Facebook chief told Wicker that in the interest of accuracy, “it'll probably be better to have my team follow up with you on this.” Of course, the answer to Wicker's question was <em>yes</em>. In fact, last year, Facebook managed to successfully defend itself against a lawsuit <a href="https://www.theguardian.com/technology/2017/jul/03/facebook-track-browsing-history-california-lawsuit">related to its tracking of users after they had logged out</a>.</p> <h3>Facebook is relying heavily on AI</h3> <p>Investment in AI is booming in lots of industries, including <a href="https://econsultancy.com/blog/67745-15-examples-of-artificial-intelligence-in-marketing">marketing</a>, <a href="https://www.econsultancy.com/blog/69797-how-ai-is-transforming-healthcare">healthcare</a> and <a href="https://www.econsultancy.com/blog/69732-td-bank-s-acquisition-of-an-ai-firm-highlights-the-growing-importance-of-ai-in-banking">banking</a>. When it comes to many of the challenges Facebook is facing, such as hate speech and extremist content, both of which have been implicated in brand safety scandals, Zuckerberg's responses revealed that Facebook is betting AI will play a major role in solving them.</p> <p>In one exchange, Zuckerberg stated “building AI tools is going to be the scalable way to identify and root out most of this harmful content.” But he also later acknowledged that AI introduces a plethora of thorny ethical issues.</p> <p>He also admitted that AI isn't perfect, revealing that while Facebook's current AI tech has been successful in identifying terrorist content, hate speech is much more difficult to identify in part because what constitutes hate speech is often subject to debate. While Zuckerberg is obviously optimistic about his company's ability to improve his company's AI tech, the question is what it will do if AI doesn't prove to be as effective as Zuckerberg expects it to be.</p> <h3>It doesn't appear that regulation is imminent</h3> <p>Will Facebook face a regulatory crackdown? Reading between the lines last week would suggest that lawmakers are likely to do something. But there were few indications that slapping new regulations on Facebook will be a top priority.</p> <p>To the contrary, there were many indications that lawmakers would tread carefully and continue their fact-finding efforts. It was also fairly obvious that Facebook will have a warm seat at the table when lawmakers do get down to business drafting legislation, which isn't surprising given that the company, like most its size, has a small army of lobbyists and has contributed funds to many lawmakers.</p> <h3>But this is just the beginning</h3> <p>While Zuckerberg managed to leave Washington D.C. largely unscathed thanks in large part to technologically challenged lawmakers, Facebook is not out of the woods. </p> <p>Despite suggestions that Facebook's biggest crisis will blow over, the sentiment around privacy and user data has changed and with the <a href="https://econsultancy.com/hello/gdpr-for-marketers/">GDPR</a> coming into effect in the E.U. and U.K. in a little over a month, as this author <a href="https://www.econsultancy.com/blog/69935-companies-should-consider-embracing-the-gdpr-even-where-they-don-t-have-to">argued previously</a>, the free-for-all environment that companies have been operating in is going away.</p> <p>Up next: expect lawmakers to expand their scrutiny to other large tech companies, including Google, which might be sitting on an even larger treasure trove of user data than Facebook. In fact, one lawmaker even asked Mark Zuckerberg if he'd offer suggestions for other individuals they should ask to appear. We'll see if Zuckerberg's team gets back to him on that request.</p> tag:econsultancy.com,2008:BlogPost/69935 2018-04-10T11:00:00+01:00 2018-04-10T11:00:00+01:00 Companies should consider embracing the GDPR even where they don't have to Patricio Robles <p>In <a href="http://tacd.org/wp-content/uploads/2018/04/TACD-letter-to-Mark-Zuckerberg_final.pdf">a letter</a> to Mark Zuckerberg, members of the Transatlantic Consumer Dialogue, a coalition of US and EU consumer groups, wrote:</p> <blockquote> <p>The GDPR helps ensure that companies such as yours operate in an accountable and transparent manner, subject to the rule of law and the democratic process. The GDPR provides a solid foundation for data protection, establishing clear responsibilities for companies that collect personal data and clear rights for users whose data is gathered. These are protections that all users should be entitled to no matter where they are located.</p> </blockquote> <p>The letter comes less than a week after Zuckerberg <a href="https://www.reuters.com/article/us-facebook-ceo-privacy-exclusive/exclusive-facebook-ceo-stops-short-of-extending-european-privacy-globally-idUSKCN1HA2M1">stated</a> that he agreed “in spirit” with the GDPR but refused to commit to adopting it worldwide. “We're still nailing down details on this, but it should directionally be, in spirit, the whole thing,” he told Reuters, a statement that is unlikely to satisfy the growing number of critics of his company.</p> <p>While it remains to be seen whether or not Facebook will eventually give in, the situation does raise an interesting questions: should companies adopt the GDPR as a global standard, applying it to users and customers they aren't required to?</p> <p>Here are four reasons why they should consider it.</p> <h3>GDPR compliance is no simple task</h3> <p>While many companies with the greatest exposure to GDPR risk are still ill-prepared for its impending implementation, as the risks come into focus and the inevitable initial enforcement actions demonstrate that they're not merely theoretical, expect to see a scramble for compliance. </p> <p>Unfortunately, complying with the GDPR is not exactly a straightforward process. Understanding what the rules are and figuring out what specific actions need to be taken to comply has proven to be quite an undertaking for many companies. Given that, companies should consider that if they're going to make a substantial investment of time and money to comply, it might make a lot of sense to leverage that investment across all their operations. </p> <h3>Global application might be easier</h3> <p>For many companies, trying to treat individuals subject to the protections of the GDPR differently than individuals who aren't might actually prove to be more difficult and costly than simply treating all individuals the same regardless of where they're located. </p> <p>Consider, for example, the fact that a US citizen who moves to an EU country <a href="https://www.itgovernance.eu/blog/en/expert-gdpr-qa-international-transfers-brexit-and-eu-us-privacy-considerations/">would be</a> covered by the GDPR. For many companies, detecting such a move and responding to it might prove more difficult than it would seem it should be.