Dive Brief:

• The IAB is seeking to unite the digital media and marketing industry to address the growing conflict between consumer privacy and personalized advertising with an effort dubbed Project Rearc, per an announcement made at the trade group's Annual Leadership Meeting.
• The association is enlisting the IAB Tech Lab, government agencies and industry and consumer groups to develop codes of conduct, legal agreements and supporting technologies for the initiative. The stakes are high for the digital media marketplace, including marketers, agencies, publishers and tech firms. Wiping out personalization would cost digital media companies $32 billion to $39 billion in ad revenue by 2025, John Deighton, a professor at Harvard Business School, said in a presentation at the IAB's yearly leadership meeting in Palm Desert, CA. 
• Project Rearc comes in the wake of Google's announcement last month that it will block third-party cookies in Chrome, a common way for marketers to track the online activities of browser users. This year's enactment of the California Consumer Privacy Act (CCPA), which gives state residents more control over their personal information, is another key issue for the digital media and marketing industry, per the announcement.

Dive Insight:

The IAB's Project Rearc aims to get ahead of the latest developments in digital advertising, even if it appears to be a mostly defensive measure in the wake of Google's plans to end support for third-party cookies and last month's enactment of the CCPA.

Privacy issues have become more prominent amid high-profile data breaches and the Cambridge Analytica scandal that ensnared Facebook. While personalized marketing aims to provide online consumers with an improved customer experience and eliminate wasteful ad spending, many people don't want to feel as if they're being spied on by marketers. 

IAB CEO Randall Rothenberg acknowledged that tension in a statement that accompanied the announcement of Project Rearc. He cited data indicating that 81% of consumers want brands to get to know them better, while 73% say their concerns over data privacy are growing. Finding a balance between those two opinions requires an understanding that people want "to be valued as individuals, within the context of living in families, communities, and cultures," Rothenberg said.

Google's plans to end support for third-party cookies in two years, catching up with other browser makers like Apple, which did the same for Safari in mid-2017, and Mozilla, which wound down support for the tracking tech last year. That gives the digital media and marketing industry a chance to develop an alternative to the tracking technology that also gives consumers more control over their personal information.

Still, response to Google's decision has been fierce. The 4A's and the ANA, two of the largest advertising industry groups representing agencies and marketers, respectively, last month issued a warning about the potential neagative consequences of Google's plans. 

The IAB and IAB Tech Lab started gathering teams from its member companies and technical experts to draft requirements and consider ways to support the industry while also respecting consumer privacy, safety, identity and other needs in the post-cookie digital marketing supply chain, according to its statement.

The steps toward self-regulation may help to avoid a stronger crackdown on the digital media industry and shape future legislation. Last year, representatives from the IAB testified before the U.S. House and Senate to push for a federal privacy law and warned against the risks associated with what the group describes as a complicated "patchwork" created by state-level laws like the CCPA. California's attorney general last week posted a revised version of the regulation to better define the meaning of "personal information," among other changes.

While the industry may lose billions in ad revenue because of stricter privacy laws, it also faces the possibility of severe legal consequences. Google last year was the first company to face a multimillion-dollar fine for alleged violations of the European Union's General Data Protection Regulation (GDPR) that took effect in 2018. Facebook's proposed $550 million settlement last month with millions of Illinois residents who alleged the social network violated a state law on biometric privacy likely will inspire more class actions from aggrieved parties. The social network also is awaiting court approval of a proposed $5 billion settlement with the Federal Trade Commission over consumer privacy issues. 

The CCPA already is having a similar effect with this month's first class action filing over alleged violations of the new law. Customers of Hanna Andersson last week sued the children's clothing company and software marker Salesforce.com after a data breach. While companies want to collect data about their customers to improve personalization, they also need to be mindful of securing the information and complying with the CCPA.