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The marketing technology industry is inextricably linked to huge amounts of data, so it is important that the development of technologies both maximize data security and keep cloud computing resources to a minimum.
The truth is that the environmental, social and governance (ESG) issues associated with user data have been snowballing for quite some time. It seems now though that companies willing to adapt and put a major focus on ESG strategy tend to benefit in the long run.
ESG allows investment to be evaluated according to the quality of governance, social responsibility, and environmental responsibility a company can provide. The importance of such criteria allows stakeholders to properly assess the company’s long-term value in addition to the traditional range of metrics such as financial performance and management acumen.
In terms of advertising technology, the market now requires an emphasis on building up and maintaining robust data centers that put resource management, data security and user privacy measures front of mind. Now more than ever, ESG principles will play a vital role in supporting core business goals and holding one’s position at the forefront of an industry.
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User privacy and data security in the modern world
Despite what the last two years have held, tech companies have seen huge gains in the financial world, in part, due to an uptick in engagement and the subsequent advertising dollars that follow. Much of these gains have been in lockstep with global regulatory bodies and a tightening of requirements for data protection and privacy security governance. This is for good reason and ultimately serves all. In the case of advertising technology, it incentivizes public companies to decrease the risk associated with either a data or privacy breach which in turn provides investors a better outlook on the company’s long-term development and ability to pivot under intense market conditions.
Developing advertising technologies now requires sustainability and a sense of social responsibility to be top of mind. It is, however, a bit of a misnomer to assume targeted advertising will inextricably lead to threats to a user’s right to data privacy. The industry has come a long way and the recent news of Google’s Privacy Sandbox initiative is a testament to this. Here, Google is providing innovative ways for targeted advertising on Android devices to co-exist with consumer and regulatory demand for less intrusive data-sharing practices. The initiative will further restrict third-party data sharing, which in turn gives first-party data and contextual advertising a chance to flourish.
An ESG strategy that considers data security and user privacy first almost always has a proactive approach. Beyond regulatory measures such as Europe’s GDPR and California’s CCPA, there is a concerted effort to audit in-house technologies through third parties. Governance here would typically require technology audits like the SOC2 Type 1 and Type 2 reports from one of the big accounting firms or through highly technical software assessments like the ISO/IEC 27001 certification. Both have proven to be effective methods for the assurance of your technology and as a trickle-down effect to the shareholders who rely on the stability of your systems.
While the entire industry has faced upheaval over the last few years, there is still a lot of opportunity for growth. The nuance is that the opportunities must grow together with both governance and sustainability. Minimizing the risks associated with users and data will require constant upkeep, especially as it pertains to governance.
As attitudes to privacy and security change, it is paramount for technology companies to respond accordingly.
The importance of cloud-native architecture for sustainability
Outside of governance, technological openness is needed in the industry. Going above and beyond the bare minimum will ensure your technology stack stays ahead of the curve.
Cloud-native architecture and public clouds, for example, can actually help save electricity.
This is especially important given the fact that peak traffic amongst advertising technology platforms can be four times higher than in other industries. If adtech companies were to build this service themselves, the hardware would also have to be configured — all of which is wasted resources. In comparison, public clouds can be used flexibly and bought on demand.
In addition to this, elastic cloud computing should also make full use of idle computing resources. Public cloud providers often produce an idle surplus of computing electricity all while the servers in data centers are constantly running and consuming electricity, leading to unused computing cycles and wasted resources. To combat this there should be higher adoption of cloud resource optimization solutions that can fully use the idle computing resources of public clouds. Beyond the benefits this provides a company’s ESG strategy, it can also ensure a higher level of reliability and cost savings.
Much of the industry changes are being enacted by large publicly-traded corporations. These companies have quickly come to understand that the health and longevity of an organization will now be dictated, in part, by its data practices. What’s needed though is a standardized set of metrics or benchmarks for adtech companies to aspire to within their ESG strategy. With measurement at the heart of advertising technology, it would make sense for the industry to have systematic benchmarks to evaluate this so-called ethical growth. Users are also beginning to better understand the value of their data and companies that adopt ethical growth frameworks will be recognized and likely rewarded by the end consumer.
Sean Song is CFO of Mobvista.
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