This article is part of a VB special issue. Read the full series here: How Data Privacy Is Transforming Marketing.
Marketers are feeling the pressure — from consumers, regulators and security teams — to protect current and potential customers’ data privacy. They are also on the hunt for solutions. So, when Gartner added privacy-enhancing computation, also known as privacy-enhancing technologies (PETs), to its list of 2022 strategic technology trends, it was clear that these measures were inching up the Hype Cycle as a way to solve the consumer privacy conundrum.
According to the IAB Tech Lab, a non-profit consortium created to develop foundational technology and standards that enable growth and trust in the digital media ecosystem, “PETs” is a broad umbrella term that covers a range of technologies focusing on protecting personal information, born out of the disciplines of encryption, machine learning, de-identification and cryptography.
“This is a means by which not only can we solve for consumer privacy, but also data security,” said Anthony Katsur, CEO of IAB Tech Lab. “Given the direction of the privacy landscape at the moment from a regulatory point of view, and [a] technology point of view (think crumbling cookies and device IDs), it is becoming more apparent that PETs, which are ultimately technologies focused on maximizing data security to protect consumer privacy and minimizing the amount of data being processed, are going to form the future foundations of the ad-funded internet.”
PETs address mounting challenges for marketers
Between legislation like GDPR and CCPA, Apple’s new iOS standards and Google’s pending deprecation of third-party cookies for Chrome, privacy issues have reached a tipping point, explained Rich Sobel, founder and CEO at marketing consultancy Marcato Solutions. That has led to mounting challenges for marketers.
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“Historically, understanding customers and working with first, second and third-party data sets on those customers has been handled somewhat ‘upstream,’ where the data was applied and modeled in advance of buying ads,” Sobel explained, adding that digital media allows advertisers to determine the value of an ad at the moment, now applying — in relatively real-time, at the point of buying the ad — all the data previously used for modeling.
“That methodology, along with an opt-out tracker, was always going to run into issues,” he said. “As a result, moving and addressing privacy through PETs has become one of the most, if not the most, important actions advertisers and publishers will take over the next 12 months.”
Companies want to share data and collaborate
Kansas City, Missouri-based startup TripleBlind provides an API that “allows your data to remain behind your firewall while it is made discoverable and computable by third parties for analysis and ML training,” said Chris Barnett, vice president of marketing at TripleBlind. Barnett explained that there are several different taxonomies for PETs, but they typically include areas like differential privacy, federated learning, synthetic data, secure multi-party computation, secure enclaves, homomorphic encryption and tokenization/data masking/data hashing.
“Generally, companies are going down this road because they are moving to public cloud infrastructure and plan to share data and collaborate with different people,” he told VentureBeat. “Our technology is available right in the AWS or Azure store, for example.”
Marketers are trying to use data collaboratively to understand their customers’ journeys from browsing to check out.
“The customer journey is the double-bullseye use case for this,” Barnett said. “The classic example is if I’ve got a product that I’m marketing on my website and I advertise on social media, search and other internet properties, how do I understand where my customers are being influenced and generated? It’s getting harder and harder to do that.”
That’s where there is typically an impasse — where one party doesn’t want to take on the risk of giving all of their data to another party. PETs, he explained, allow different parties to share and collaborate around sensitive information while preserving privacy and ensuring compliance.
Jonathan Moran, head of martech solutions at SAS, said no one data alternative has yet emerged as “bulletproof,” but “a combination of PET practices like Universal ID, device fingerprinting and Digitrust will attempt to fill the gap and allow brands to prosper in the post-third-party cookie world.”
Of those three, he says Universal ID — an identifying cookie that is stored in the HTML5 storage space of a user’s browser and is limited to first-party use only — is perhaps the most viable alternative. “But it will take some time and work before being rolled out more widely,” he said.
The future of marketing and PETs
There has certainly been plenty of movement on the PETs front over the past year. In August 2021, Meta said it was “investing in a multi-year effort to build a portfolio of privacy-enhancing technologies and collaborate with the industry on these and other standards that will support the next era.”
In February, IAB Tech Lab announced a new working group on privacy-enhancing technologies, saying it “invites developers working on advanced cryptography, data scientists, privacy and security systems engineers, and others in the digital advertising community to come together to develop privacy-enhancing standards and software tools for the digital advertising industry.”
For brands and publishers who have strong, direct customer relationships to build strong first-party datasets, the adoption and application of PETs is fairly straightforward and the path clear, said Sobel. But brands and publishers that have less direct customer relationships and less deterministic data on their customers will need proxy tools and partnerships to build better datasets through data clean rooms — places where “walled gardens” like Google, Facebook and Amazon, for example, share aggregated rather than customer-level data.
“PETs and data clean rooms are incredibly powerful tools, so their adoption needs to be aligned with business use cases and not just technology for technology’s sake,” he explained. “They’re too expensive to ‘just have them.’”
But according to IAB Tech Lab’s Katsur, while it is still early days for the use of PETs to tackle marketing’s most thorny privacy challenges, maturity is coming.
“We’re currently still defining practical use cases within and outside the advertising ecosystem for PETs,” he said. “Next year, you will see more practical applications as we move from theory and education to real-world usage.”