Storyboard18 | Advertising is in the position where tobacco was: IPG's Arun Kumar

In India you don’t have a proper reference graph. Whereas in other markets there is a common understanding of the consumers, there is a reference graph that connects the offline data set to online. You don’t have that in this country. Therefore, what I would call establishing identity of people and connecting the offline to the online world is absent. In a market like India where retail lives both in the physical world and in the ecommerce world, tying those two together is going to be important. Managing identities is also going to be crucial for keeping reach, because India is a market that is heavily dependent on third-party cookies. And when that is going to go away, it is going to be replaced by identifiers that are far less effective in helping marketing and therefore driving growth for a lot of the ecommerce industry.

What are the new age identity solutions where third party cookies are phasing out? How disruptive is it?

It is going to be very disruptive and what you are going to find is that there is going to be a greater concentration of power in the hands of the ‘walled gardens’. They are going to have the information about the consumers and it is not going to leave those walls. And it is essentially students marking their own homework or marking their own exams. There is going to be no one who is going to tell you whether what they are claiming is right or not. They are going to get granular data whereas you are going to get aggregate data.

What is happening around the world, and I think it is going to start to happen in India as well, is that every single brand or marketer, whatever category they are in, are focused on building their own first party data sets and having their own private graphs. This means that if the platforms are going to undermine your relationship with the consumer then it is incumbent on you as a brand to make sure that every time they do come in contact with you, whether it is a store, site or a call center, whether they complain or they buy or return the product, you get all these streams of information.

What's the challenge then?

The problem is that these streams are never unified. A very simple use case is that I can be registered in two different databases with the same organization under three different names, four different addresses. And there might be no recognition that me and my wife belong to the same household. You may not know the relationship. All of those need to start getting tied up. Because if you don’t tie them up, the ‘walled gardens’ are going to tie them up. So how are you going to say that your campaign hit the reach and frequency goals? Reach and frequency is most fundamental to media. If you can’t go across platforms or across devices to measure reach, then how are you correlating that to marketing effectiveness?

So how can you correlate?

The only way you can do that is if you have a direct relationship with consumers and if you can map their behaviors and also a lot of the new regulatory laws coming through are saying get the consent from consumers. Which means you need to have a direct value exchange with them. They will give you information in exchange for something. And that exchange needs to be valuable otherwise why the hell would I give it. I think there are going to be categories or products for which this is not going to be important. For example if you are selling salt, you don’t need to know who people are. But if you are selling luxury vehicles you need to know. So the idea is to build private graphs and then connect them across main graphs to the rest of the ecosystem. So do I know everything about the consumer? That is my private graph, but how to find her in the wider ecosystem across all media sets of contact points that’s the cross to main graphs. And then you need to connect those two. And like I said for the private graphs and for cross to main, you need reference graphs otherwise you can’t normalize the data set. Those are some of the things that India needs right now.

In your view, what kind of understanding do marketers have, especially in a market like India, about this entire shift?

From what I have seen, I wouldn’t say that there is a lot of awareness. There is still a lot of focus on price. The problem with price is that price doesn’t necessarily translate to value. So a lot of the benchmarks that you have today are going to go away in two years. You are not going to be able to compare apples to apples. If there is going to be disruption anyway you are going to start to change the way in which you view the environment. Many marketers are not aware, some are asleep at the wheel, others are hoping that there will be some kind of a solution to preserve the status quo. But I won’t blame them because even at a global level, we typically find that there is slowly a recognition that there is going to be transformation. Some organizations are faster than the others. But the awareness is pretty low.

Data privacy has become a hotly debated topic and a complex one. What could be a simple solution that will probably be win-win for both consumers and brands?

There needs to be a common set of standards. The best industry I would look at is the telecom industry. When you pick up your cellphone and you say I am going to make a phone call, you don’t worry about whether the recipient has the same phone brand, has the same network or has the same carrier. It is because there is a common set of standards. There is 4G and everyone is adhering to it and it doesn’t matter what carrier you have. You were to transform the digital ecosystem to telecom, what it means is you have to take out your phone and if your phone and other person’s phone is different, then it won’t connect because there is no standard.

First thing is to set up standards and the standards cannot be set by Facebook, Google, Amazon, Microsoft etc. They need to be set up by a wide body of experts who are technically proficient and who are not pushed by any vested interest. There can’t be different versions of privacy. You can’t have Apple saying allow this information and someone else saying the opposite.