</p> <h3>Similar regulation is likely coming outside of the EU</h3> <p>There's a growing consensus that GDPR-like regulation will be adopted outside of Europe, including in the US. While it's likely that there will be differences between regulations in different parts of the world, expect to see countries like the US look to the GDRP <a href="http://www.thedrum.com/news/2018/03/27/let-s-look-gdpr-global-data-protection-regulation-grapeshot">as a model</a> when they get around to creating their own scheme.</p> <p>This means companies that embrace the GDPR as a global standard will likely be better positioned to comply with similar regulations when and as they're implemented.</p> <h3>The tide has turned on privacy</h3> <p>Perhaps the biggest reason companies should consider applying their GDPR compliance to their global operations is that it's becoming increasingly evident that there is sea shift taking place vis-à-vis data collection, usage and protection.</p> <p>The Cambridge Analytica scandal is no longer just about Cambridge Analytica. Instead, Facebook's practices are being scrutinized in a way they never have been before and while it's still too early to predict what exactly will happen, the actions Facebook has taken to date suggest that even it knows the largely unregulated data Gold Rush is fast coming to an end. </p> <p>Put simply, in the post-GDPR world, data will have the potential to be a huge liability, not just an asset.</p> <p>The implication for companies: it might be wise to accept this and proactively prepare for substantially more rules around how data is collected and used.</p> <p><a href="https://www.econsultancy.com/reports/a-marketer-s-guide-to-the-general-data-protection-regulation-gdpr"><img src="https://assets.econsultancy.com/images/0009/3207/gdpr_report.png" alt="gdpr" width="615" height="243"></a></p> <p><em>Note that this article represents the views of the author solely, and are not intended to constitute legal advice.</em></p> tag:econsultancy.com,2008:BlogPost/69911 2018-04-03T13:00:00+01:00 2018-04-03T13:00:00+01:00 Study finds very few influencers disclose affiliate marketing on YouTube and Pinterest Patricio Robles <p>The researchers took a representative sample of half a million YouTube videos and over 2m Pinterest pins published by influencers over the course of a month in 2017 and found that more than 3,000 videos and 18,000 pins contained affiliate links. But only 10% of the videos and 7% of the pins contained a disclosure. The number of videos and pins subject to the disclosure rules but that failed to follow them is probably higher as the researchers did not look at videos and pins containing coupon codes, which can also be used to track sales referred by affiliates. </p> <h3>What's required</h3> <p>The FTC's endorsement guides specifically address affiliate links and state that disclosure of these links must be “clear and conspicuous.” The agency <a href="https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#affiliateornetwork">explains</a>:</p> <blockquote> <p>The closer [the disclosure] is to your recommendation, the better. Putting disclosures in obscure places – for example, buried on an ABOUT US or GENERAL INFO page, behind a poorly labeled hyperlink or in a “terms of service” agreement – isn't good enough. Neither is placing it below your review or below the link to the online retailer so readers would have to keep scrolling after they finish reading. Consumers should be able to notice the disclosure easily. They shouldn't have to hunt for it.</p> </blockquote> <p>But according to the Princeton researchers, most of the disclosures it did find were anything but clear and conspicuous and that “Explanation disclosures – which the FTC recommends – only appear in 1.82% and 2.43% of affiliate content on YouTube and Pinterest respectively.”</p> <p>That might have something to do with the fact that few are aware of the rules. Indeed, the Princeton researchers noted in their paper that of the eight affiliate companies that were most prevalent, which include Amazon, AliExpress, Commission Junction and Rakuten, only two explicitly reference the FTC's guidelines in their affiliate terms.</p> <h3>Hidden risks for brands</h3> <p>While the FTC did fire off warnings to dozens of influencers last year and <a href="https://econsultancy.com/blog/69418-the-ftc-begins-cracking-down-on-influencers-who-violate-its-rules">has engaged in some enforcement actions</a>, the large volume of content published on sites like YouTube and Pinterest, combined with the fact that violations of the FTC's guidelines are so widespread, suggests that influencers and the brands they're publishing affiliate links for have little to be concerned about.</p> <p>But the risks of not complying aren't limited to the possibility that the FTC will eventually crack down on violations and make examples of influencers and brands that assumed they were safe.</p> <p>For brands specifically, there are other risks.</p> <p>One is that lack of disclosure could actually hurt influencer affiliate campaigns. As Copyblogger's Brian Clark once <a href="https://www.copyblogger.com/affiliate-marketing-disclosure/">pointed out</a>, honest and confident disclosure can actually help sell. “If you're delivering value to your audience on a regular basis, they should have no problem with you being compensated for an occasional affiliate review or recommendation,” he opined. In fact, knowing that a purchase will help support the influencer might even encourage followers to make a purchase through an affiliate link.