You, Facebook, and GDPR Walk into a Bar…
Here’s a fun activity (hint: it involves scrolling through social media!)
Open Facebook or Instagram and browse your feed. But don’t skip the ads like you usually do! Pay close attention to them. What are they trying to sell you? Something eerily relevant to your life, perhaps? Here are a few of mine:
Thanks to a thing called “targeted advertising” — a type of ad that uses data about you to try and sell you stuff that’s personalized to your interests, location, gender, and other information about you — nowadays you’re being asked to buy things that you’re (surprise!) pretty likely to buy.
Instead of erecting a prohibitively expensive billboard along a busy highway and hoping some of the 100,000 people who see it buy their product, in 2018 businesses are using targeted ads to evangelize to a smaller group of people — say, 5,000 — who are much more likely to buy their product because it’s relevant to them. And businesses are saving a lot of money doing it, because it’s cheaper to advertise to a handful of people than it is to blast it to the free world.
In the early days of advertising, only multi-million-dollar companies could afford to take out an ad in a glossy magazine or put up a billboard. As a result, they smoked their smaller competitors.
But thanks to targeting, the barriers to entry are no longer insurmountable in advertising. Take Facebook, for example. The narrower your Facebook target audience, the further your advertising dollars go. If you’re a small pizza parlor in Scottsdale, Arizona, it’s cheaper for you to deliver an ad to 500 college-aged users living in Scottsdale than it is to blast an ad to all of Facebook’s 2 billion users. It’s also more effective, since nobody but Scottsdale folks will actually want your pizza (unless it’s astoundingly good pizza). It’s this type of smart advertising that has allowed small businesses to compete with the big guys.
Sounds great, right? But here’s the problem. You and I hate targeted ads. We’re not okay with the fact that we entrusted our data to social media platforms like Facebook, and they turned around and gave businesses access to our data so they could pummel us with ads we never signed up to see. We signed up to share with our friends and loved ones… not fuel a sales pipeline.
That’s where this week’s big news comes in. You’ve probably seen and heard the acronym “GDPR” being thrown around a lot lately. You’ve also gotten a slew of emails about privacy policies.
That’s because according to a new EU law that went into effect on May 25, 2018 — the General Data Protection Regulation — companies with operations in the EU are now required to explicitly ask your permission before they collect your data. They’re also required to tell you how they’ll use that data. If they fail to comply, they’ll face enormous — potentially debilitatingly enormous — fines. If you knew your data would be used to deliver ads to you, you’d probably say no… right?
That’s the problem businesses are facing in the new GDPR reality. While giants like Facebook and Google would be able to withstand massive fines, small business wouldn’t. In fact, those fines could run them completely out of business.
Even if small businesses are compliant with GDPR, it will be harder for them to run cheap targeted ad campaigns, because they’ll no longer have the data they need. Nor are they likely to be able to afford broader, untargeted ad campaigns that aren’t necessarily relevant to you. You know who can afford broader, untargeted ad campaigns? Big companies like Facebook and Google.
Which leads to the question: Will the GDPR actually help the big companies it was intended to check? Will it hurt small businesses in the long run?
The jury is still out on this. GDPR has only just gone into effect, and after all, it’s an EU (not a U.S.) law). But given the global nature of the Internet, it’s likely that the GDPR will set a precedent for practice in the U.S. and other countries. Welcome to our global reality.
But at the end of the day, the everyman probably doesn’t care much about small businesses and their success (or failure). The very notion of our privacy is at stake. Lawmakers seem to agree that civil liberties are more important than the revenue streams that take advantage of our privacy — which most would argue is a step in the right direction. In the end, businesses will find a way to survive if they’re smart, even if it means starting back at square one and using billboards to sell us their wares.
So enjoy your personalized Facebook ads… while they last.
