The loss of tracking data and its impact on the ad industry

The Web is changing in fundamental ways. On the one hand, there’s a real push for more privacy online: Users expect it, governments are supporting users’ demands, and even Big Tech is reluctantly listening (although, whether they take real action is another story). On the other hand, people are using tools—like ad blockers, VPNs, privacy browsers, and even Web3 technologies—to bypass Big Tech altogether.

Add it all up and you’ve got a perfect storm for advertisers: The data that powers the traditional Internet ad model is drying up. And users are leaving Big Tech in droves. Ad costs go up, while ROI goes down.

But savvy advertisers aren’t scared: They’re embracing this new privacy-focused world to connect with audiences on their terms. They’re diversifying and preparing for a user-first Web that respects user privacy.

The traditional Internet ad model is fueled by user data

As people spend time (and money) online, they generate tons of data. This includes things like what you search, click, buy, watch, share, and more. This data is extremely valuable to the companies that harvest it—in fact, data is now the most valuable asset on Earth, surpassing resources like gold and oil.

Who’s collecting, controlling, and profiting from this data? Who’s behind this so-called “surveillance economy?” Big Tech, of course. The same companies (like Google) that helped shape the modern Web.

By amassing huge amounts of users, and swallowing up smaller companies, Big Tech companies have come to dominate the tech space across social media, search engines, cloud computing, software, hardware, and more. They’re the central authorities of almost everything we do online.

To be fair, it’s not like Big Tech is outright stealing. In today’s Internet, users “freely” give up their data in exchange for access to Google apps and other Big Tech tools. People don’t want to pay for these platforms, so they hand over their data as the ticket to play. Some users don’t even realize their data is being collected or how valuable it is.

Whether users are aware of it, data collection (and abuse) is basically built into the core of how today’s Internet operates. Apps need money; they get that money by harvesting data and using it to sell highly targeted ad space on their platforms.

But Big Tech’s source of power is also its greatest weakness: What happens if that data starts to dry up?

Why data is disappearing

The data sources that power the traditional online advertising model are dwindling. There are three different factors converging to create this threat:

• Consumers taking steps to protect their privacy
• Government legislation in support of user privacy
• Competition between Big Tech companies

Consumer distrust of tech companies

Gone are the days where users surf the Web, blissfully ignorant of how things work. Users know the game now: Their data is being collected and used to put money in the pockets of Big Tech. They know this data model is annoying, creepy, and dangerous. All too often, careless tech companies have been caught leaking sensitive user info.

For all these reasons, many people are taking control of their data. They’re switching from Gmail to ProtonMail. From Chrome to Brave. They’re taking advantage of iPhone’s native privacy features (such as App Tracking Transparency). They’re leaving Facebook altogether. They’re rejecting cookies, and using ad blockers and VPNs.

Privacy and data autonomy, once afterthoughts on the Web, are now front and center.

Government efforts to protect digital rights

The traditional Internet economic model has attracted well deserved attention for its monopolizing and data mismanagement. Government regulators are passing new online privacy laws like Europe’s GDPR and California’s CCPA, and antitrust bills focused on restructuring many Big Tech companies. In 2021 alone, the US saw at least 27 bills proposed or passed in state legislatures—all aimed at regulating the data economy and protecting digital rights.

Big Tech companies are limiting data sharing

As more users protect their data, and regulators close in on Big Tech’s data collection, the tech giants are beginning to fight amongst themselves for the diminishing supply of data. They’re creating “walled gardens” between platforms where communication was once seamless. They’re adjusting what can and can’t be tracked, and how (or if) that data can be shared—a huge blow to the third-party data that fuels the old ad targeting model.

For example, you can’t export data from a Facebook ad campaign and plug it into Google’s ad manager. And Apple now gives iOS mobile users the ability to opt out of cross-site tracking (via a feature called App Tracking Transparency). An option that 95% of users take advantage of.

Collectively, these “self-imposed” changes make ad targeting much more difficult, expensive, and less effective. Platforms that rely heavily on third-party cookies and cross-site tracking—think of Facebook, X (formerly Twitter), Instagram, Google, and others—are slowly losing their data supply.

Note that Apple can make such drastic changes because, in the end, it’s a hardware company. It makes money through the sale of devices like iPhones and macOS computers, not ad sales. For other tech companies, the data policy changes are often mere lip service to regulators, or designed to give one company an advantage over competitors, or to appear more marketable as “private.” They’re bare minimum changes, rather than a good-faith effort to nurture a privacy-first Web.

Add it all up, and you’re looking at the beginning of the end for the Internet’s old economic model…and many Big Tech companies as we know them.

The future of privacy and digital advertising changes

Bear in mind that while Big Tech is phasing out old tools like cookies, they’re busy developing new and and more complex tracking methods like browser- and device-level fingerprinting. It’s the same game, same players, same goals. Just slightly different rules. And users are tired of it. They’re staying one step ahead of Big Tech’s data economy by using tools like ad blockers and VPNs.

This is a challenge for tech companies and advertisers; it’s also a huge opportunity. User privacy can be a selling point for the brands that get it right. Real privacy-protecting features can be a market differentiator that draws new users. Apple can seriously say they’re limiting Big Tech’s data harvest, and their hardware sales keep reaching all-time highs. And 51% of Brave users feel more positively about brands (such as Verizon and eToro) that advertise in a privacy-respecting way. In this sense, the new privacy-focused Web holds real promise for privacy-conscious users and brands alike.

People want data protection and privacy. Governments are backing them. And Big Tech companies are (reluctantly) falling in line. The future is a world where users have full control over their data and expect robust privacy protections. The Internet will no longer be dominated by ad tech, but there’s still room for it, if brands learn to adjust, adapt, and take on new strategies.

The shift to a more private Web won’t happen overnight, but it’s already happening. This gives brands and advertisers a chance to test different privacy-respecting strategies now, and hone them before other brands arrive. Learn about the best strategies to connect with audiences in the age of privacy, or launch your first campaign with Brave’s cutting-edge private ad platform—Brave Ads—today.

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