</p> <p>Another risk is that absent disclosure, the relationship between influencers and the brands they put in front of their audiences isn't clear. Is the influencer endorsing the brand? Is the brand endorsing the influencer? This is a potential problem when <a href="https://www.econsultancy.com/blog/69709-will-influencer-marketing-take-a-hit-after-the-logan-paul-firestorm">influencers find themselves in trouble</a> and the brands they've been associated with are at risk of becoming associated in some way with the trouble.</p> <h3>Playing by the rules is the right thing to do</h3> <p>Digital marketing is facing some of the biggest headwinds it has ever faced thanks in large part to players that either didn't follow the rules or, in the absence of clear rules, took liberties they probably shouldn't have.</p> <p>One of the lessons <a href="https://www.econsultancy.com/blog/69902-facebook-is-in-real-trouble-what-it-could-mean-for-marketers">being learned</a> is that just because you can get away with it doesn't mean you should. When it comes to affiliate disclosures, brands have an opportunity to step up and help ensure that affiliate influencers are playing by the rules. Brands should take advantage of it while they can. </p> <p><em><strong>Further reading:</strong></em></p> <ul> <li><a href="https://www.econsultancy.com/blog/69697-is-the-influencer-marketing-bubble-set-to-burst">Is the influencer marketing bubble set to burst?</a></li> <li><a href="https://www.econsultancy.com/blog/69620-only-29-of-influencer-campaigns-use-trackable-urls-for-attribution">Only 29% of influencer campaigns use trackable URLs for attribution</a></li> <li><a href="https://econsultancy.com/blog/69365-five-steps-to-successful-b2b-influencer-marketing">Five steps to successful B2B influencer marketing</a></li> <li><a href="https://econsultancy.com/blog/69196-11-impressive-influencer-marketing-campaigns">11 impressive influencer marketing campaigns</a></li> <li><a href="https://www.econsultancy.com/reports/the-rise-of-influencers">The Rise of Influencers</a></li> </ul> <p><em><strong>Econsultancy training:</strong></em></p> <ul> <li><a href="https://econsultancy.com/training/courses/social-media-and-online-pr">Social Media &amp; Online PR Training</a></li> </ul> tag:econsultancy.com,2008:BlogPost/69902 2018-03-27T11:00:00+01:00 2018-03-27T11:00:00+01:00 Facebook is in real trouble: What it could mean for marketers Patricio Robles <h3>This time it's different</h3> <p>Facebook is no stranger to controversy and PR crises. For years, every move the world's largest social network has made has been put under a microscope and when it has made mistakes, the company has by and large been called out on them. Through trial by fire, the company has become adept at putting out PR fires.</p> <p>But the Cambridge Analytica backlash isn't like any PR fire Facebook has put out before for a number of reasons, including:</p> <p><strong>It comes at a time when a growing number of users are already engaging less and less with Facebook. </strong></p> <p><strong>It comes at a time when public opinion on large tech companies, including Facebook, has significantly soured.</strong> Concerns over foreign meddling in elections, fake news and censorship have managed to unite individuals and lawmakers of all political persuasions.</p> <p><strong>Polls indicate that trust in Facebook has plummeted in the wake of the Cambridge Analytica scandal.</strong> <a href="https://www.reuters.com/article/us-facebook-cambridge-analytica-apology/americans-less-likely-to-trust-facebook-than-rivals-on-personal-data-idUSKBN1H10AF">According to a Reuters/Ipsos poll</a> released Sunday, well under half of Americans (41%) now trust Facebook to obey U.S. privacy laws. While big tech companies have been under fire, 66%, 62% and 60% of Americans indicated they trust Amazon, Google and Microsoft, respectively.</p> <p><strong>The backlash has not only been sustained, but has spread to Facebook's stock.</strong> Apparently a good number of investors are not happy with the constant stream of negative headlines and more than $80bn in share value was erased as investors sold Facebook stock last week.</p> <p><strong>People associated with Facebook are turning on the company.</strong> For example, Brian Acton, the co-founder of WhatsApp, which Facebook purchased for nearly $20bn in 2014, publicly endorsed the idea that users should delete Facebook.</p> <blockquote class="twitter-tweet"> <p lang="en" dir="ltr">It is time. <a href="https://twitter.com/hashtag/deletefacebook?src=hash&amp;ref_src=twsrc%5Etfw">#deletefacebook</a></p> — Brian Acton (@brianacton) <a href="https://twitter.com/brianacton/status/976231995846963201?ref_src=twsrc%5Etfw">March 20, 2018</a> </blockquote> <p><strong>Mark Zuckerberg is getting involved in a big way.</strong> The company's CEO normally likes to communicate with the public through well-crafted Facebook posts but has been forced out of his comfort zone by this crisis. He conducted <a href="https://www.cnn.com/2018/03/21/us/mark-zuckerberg-facebook-latest/index.html">a CNN interview</a>, which was followed by <a href="https://qz.com/1236981/facebook-and-mark-zuckerberg-buy-newspaper-ads-to-say-sorry/">full-page apologies in major newspapers in the U.S. and U.K.</a></p> <p><strong>Regulators around the world seem more serious than ever about regula</strong><strong>ting Facebook and potentially punishing it for the Cambridge Analytica transgression.</strong> In the U.S., the Federal Trade Commission (FTC) <a href="https://www.cnbc.com/2018/03/26/ftc-confirms-facebook-data-breach-investigation.html">confirmed</a> Monday that it has opened a non-public investigation that could have serious consequences for Facebook as the company signed a consent decree with the consumer protection agency in 2011. If Facebook is found to have violated that decree, it could face harsh financial penalties of up to $40,000 per violation.</p> <p>If the above wasn't bad enough, perhaps the biggest indication that this time it's different for Facebook is that some advertisers are starting to press pause, something they've never done before. Last week, Mozilla Corp., the maker of popular software including the Firefox browser, and Commerzbank, Germany's second largest bank, announced that they were suspending their ad campaigns on the social network. On Monday, <a href="https://www.reuters.com/article/us-facebook-cambridge-analytica-pep-boys/pep-boys-suspends-facebook-ads-after-data-security-breach-idUSKBN1H21OH">they were joined by Pep Boys</a>, a major U.S. automotive retailer.