Howestreet.com - the source for market opinions

ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

June 2, 2018 | Google Ad Revenue Increases, Competitors Drop, After EU’s New Privacy Rules

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
The EU is targeting Google. Preliminary results show one part of the plan has backfired already.

GDPR, the European Union’s new privacy law, is drawing advertising money toward Google’s online-ad services and away from competitors that are straining to show they’re complying with the sweeping regulation.

The reason: the Alphabet Inc. GOOGL 3.18% ad giant is gathering individuals’ consent for targeted advertising at far higher rates than many competing online-ad services, early data show. That means the new law, the General Data Protection Regulation, is reinforcing—at least initially—the strength of the biggest online-ad players, led by Google and Facebook Inc.

Hundreds of companies along the chain of automated bidding and selling of digital ads—from ad buyers to websites that show ads—have been scrambling to comply with the law while continuing to target people based on the personal information such as web-browsing histories, offline purchases or demographic details.

Since the law went into effect, Google’s DoubleClick Bid Manager, or DBM, a major tool ad buyers use to purchase targeted online ads, has been directing some advertisers’ money toward Google’s own marketplace where digital-ad inventory can be bought and sold, and away from some smaller such ad exchanges and other vendors. That shift has hurt some smaller firms, where Google says it can’t verify whether people who see ads have given consent.

Google is applying a relatively strict interpretation of how and where the new law requires consent, both on its own platforms and those of other firms. The stringent interpretation helps Google avoid GDPR’s harsh penalties and pushes the company to buy more ad inventory from its own exchange, where it is sure to have user consent for targeted advertising.

Bottom line: Google has taken a strict interpretation of the EU privacy law. As a result, it uses its own ad exchange more frequently.

The EU’s expected result was to drive Google to other ad exchanges.

Never underestimate the EU’s ability to come up with silly solutions to alleged problems.

Mike “Mish” Shedlock

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the HoweStreet.com Weekly Recap.

June 2nd, 2018

Posted In: Mish Talk

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site

*
*

This site uses Akismet to reduce spam. Learn how your comment data is processed.