Advertising increasingly in many markets is almost in the position where tobacco was many years ago. And it always astounds me when people look at advertising and marketing in the same light. There is this belief and even in regulatory circles in western countries where influence as a word is used conjointly with manipulation. So advertising is seen as manipulation rather than a free speech of a brand which says you need to buy me as opposed to somebody else.

How did it get to that point?

Part of the fault is a lot of marketers don’t talk about what they do and why it is valuable. But any law that comes up, first of all there needs to be a national law, there shouldn’t be state wise laws. There need to be some standards that balance both the interests. For example, define what are sensitive data types that are off the table. What are data sets that people can use and how can they use it? Some principles should be legitimized. Because businesses need to know certain pieces of information in order to service consumers. You can’t make it all conditional basis consent. Because how many times is the consumer going to give consent and to how many people? Any law should be cognizant of something that most people forget - marketing is a key factor that funds democracy.

Let's unpack that a bit.

So, if you unpack that, think about the free press. Subscription revenues do not drive the free press. If you want multiplicity of opinions, the multiplicity of opinions needs to be funded. It is funded by advertising. So if you remove the ability to do precision targeting or for us to understand the value of online news sites, a number of these online sites are going to die. They are not going to get the funding. Therefore, many opinions in the niche are going to die out. That is going to fundamentally impact democracy.

Back to the second point. All these regulations mean that the companies have to spend a lot of money on compliance. There are almost billions of dollars that are being spent in the US around the CCPA (California Consumer Privacy Act of 2018) for them to be actually compliant. Who do you think is paying the price for it? Do you think companies are not passing the price pack to the consumers? Suppose if I told you, in this inflationary time, that your grocery bill has just gone up by 5% because of the privilege of not having your cookie shared elsewhere. Isn’t that a choice that you should make? Whether you are willing to pay 5% more or whether I am OK with the data being shared? So there is a lot of lack of transparency from people who are demanding transparency.

The privacy activists don’t speak about the economic cost, the jobs that will be lost. The fact that marketing drives a lot of opinions that exist in a democracy. This idea that it is all manipulation and influence - again, you have to specify use cases. And by the way, it all started with Facebook and Cambridge Analytica and blew up with politics. Has political advertising escaped in the western world? No. Has the ability of hackers to get your data gone down? No. Has government surveillance gone down? No.

None of the laws that have been constructed are actually focused on the problems that started the conversation. And instead cost consumers and are painting marketing as a bad act. And a part of the problem is that our marketers are not standing up and being heard. We are there in many regulatory bodies around the world. We have actually testified in front of the Senate in the US. We were the only people to do that from any holding company. We didn’t find any advertisers around us. My plea to marketers is if you don’t stand up and talk about the value of marketing, people are going to dub you the next tobacco.

There is too much power in the hands of Big Tech and even today for digital solutions the entire industry is dependent on a handful of big tech companies. Do you see that changing?

There is a concerted effort with all the regulatory changes in Europe and the US. They are also asking questions like should we break them up, should we change the business models, etc. I think some of it will come to play. However, I would again go back to- are you creating policies that would allow startups to grow? The reason why you would have those big tech players to grow in the first place is because there was freedom for them to grow. Those big tech players have now made it impossible for startups and VC companies to operate in that space.

Or will they simply acquire it?

Yes, in the VC world if you are operating in certain areas and it is very close to let’s say something like Amazon operates, it is called ‘Death Zone’. Because you are either going to be acquired or not be successful. That is what law makers need to focus on. Are you creating an equitable market? A lot of this happens because they are allowed to mark their own report cards. ‘I am a platform and I also sell my own products’. 'I am supply side, buy side, I am analytics and I also do attribution.' And a lot of these acquisitions were allowed. You have to undo some of them and you have to be very careful about the principles of the digital market. For example, in a non-digital market you have ‘antitrust’. The same principle is not applied in the digital world. The regulators block so many of the M&A opportunities in the physical world which they are very reluctant to do in the digital space. And now they complain that these companies have become too big.

You seem to have a strong opinion against the regulators?

My issue with the regulators is that they are engaging with very few sets of people which are largely privacy activists. There are a lot of privacy activists lobbying on one side and big tech on the other. And I don’t think this is truly representative of the entire ecosystem. There are no marketers or third party service providers who actually have an opinion on this. And in some cases, they don’t even know that these conversations are on.