</p> <p>In a statement, Pep Boys CMO Danielle Porto Mohn explained, "We are concerned about the issues surrounding Facebook and have decided to suspend all media on the platform until the facts are out and corrective actions have been taken."</p> <h3>What's next?</h3> <p>It's likely that Mozilla, Commerzbank and Pep Boys won't be the only advertisers to halt their campaigns or cut back on ads on the social network while the situation plays out. And there's the chance that as Facebook is put under the biggest microscope imaginable, <a href="https://www.usatoday.com/story/tech/news/2018/03/26/facebook-scrutinized-pulling-android-data/457834002/">other issues will be discovered</a> and Cambridge Analytica will prove to be just the beginning of its woes, not the end of them.</p> <p>While it's too early to predict what exactly will happen next, it's not too early for marketers to start contemplating the possibility that this crisis is going to change Facebook, and social media generally, forever.</p> <p>At this point, it seems probable that Facebook and services like it will be forced to submit to greater regulation. The <a href="https://econsultancy.com/hello/gdpr-for-marketers/">GDPR</a> will likely just be the start. Countries within the E.U., <a href="https://www.bloomberg.com/news/articles/2018-03-26/germany-seeks-tighter-facebook-controls-after-intolerable-leak">such as Germany</a>, are already suggesting tighter controls, and it would be surprising if the U.S. doesn't eventually adopt regulation similar to the GDPR. </p> <p>Some are pointing out that regulation could ironically help Facebook by creating barriers that smaller competitors won't have the resources to deal with, but that isn't necessarily good news for marketers. New regulations could make it more difficult for marketers to collect data from users and customers, and to use it to target customers on third-party platforms. In other words, marketers' ability to engage in retargeting, which is already impacted by the GDPR, could be hampered significantly by stronger regulations.</p> <p>New and stronger regulations would likely also hamper marketers' ability to use third party data. For example, when advertising through Facebook's Audience Network, marketers can take advantage of Facebook's data to target users based on demographics, interests, behaviors, locations and connections. They can also employ data from Facebook partners to target specific audiences. Tighter controls over the data third parties are allowed to offer in some form to marketers could upend the digital marketing ecosystem and especially hurt small and mid-size marketers that don't have huge repositories of first-party data.</p> <p><img src="https://assets.econsultancy.com/images/0009/3193/facebook-ads.png" alt="facebook ad platform" width="500"></p> <h3>The bottom line</h3> <p>Obviously, tech giants like Facebook, as well as large marketers and industry associations, aren't going to go down without a fight. Even if they resign themselves to greater regulation, you can be sure they'll be working behind the scenes to help craft that regulation as much as they can.</p> <p>But marketers, particularly those that don't have lobbyists of their own, should prepare for major changes in the coming weeks, months and years. Facebook's Cambridge Analytica crisis is arguably the watershed moment the industry has been hoping would never come: the incident that leaves the industry incapable of mounting a believable defense against the argument that it's not capable of policing itself.</p> <p><em><strong>Related resources:</strong></em></p> <ul> <li><a href="https://econsultancy.com/reports/a-marketer-s-guide-to-the-general-data-protection-regulation-gdpr/">A Marketer's Guide to the General Data Protection Regulation (GDPR)</a></li> <li><a href="https://econsultancy.com/training/courses/general-data-protection-regulation-gdpr-online">GDPR Essentials for Marketers - Online Training</a></li> <li><a href="https://www.econsultancy.com/training/courses/gdpr-data-driven-marketing">GDPR for Marketers Training</a></li> </ul> tag:econsultancy.com,2008:BlogPost/69852 2018-03-08T13:15:00+00:00 2018-03-08T13:15:00+00:00 Will digital phenotyping ever be applied to pharma marketing? Patricio Robles <p>While pharma marketers have lots of room for improvement in terms of how they connect to professionals and consumers online, they're increasingly active in digital channels ranging from search to social.</p> <p>Through these digital channels, pharma marketers have the opportunity to connect healthcare professionals and consumers to content and resources that are relevant to conditions they treat, are being treated for, or need treatment for.</p> <p>Of course, thanks to regulations like <a href="https://econsultancy.com/blog/67498-digital-media-vs-hipaa-violations-risking-your-reputation-in-healthcare">HIPAA</a>, pharma marketers are far more limited in how they can target their digital ads. Use of first-party data is generally a no-no, and some otherwise commonly-used types of remarketing are also often not permissible.</p> <p>This makes it more difficult for pharma marketers to reach the specific people they want to reach. So they develop campaigns that are less granularly targeted and thus often more expensive. They purchase ads against specific condition-related terms. And so on and so forth.</p> <p>But in the not too distant future, is it possible that pharma marketers will have access to targeting solutions based on digital phenotyping?</p> <p>As the New York Times <a href="https://www.nytimes.com/2018/02/25/technology/smartphones-mental-health.html">recently detailed</a> in a piece about digital phenotyping, which one study defined as “moment-by-moment quantification of the individual-level human phenotype in situ using data from personal digital devices, a growing number of tech companies and researchers “are tracking users' social media posts, calls, scrolls and clicks in search of behavior changes that could correlate with disease symptoms.”