The mobile advertising landscape is rapidly expanding. During the course of 2014, we encountered a worldwide explosion of mobile advertising campaigns and budgets, which consequently sparked a dramatic evolution in industry best practices, new standards, innovative technologies, compliance demands and enforcement action.
The overall experience in this area has shown that mobile technologies give rise tounique monetization & privacy concerns as a result of the high number of companies involved in the mobile ecosystem and the large volume of data being collected.
During the course of 2014, we encountered:
- A dramatic surge of enforcement actions by the FTC
The Federal Trade Commission (“FTC”) has been increasingly focused on the mobile advertising sector and on alleged consumer protection violations. The FTC has also addressed these issues in policy initiatives, reports and educational material. The FTC’s guidance on aspects surrounding the mobile apps ecosystem is constantly evolving.
In reviewing the FTC's surveys, reports, guidance and enforcement actions, we have concluded that the FTC's key focuses are on: privacy and data security (particularly failure to honor stated privacy policies, data security breaches, potential use of consumers' information by data brokers and other third parties, and use of sensitive or financial information), native advertising (particularly the blurring of advertising and editorial content), and unauthorized charges using prepaid or stored value apps & unfair billing practices.
During 2014, the FTC has issued complaints with respect to various matters relating to the mobile marketplace, including unfair billing practices (see e.g., Google, Apple,Amazon), collecting personal information (see e.g., Yelp, Snapchat, TinyCo) and securing sensitive personal information (see e.g., Fandango, Credit Karma).
The FTC's increasing enforcement actions, confirm its ongoing commitment to monitor and target deceptive and unfair trade practices in the mobile marketplace, including data collection and billing practices.
- Guidelines and best practices by self-regulatory bodies
Measuring the online advertising revenues in 2014, the Internet Advertising Bureau (IAB) has reported that the mobile sector was the most important theme in 2014, showing the strongest growth and representing a significant percentage of advertising formats (this was reflected, inter alia, in global installed base, average consumer time-spend per day, media and video consumption and increasing dominance in e-commerce and as a social channel).
Recognizing that maintaining ethical and efficient control over an ever-increasing data flow is also becoming a more demanding requirement in the interactive advertising industry and the mobile environment, particularly with respect to privacy concerns relating to the use of consumer data, the IAB has released a Best Practices Guideregarding Effective Data Stewardship (i.e. the collection, management, use, storage, and disposal of data over time) in the web and mobile ecosystem.
The IAB has also published an Ad Marker Implementation Guidelines for Mobile, which covers the provision of notice and choice for ad campaigns in mobile app and mobile web environment, and is intended to ensure that mobile device users have access to insight and control over mobile advertising. It should also be noted that during the course of 2013, the Digital Advertising Alliance published a guideline concerning the Application of Self-Regulatory Principles to the Mobile Environment.
- Growth in ad-spend and new ad formats
During the course of 2014, the mobile platforms, in particular mobile apps, played a key role in changing consumers’ behavior, accounting for a dominant share of digital media time spent (according to several reports, more than half of digital media time spent; this was notably reflected in various content categories, including digital radio, social networking, games and entertainment). The mobile ad spend followed this trend, demonstrating a massive rise. The mobile ad spending and revenues are projected to have increasing growth in the following years.
These trends underscored the present challenges of mobile ad formats, ad measurement of mobile audience tools and monetization infrastructure. We were alsointroduced with new native ads trends and standards, and new mobile engagements ad units and formats that leverage mobile functionality (e.g. adhesion banners, interactive rich media, push, etc.), as well as new innovations with respect to tracking ad performance on mobile devices.
- International focus on privacy transparency in the mobile marketplace
The EU 29 Working Party also addressed mobile privacy, and laid out new safeguards and recommendation for mobile application developers, application stores, device manufactures and third parties. The Information Commissioner’s Office (ICO) in the UK has also released guidance that sets out key requirements which must be meet when processing personal data through an app.
International data protection authorities have identified mobile apps as a key area of focus in light of the privacy implications for consumers, and carried out a mobile app privacy sweep to scrutinize organizations' collection and use of personal data on mobile apps. In view of this development, several international data protection authorities (including from Canada, the UK, Ireland and more) have signed a joint open letter to the operators of the leading mobile app marketplaces urging them to make links to privacy policies mandatory practice for apps that collect personal data.
These developments reflect the international data protection authorities' concern over users' privacy in the mobile ecosystem, due to the inherent and serious risks which rangefrom a lack of transparency and awareness amongst mobile application users, to poor securitymeasures, invalid consent mechanisms, a trend towards data maximization and elasticity ofdata processing purposes. This concern is also reflected in the EU working party’s recent opinion concerning the Recent Developments on the Internet of Things. Particular notice has been given to the nature of permissions being sought by app developers in the app marketplace and lack of an appropriate privacy notice.
- Greater scrutiny in the mobile digital marketplaces
Google has updated its Google Play policies on a number of occasions in an effort to improve the overall quality of the apps distributed on the stores. Special attention is afforded to violations of Google Play's Ad Policy (e.g. ad units, interstitial ads, impersonation, interference with other apps, ad content and user privacy). This is also reflected in the introduction of the Google Advertising ID, (which became mandatory for advertising purposes, commencing August 1, 2014, for any app distributed in Google Play) which is designed to afford the users’ control over their advertising preferences.
The mobile industry has scaled dramatically in the past year, fuelling the proliferation of new apps and services, ad formats, ad measurement tools, monetization infrastructure, etc. The fragmented nature of the mobile ecosystem, the wide scope of technical access possibilities to data stored or generated by mobile device and the lack of legal awareness amongst the various parties involved in the app ecosystem (including the mobile app or SDK developers, mobile app stores, advertisers, analytics providers, cloud service providers, device and operating systems manufacturers, etc.) are creating various challenges and giving rise to privacy concerns, as consumer data is increasingly accessed, used and shared by multiple parties. These challenges are also reflected in the ever-evolving accountable business practices and industry standards.
As the mobile platform has been identified as the key area of focus of various regulatory and enforcement authorities in the coming years, we encourage any of our clients involved in the provision of online services in the mobile ecosystem to better understand their respective roles and responsibilities in safeguarding mobile users' privacy and adhering to fair and effective advertising practices.