The Trust Economy: Why Adtech's Decline Signals a Shift

The year 2020 witnessed the emergence of significant social activism. During June, campaigners initiated the Stop Hate for Profit movement, aiming to make social media organizations, including Facebook, responsible for the prevalence of harmful content on their sites.

The strategy centered on reducing advertising expenditure to compel these social networks to address the issue. Over 1,200 organizations, encompassing both businesses and non-profit entities, participated in this effort, with notable examples including The North Face, Patagonia, and Verizon. I directed my organization, Cheetah Digital, to participate, alongside several of our customers such as Starbucks and VF Corp.

Stop Hate for Profit underscored a critical moment for social media platforms. Twitter and Snapchat demonstrated a commitment to combating hate speech by prohibiting political advertisements and implementing measures to identify false information. Facebook, however, has not demonstrated the same level of consistent responsiveness.

Despite initial expectations of a short-lived campaign, the movement’s impact is ongoing. Given the highly contentious nature of the recent American election, these challenges are unlikely to diminish. For marketing professionals, Stop Hate for Profit represents more than simply a social cause—it reveals a broader concern regarding the technology used for advertising.

I anticipate a fundamental shift in the advertising technology landscape, driven by social media boycotts and increasing concerns about data privacy.

The social media quagmire

A recent Forrester report, published in May and titled “It’s OK to Break Up with Social Media,” revealed growing consumer dissatisfaction with these platforms. The report’s data showed that a significant 70% of individuals surveyed expressed concerns about data privacy and do not place their trust in social media companies. A mere 14% of consumers consider the information found on social media to be reliable. Additionally, 37% of U.S. online adults feel that social media has a predominantly negative impact.

It’s important to remember the original intent of social media: it wasn’t designed as a direct marketing tool for businesses to connect with consumers. Initially, companies quickly adopted these channels to participate in online discussions. However, many soon found that these platforms frequently became outlets for customer grievances rather than spaces for fostering positive brand image. Moreover, the social media sites that marketers initially embraced as a means of customer engagement began implementing fees for access to those very customers.

The algorithms governing content visibility unfortunately contribute to echo chambers, making it more difficult for individuals to encounter diverse perspectives, and this is a major factor in increasing societal division. For example, if a user begins to view content related to QAnon, the algorithms will quickly prioritize similar content. While increased time spent on these platforms may generate revenue for them through advertising, it can also lead to a detachment from objective truth. Marketing professionals should acknowledge the current state of social media and recognize that it is acceptable to explore alternative strategies.

Privacy matters

Consider a scenario where you require a relatively simple medical procedure. You might utilize a ride-sharing service to visit a medical professional for an assessment. Following this, you undergo the procedure, which is successfully completed. You then return home to recuperate, and initially, everything progresses favorably. However, while browsing Facebook, you begin to notice advertisements for legal services specializing in medical malpractice – despite not having disclosed your surgery to anyone, nor having mentioned it on any social media platforms.

In this situation, you simply desire a peaceful recovery at home, but instead, you are confronted with targeted advertising. How did these advertisements appear? You inadvertently created a digital trail, your information was shared, and now you are experiencing intrusive ad displays. This situation, in my view, perfectly illustrates the problematic practices that ad technology has been enabling. It represents a significant breach of personal privacy, and consumers are increasingly aware of this issue.

The topic of data privacy has been a prominent concern for marketing professionals for several years. This year alone, the United States witnessed the implementation and enforcement of the California Consumer Privacy Act (CCPA). This law empowers individuals with greater control over their personal data. Furthermore, Apple revealed updates in June designed to restrict the ability of applications and content providers to monitor location data and utilize it for advertising purposes. Early in August, Meredith and Kroger established a collaboration to share direct-from-consumer purchase information to support advertising initiatives, aiming to reduce reliance on tracking cookies. It’s evident that data privacy is a sustained and growing priority.

Where do marketers go from here?

I contend that the coming landscape of marketing will be defined by the trust economy. Campaigns like Stop Hate for Profit, growing concerns about data privacy, and evolving consumer preferences indicate a departure from the era of reliance on third-party data. Currently, trust represents the most significant economic force, surpassing the influence of data itself. Earlier this year, we collaborated with eConsultancy on research that showed 39% of consumers in the U.S. express dissatisfaction with personalized advertisements fueled by cookie data. Individuals are increasingly resistant to being monitored and targeted while browsing online. The foundations of ad tech are weakening, and marketers need to adapt accordingly.

Traditional marketing approaches will prove insufficient in navigating the trust economy. It’s essential to explore new avenues and re-evaluate established ones. We must prioritize channels where we have control over the messaging. When advertising on social media platforms, the focus should be on directing consumers to owned channels, enabling you to obtain their consent and data for direct communication. Email marketing deserves particular attention as a key channel.

Rest assured, this strategy is effective. The aforementioned eConsultancy report revealed that almost 75% of consumers completed a purchase within the past year following receipt of an email from a brand or retailer, significantly exceeding the sales impact of social advertisements. Furthermore, in 2020, nine times more U.S. consumers expressed a desire to increase their engagement with loyalty programs than those who wished to decrease it. Securing ownership of your data is crucial, and loyalty programs represent a valuable source of directly owned consumer data. Emily Collins at Forrester provides insightful explanations on achieving this through a genuine loyalty strategy, extending beyond simple rewards programs.

Your primary objective should be establishing direct relationships with consumers. Cultivating trust involves providing a mutually beneficial exchange for data and engagement, rather than acquiring it from external sources. Fatemah Khatibloo, a principal analyst at Forrester, defines zero-party data as “that which a customer intentionally and proactively shares with a brand. It can include purchase intentions, personal context, and how the individual wants the brand to recognize her.” This zero-party data is fundamental to the trust economy, and her guidance on leveraging it for privacy and personalization is highly recommended.

Take responsibility

The foundation of a thriving trust economy lies in a marketer’s core values. It requires careful consideration of your stance regarding your connection with customers. Do you demonstrate genuine concern for their well-being? What type of interaction are you striving to create? Protecting privacy is an essential component of this approach. Demonstrating accountability is paramount; we need to be mindful of where our financial resources are directed. It's essential to cease providing support to negativity, reinforcing harmful societal elements, and exacerbating discord. Begin to embrace responsibility, show concern for important social matters, and cultivate authentic connections with consumers that are rooted in mutual trust.