</p> <p>Much of the exploration of digital phenotyping to date has focused on mental illness and mood disorders. For instance, Mindstrong Health, a mental health startup, is analyzing smartphone usage in an attempt to detect signs of depression. And Facebook is already using artificial intelligence to scan content posted by users for signs of suicidal thought. In some cases, it has used its technology to display notifications or to alert local authorities so they can follow up and intervene if necessary.</p> <p>While there are significant questions about the accuracy of digital phenotyping, it's not difficult to see the potential for it to also be applied to digital marketing, giving pharma marketers the ability to target consumers on more than just demographics, stated interests, search keywords and the like.</p> <h3>The big question: will this ever happen?</h3> <p>That isn't clear. Facebook, for instance, <a href="https://www.statnews.com/2016/11/01/facebook-pharma-drug-ads/">has been vying for pharma ad dollars</a>, apparently with mixed success. The social media giant late last year <a href="https://www.cnbc.com/2017/09/07/facebook-held-a-breakfast-to-promote-clinical-trials-strategy.html">held an event</a> to pitch pharma marketers on the use of Facebook to target users for clinical trials. At that event, it reportedly indicated that it would not allow pharma marketers to target users based on health conditions.</p> <p>Facebook's stance makes sense. Allowing pharma marketers to target its users based on conditions the social network knows or thinks they have would almost certainly lead to a PR backlash. There would no doubt be calls for legal and regulatory action. In Europe this sort of profiling is regulated by the new <a href="https://econsultancy.com/hello/gdpr-for-marketers/">GDPR</a>.</p> <h3>A reminder of the value of digital data</h3> <p>While it's possible that other players in the digital advertising ecosystem might be more willing than Facebook to apply digital phenotyping to marketing solutions – there is already a sizable and growing market for <a href="https://www.mediapost.com/publications/article/312819/in-pharma-marketing-programmatic-offers-solutions.html">third-party data</a> – one of the most important take-aways for pharma marketers in the rise of digital phenotyping is that digital data is extremely valuable and might prove even more valuable than previously thought.</p> <p>Pharma marketers should keep this in mind as they develop homegrown digital initiatives.</p> <p><em>To learn more about digital transformation in Pharma, join us at ePharma in New York on March 21-23. Our VP of Research Stefan Tornquist will be discussing the future of digital and marketing with Anthony Lambrou, Director of Corporate Strategy and Innovation at Pfizer, as well as hosting a roundtable for you to learn, share and connect with fellow pharma marketers. Find out more and secure your spot:</em></p> <ul> <li><em><a href="https://lifesciences.knect365.com/epharma/agenda/3#epharma-roundtable-digital-transformation-to-future-proof-your-marketing">ePharma Roundtable: Digital Transformation to Future-Proof Your Marketing</a></em></li> <li><em><a href="https://lifesciences.knect365.com/epharma/agenda/3#main-stage-keynotes_the-future-of-digital-and-marketing">The Future of Digital and Marketing</a></em></li> </ul> tag:econsultancy.com,2008:BlogPost/69796 2018-02-13T15:28:00+00:00 2018-02-13T15:28:00+00:00 Traffic buying allegations against Newsweek Media Group highlight complexity of the digital ad problem Patricio Robles <p>But <a href="http://socialpuncher.com/media/files/CFPB-IBTimes-Case-by-Socialpuncher.pdf">an investigative report</a> (PDF) recently published by Social Puncher, “an independent company that serves as a sheriff in the digital ad market”, suggests that publishers seen as legitimate can be the source of fraud. </p> <p>The report claims Newsweek Media Group (NMG), whose digital properties include Newsweek.com and IBTimes.com, paid for fraudulent traffic that led to it earning millions in ad revenue from an ad campaign run by the Consumer Financial Protection Bureau (CFPB). Specifically, the report alleges that  “Ibtimes.com in spring 2017 (March-May) received 13,300,000 of laundered via tech domain pop-under visits and 5,500,000 non-laundered pop-under visits.”</p> <p>Many of the sites originating this traffic were said to be file sharing and pirated video streaming sites. Layers of redirects were used to hide the origin of the traffic, Social Puncher's report states.</p> <p><img src="https://assets.econsultancy.com/images/0009/2238/ibt.png" alt="" width="477" height="170"></p> <p>BuzzFeed, which conducted its own investigation into IBTimes India, <a href="https://www.buzzfeed.com/craigsilverman/the-publisher-of-newsweek-and-the-international-business">says</a> that two independent ad fraud detection and measurement firms identified similar patterns. What's more, BuzzFeed reported that one of those firms, DoubleVerify, has this month “classified IBT’s US, UK, India, and Singapore sites as 'as having fraud or sophisticated invalid traffic'”.</p> <p>As a result, DoubleVerify “is now blocking all ad impressions on these sites on behalf of customers.”</p> <p>Not surprisingly, NMG disputes the claims that it has been engaging in fraudulent behavior. While it admitted that it purchases from ad networks that generate pop-up and pop-under traffic, it told BuzzFeed that this represents a “small percentage of traffic on our sites” and “we use third-party platforms to verify and filter this traffic to ensure it is of the highest quality.” </p> <p>According to BuzzFeed, NMG refused to identify those third-party platforms by name.</p> <h3>Who can advertisers trust?</h3> <p>Certainly, the fact that multiple independent sources have raised the same suspicions calls into question NMG's claim that it was acting on the up and up.</p> <p>But more importantly, it calls into question just how much advertisers can trust the digital advertising ecosystem. </p> <p>According to Social Puncher, the CFPB's purchase of ads from NMG was conducted on its behalf by GMMB, a Washington, D.C.-based agency. Its report indicates that one of the largest campaigns GMMB ran for the CFPB was a video campaign that consisted of $6.4m in direct ad buys through the DoubleClick Campaign Manager DSP and that over half of the budget went to NMG.</p> <p>Many advertisers of course outsource media buying to agencies and this wouldn't be the first time that an advertiser has come away let down.</p> <p>Late last year, <a href="https://econsultancy.com/blog/69438-is-uber-s-lawsuit-against-an-agency-a-harbinger-of-greater-brand-agency-discord">Uber sued ad agency Fetch</a>, which is owned by Japanese holding giant Dentsu, alleging that it had squandered "tens of millions of dollars" to purchase non-viewable, non-existent or fraudulent traffic on Uber's behalf.</p> <p>While that's a different scenario – neither Social Puncher or BuzzFeed has alleged that the CFPB's agency knew about NMG's questionable traffic buying – it is clear that even the firms advertisers are hiring for their media buying expertise are often falling short when it comes to policing fraud on behalf of their clients.</p> <p>In the case of the CFPB and NMG, what's particularly disturbing is that the alleged fraud wasn't the product of, say, opacity in the programmatic market. It was conducted by a publisher seen as reputable enough to be awarded a significant irect buy from a legitimate agency.</p> <p>The lesson: the ad fraud problem runs deep and while <a href="https://econsultancy.com/blog/69231-ads-txt-a-new-standard-for-fighting-inventory-spoofing-unauthorized-sellers-what-you-need-to-know">progress is being made</a> to reduce the ease with which ad fraud can take place in programmatic markets, there's still the very real ability for large-scale fraud to take place in plain sight. To address this, advertisers are going to have to get more aggressive in vetting the capabilities of their agencies to address fraud. Ultimately, they may conclude that they either need to move some of their media buying in-house or exercise much greater oversight over agency buys.</p> <p><em><strong>Further reading:</strong></em></p> <ul> <li><a href="https://www.econsultancy.com/blog/69671-programmatic-advertising-trends-in-2018-what-do-the-experts-predict">Programmatic trends in 2018</a></li> </ul> tag:econsultancy.com,2008:BlogPost/69774 2018-02-06T14:00:00+00:00 2018-02-06T14:00:00+00:00 The fake follower economy is beginning to crumble Patricio Robles <p>But it looks like fake follower economy is set for a potentially big fall. </p> <p>This past Saturday, New York attorney general Eric T. Schneiderman <a href="https://www.nytimes.com/2018/01/27/technology/schneiderman-social-media-bots.html">opened an investigation</a> into Devumi, a prominent purveyor of fake followers.</p> <p>A <a href="https://www.nytimes.com/interactive/2018/01/27/technology/social-media-bots.html">New York Times exposé</a> published the same day Schneiderman announced his investigation concluded that Devumi was in control of more than 3.5m fake Twitter accounts and has used them to sell more than 200m fake followers on the popular social media platform.</p> <p>Perhaps the most disturbing thing about Devumi's business is that many of the fake accounts are alleged to use photos and other personal information taken from the social media profiles of real users. In other words, Devumi is accused of engaging in a form of social media identity theft.</p> <p>Impersonation and deception are illegal in New York, and that's the angle attorney general Schneiderman is taking in pursuing Devumi.</p> <h3>An inconvenient truth</h3> <p>How did Devumi and shady businesses like it get so big? The answer is simple: there's big demand for fake followers and engagement on social platforms like Facebook and Twitter. And this demand often comes from the very individuals and businesses who would like the world to believe that they need Devumi's “services” the least:</p> <blockquote> <p>The Times reviewed business and court records showing that Devumi has more than 200,000 customers, including reality television stars, professional athletes, comedians, TED speakers, pastors and models. In most cases, the records show, they purchased their own followers. In others, their employees, agents, public relations companies, family members or friends did the buying. </p> </blockquote> <p>Why would high-profile individuals and companies risk their reputations buying fake followers? It's simple economics. As the New York Times revealed, the cost of fake followers and engagement actions is often measured in pennies, a small price to pay for inflated metrics that can lead to big bucks.</p> <p>Virtually all of those big bucks come from brands, of course, which have embraced influencer marketing in all its forms in an effort to better connect with consumers online.</p> <h3>Just how badly are brands being duped?</h3> <p>Thanks to the rise of influencer marketing, there are influencers routinely earning five, six and even seven figures for sponsored social media posts. How much they earn is largely a function of the size of the audience they appear capable of reaching. The bigger the audience, the bigger the paychecks.</p> <p>While there are tools and methods brands can use to assess the quality of an influencer's audience, none are perfect and it would seem few brands are doing significant due diligence on their influencer marketing transactions. In many cases, sponsored social media posts are bought through automated or semi-automated platforms, or by ad agencies.</p> <p>All indications are that some if not much of the spend is for naught. Case in point: the Times identified two teenagers, Arabella and Jaadin Daho, who reportedly earn $100,000 annually through influencer marketing. They <a href="https://www.thesun.co.uk/fabulous/5030582/aspiring-child-youtubers-callum-ryan-erin-bradley-arabella-daho/">have worked with</a> brands including Amazon, Disney, Louis Vuitton and Nintendo.</p> <p>But, according to the Times, their Twitter accounts “are boosted by thousands of retweets purchased by their mother and manager, Shadia Daho, according to Devumi records. Ms. Daho did not respond to repeated attempts to reach her by email and through a public relations firm.”</p> <h3>An urgent wake-up call</h3> <p>This sort of dubious social media arbitrage, in which supposed influencers turn pennies into dollars at the expense of brands using fake followers and engagement, is obviously not healthy and is also unsustainable.</p> <p>While <a href="https://econsultancy.com/blog/69343-are-marketers-underestimating-the-fraud-threat-to-influencer-marketing">the existence of what can only be described as fraud</a> has been known for some time, companies like Facebook and Twitter face numerous technical challenges in cracking down on fake accounts. They have also been disincentivized from engaging in major purges of accounts, even if they're fake. That's because, just as it is for influencers, more is better for these companies. </p> <p>But the recent news, which included the revelation that a Twitter board member purchased at least 65,000 fake followers, along with law enforcement action, suggests that the fake follower economy is now too big to ignore.</p> <p>Already, Twitter is apparently cleaning house. As The Daily Mail <a href="http://www.dailymail.co.uk/sciencetech/article-5341637/Celebrities-lose-followers-Twitter-rids-fake-accounts.html">detailed</a>, a number of high-profile users are seeing their follower numbers drop significantly in the wake of the Times piece. And one celebrity – Great British Bake Off judge Paul Hollywood – <a href="https://www.eater.com/2018/1/29/16944770/paul-hollywood-deletes-twitter-account">has deleted his Twitter account</a> after being outed as a Devumi customer.</p> <p>For everyone involved, the writing is on the wall. Savvy brands whose dollars have largely fueled this craziness will get in front of the collapse and adapt their influencer marketing and broader social strategies accordingly.</p> <p><em><strong>Further reading:</strong></em></p> <ul> <li><a href="https://www.econsultancy.com/blog/69620-only-29-of-influencer-campaigns-use-trackable-urls-for-attribution">Only 29% of influencer campaigns use trackable URLs for attribution</a></li> </ul> tag:econsultancy.com,2008:BlogPost/69764 2018-02-02T10:00:00+00:00 2018-02-02T10:00:00+00:00 Kodak demonstrates why brands should tread carefully with blockchain initiatives Patricio Robles <p>Many of these applications are in the world of finance but the blockchain's potential extends beyond financial services. For instance, there <a href="https://econsultancy.com/blog/69712-four-ways-the-blockchain-could-be-applied-to-digital-advertising">are ways it could be used in the digital advertising market</a> to address pressing issues like fraud.</p> <p>But established brands would be wise to tread carefully when it comes to blockchain initiatives.</p> <p>That's because the blockchain hype has led to a flood of <a href="https://www.wired.com/story/cryptocurrency-scams-ico-trolling/">obvious scams</a> as well as questionable behavior that some suggest is not exactly on the up-and-up.</p> <p>For example, a number of publicly-traded companies, most of them small and previously unheard of, <a href="https://www.theregister.co.uk/2018/01/22/blockchain_rebrand_sends_stapleton_capitals_shares_soaring/">have pivoted to the blockchain</a>, sending the prices of their shares soaring. Perhaps one of the most amusing examples of this phenomenon: a company called the Long Island Iced Tea Corp., which, as the name suggests, was in the business of making iced tea, changed its name to Long Blockchain Corp. and saw its stock more than triple on the news.</p> <p>Regulators, including officials at the Securities and Exchange Commission (SEC), have been warning investors about the risks of investing in these companies. And they have signaled that they are going to scrutinize companies that engage in this behavior. Even so, enforcement action has been limited.</p> <p>That, however, appears to be changing. This month, the SEC halted trading of shares in a Hong Kong-based blockchain company that had seen its stock price increase by 900% last year. </p> <p>And in what is its biggest enforcement action in the space to date, the SEC this week <a href="https://www.coindesk.com/sec-files-fraud-suit-against-crypto-bank-ico/">filed a lawsuit</a> against AriseBank, a Texas-based company that said it was building a cryptocurrency bank. AriseBank claims it raised over $1bn through an Initial Coin Offering (ICO) that the SEC says was fraudulent and represented an unregistered offering of securities.</p> <h3>The case of Kodak</h3> <p>Of course, the presence of bad actors in the nascent cryptocurrency and blockchain technology market doesn't mean that the entire market is full of bad apples.</p> <p>Case in point: Kodak <a href="https://www.businesswire.com/news/home/20180109006183/en/KODAK-WENN-Digital-Partner-Launch-Major-Blockchain">recently announced</a> a blockchain initiative called KodakCoin, “a photo-centric cryptocurrency to empower photographers and agencies to take greater control in image rights management.”</p> <p>Kodak, of course, is the once-powerful imaging technology company. It filed for bankruptcy in 2012 and is today a shell of what it once was.</p> <p>But its brand, which was at one point synonymous with photography, is perhaps its most valuable remaining asset and by slapping it on a blockchain venture, Kodak's stock price rose more than 200% in the span of two days.</p> <p>Kodak's blockchain venture itself is real. The company wants to use the blockchain as the underpinning of KodakOne, an image rights management platform. That seems like a legitimate application for the technology. And Kodak has registered its ICO for KodakCoin, which could raise up to $20m, with the SEC, although <a href="https://www.usatoday.com/story/money/nation-now/2018/01/31/kodak-delays-kodakcoin-cryptocurrency/1082443001/">it is being delayed by several weeks</a> due to concerns over the vetting of investors.</p> <p>But while KodakCoin appears to be a legitimate blockchain effort, the meteoric rise of Kodak's stock price has caused the company to face considerable scrutiny. The New York Times <a href="https://www.nytimes.com/2018/01/30/technology/kodak-blockchain-bitcoin.html">called Kodak's move</a> a "dubious cryptocurrency gamble" and pointed out that Kodak is really only lending its name to the blockchain venture. Its partner and the real brains behind the operation, a company named WENN Digital, is “a California-based affiliate of a British photo agency that specializes in paparazzi photo licensing.”</p> <p>The New York Times has noted that a lead adviser to KodakCoin “has a troubled track record” that includes being banned from the Alberta Stock Exchange for five years, and Marketwatch <a href="https://www.marketwatch.com/story/key-kodakcoin-exec-barred-from-serving-as-officer-in-german-companies-2018-02-01">yesterday reported</a> that the CTO of WENN Digital is banned from serving as an officer of a publicly-traded company in Germany.</p> <p>Throw in <a href="https://www.marketwatch.com/story/kodak-stock-pulls-back-directors-disclose-acquisitions-prior-to-blockchain-rally-2018-01-11">some interesting stock purchases and sales</a> by Kodak directors in the days leading up to and on the day of Kodak's KodakCoin announcement and you have fuel for a narrative that doesn't help Kodak's brand.</p> <p>But on substance, even if the blockchain skeptics and critics are ultimately wrong about how meaningful the impact the technology will have on the world, it's not at all clear that KodakCoin specifically has what it takes to succeed. While the problems the venture aims to solve are real ones, nothing presented by the company to date suggests that photographers and those wanting to license photos will embrace the KodakCoin model over the many existing approaches and platforms that are already in use.</p> <p>In fact, the New York Times has detailed what appear to be serious flaws in the KodakCoin model, such as the fact that only accredited investors will be able to buy and use KodakCoin.</p> <h3>Experiment before embracing</h3> <p>Kodak's experience highlights the primary reason that brands need to be careful about their blockchain initiatives: while blockchain tech is very promising, it's too early to tell which applications are going to be commercially viable and most brands are unlikely to have all the answers.</p> <p>They should by all means be willing to experiment with blockchain technology, but embracing it totally and using it to launch major offerings positioned as viable solutions to big problems looks incredibly premature.</p> <p>Put simply, the risk that such offerings won't be viable high and when you add on the risk of scrutiny from the public and powerful government agencies like the SEC, even brands that are trying to recapture their glory days, like Kodak, potentially have a lot to lose.</p> <p><em><strong>Want to learn more about the blockchain and marketing? Subscribers can download Econsultancy's <a href="https://econsultancy.com/reports/opportunities-and-challenges-for-marketers-in-2018/">Opportunities and Challenges for Marketers in 2018</a>.</strong></em></p> tag:econsultancy.com,2008:BlogPost/69728 2018-01-16T13:30:00+00:00 2018-01-16T13:30:00+00:00 New E.U. regulations could make it easier for fintechs to operate across the bloc Patricio Robles <p>It's a global trend. Cities and countries around the world, from Stockholm to Singapore, are aiming to become fintech hubs and for good reason: while entrenched financial institutions, namely major banks, aren't going away any time soon, observers like McKinsey &amp; Co. <a href="https://thefinancialbrand.com/54662/mckinsey-banking-fintech-competition/">believe</a> fintech upstarts could eventually divert trillions of dollars in business from them. So the regions that successfully court fintechs could seen their own fortunes grow.</p> <p>That isn't lost on what is already one of the most economically powerful regions in the world, the European Union.</p> <p>But the E.U. faces some unique challenges as it battles to keep other regions from dominating fintech. One of the biggest: many fintechs located in an E.U. member state often can't easily operate in other E.U. member states.</p> <p>That's because some member states have applicable laws that are more stringent than E.U. laws, meaning that fintechs wanting to operate in those member states have to deal with the local rules. As a result, many fintechs choose to operate only in major E.U. markets, or their home market only, because the time, money and effort required to operate across the E.U. would be too great.</p> <p>As Valdis Dombrovskis, E.U. Commission vice-president responsible for financial services, told the Financial Times, “We still don't have this digital single market...and that's why we see many European fintechs then going to the US or Asia to scale up.”</p> <p>In an effort to ensure that the E.U. doesn't cede its fintech opportunity to other countries and regions, the European Commission is reportedly prepping draft legislation that would let fintechs in the peer-to-peer lending and crowdfunding spaces obtain pan-E.U. licenses that eliminate the need to deal with the headaches caused by local regulation. Pan-E.U. licenses for other fintech markets could be added at a later date.</p> <p><a href="https://www.ft.com/content/a340b96a-e727-11e7-8b99-0191e45377ec">According to</a> the Financial Times, the draft legislation will also provide for “regulatory sandboxes” that allow fintechs to experiment with new services without having to deal with excessive regulation.</p> <h3>Not all bad news for established players </h3> <p>While the kind of regulation the E.U. is reportedly preparing to pursue will obviously give fintechs a new advantage as they continue their march to dethrone established financial institutions, it's not all bad news for large, established financial services firms, including big banks.</p> <p>That's because these players are increasingly investing in, partnering with and even acquiring fintechs that show promise and/or are related to their business. In other words, the behemoths of finance are leveraging their capital and playing a strong “if you can't beat em, join em” card.</p> <p>From this perspective, pan-E.U. licenses for fintechs might actually benefit entrenched players, allowing them to more easily and rapidly take advantage of the innovations these upstarts are bringing to market. For example, a major bank that operates across the E.U. might today have to partner with multiple fintechs that serve the same function, or limit their partnerships to fintechs in certain countries, because those fintechs don't operate in all E.U. member states.</p> <p>If and when that changes, both fintechs and the established financial institutions that they're frenemies with, could benefit significantly, ushering in a new phase of fintech's rise in Europe.</p>