In The Big Short, investor Michael Burry says “One hallmark of mania is the rapid rise in the incidence and complexity of fraud.” (Burry shorted the mania- and fraud-filled subprime mortgage market and made a mint in the process.)

One would be equally smart to bet against the mania for the tracking-based form of advertising called adtech.

Since tracking people took off in the late ’00s, adtech has grown to become a four-dimensional shell game played by hundreds (or, if you include martech, thousands) of companies, none of which can see the whole mess, or can control the fraud, malware and other forms of bad acting that thrive in the midst of it.

And that’s on top of the main problem: tracking people without their knowledge, approval or a court order is just flat-out wrong. The fact that it can be done is no excuse. Nor is the monstrous sum of money made by it.

Without adtech, the EU’s GDPR (General Data Protection Regulation) would never have happened. But the GDPR did happen, and as a result websites all over the world are suddenly posting notices about their changed privacy policies, use of cookies, and opt-in choices for “relevant” or “interest-based” (translation: tracking-based) advertising. Email lists are doing the same kinds of things.

“Sunrise day” for the GDPR is 25 May. That’s when the EU can start smacking fines on violators.

Simply put, your site or service is a violator if it extracts or processes personal data without personal permission. Real permission, that is. You know, where you specifically say “Hell yeah, I wanna be tracked everywhere.”

Of course what I just said greatly simplifies what the GDPR actually utters, in bureaucratic legalese. The GDPR is also full of loopholes only snakes can thread; but the spirit of the law is clear, and the snakes will be easy to shame, even if they don’t get fined. (And legitimate interest—an actual loophole in the GDPR, may prove hard to claim.)

Toward the aftermath, the main question is What will be left of advertising—and what it supports—after the adtech bubble pops?

Answers require knowing the differences between advertising and adtech, which I liken to wheat and chaff.

First, advertising:

Advertising isn’t personal, and doesn’t have to be. In fact, knowing it’s not personal is an advantage for advertisers. Consumers don’t wonder what the hell an ad is doing where it is, who put it there, or why.

Advertising makes brands. Nearly all the brands you know were burned into your brain by advertising. In fact the term branding was borrowed by advertising from the cattle business. (Specifically by Procter and Gamble in the early 1930s.) Advertising carries an economic signal. Meaning that it shows a company can afford to advertise. Tracking-based advertising can’t do that. (For more on this, read Don Marti, starting here.) Advertising sponsors media, and those paid by media. All the big pro sports salaries are paid by advertising that sponsors game broadcasts. For lack of sponsorship, media—especially publishers—are hurting. @WaltMossberg learned why on a conference stage when an ad agency guy said the agency’s ads wouldn’t sponsor Walt’s new publication, recode. Walt: “I asked him if that meant he’d be placing ads on our fledgling site. He said yes, he’d do that for a little while. And then, after the cookies he placed on Recode helped him to track our desirable audience around the web, his agency would begin removing the ads and placing them on cheaper sites our readers also happened to visit. In other words, our quality journalism was, to him, nothing more than a lead generator for target-rich readers, and would ultimately benefit sites that might care less about quality.” With friends like that, who needs enemies?

Second, Adtech:

To get a sense of what will be left of adtech after GDPR Sunrise Day, start by reading a pair of articles in AdExchanger by @JamesHercher. The first reports on the Transparency and Consent Framework published by IAB Europe. The second reports on how Google is pretty much ignoring that framework and going direct with their own way of obtaining consent to tracking:

Google’s and other consent-gathering solutions are basically a series of pop-up notifications that provide a mechanism for publishers to provide clear disclosure and consent in accordance with data regulations.

Specifically,

The Google consent interface greets site visitors with a request to use data to tailor advertising, with equally prominent “no” and “yes” buttons. If a reader declines to be tracked, he or she sees a notice saying the ads will be less relevant and asking to “agree” or go back to the previous page. According to a source, one research study on this type of opt-out mechanism led to opt-out rates of more than 70%.

Meaning only 30% of site visitors will consent to being tracked. So, say goodbye to 70% of adtech’s eyeball targets right there.

Google’s consent gathering system, dubbed “Funding Choices,” also screws most of the hundreds of other adtech intermediaries fighting for a hunk of what’s left of their market. Writes James, “It restricts the number of supply chain partners a publisher can share consent with to just 12 vendors, sources with knowledge of the product tell AdExchanger.”

And that’s not all:

Last week, Google alerted advertisers it would sharply limit use of the DoubleClick advertising ID, which brands and agencies used to pull log files from DoubleClick so campaigns could be cohesively measured across other ad servers, incentivizing buyers to consolidate spend on the Google stack. Google also raised eyebrows last month with a new policy insisting that all DFP publishers grant it status as a data controller, giving Google the right to collect and use site data, whereas other online tech companies – mere data processors – can only receive limited data assigned to them by the publisher, i.e., the data controller.

This is also Google’s way of scraping off GDPR liability on publishers.

Publishers and adtech intermediaries can attempt to avoid Google by using Consent Management Platforms (CMPs), a new category of intermediary defined and described by IAB Europe’s Consent Management Framework. Writes James,

The IAB Europe and and IAB Tech Lab framework includes a list of registered vendors that publishers can pass consent to for data-driven advertising. The tech companies pay a one-time fee between $1,000 and $2,000 to join the vendor list, according to executives from three participating companies…Although now that the framework is live, the barriers to adoption are painfully real as well. The CMP category is pretty bare at the moment, and it may be greeted with suspicion by some publishers.There are eight initial CMPs: two publisher tech companies with roots in ad-blocker solutions, Sourcepoint and Admiral, as well as the ad tech companies Quantcast and Conversant and a few blockchain-based advertising startups… Digital Content Next, a trade group representing online news publishers, is advising publishers to reject the framework, which CEO Jason Kint said “doesn’t meet the letter or spirit of GDPR.” Only two publishers have publicly adopted the Consent and Transparency Framework, but they’re heavy hitters with blue-chip value in the market: Axel Springer, Europe’s largest digital media company, and the 180-year-old Schibsted Media, a respected newspaper publisher in Sweden and Norway.

In other words, good luck with that.

[Later, 26 May…] Well, Google caved on this one, so apparently Google is coming to IAB Europe’s table.

[And on 30 May…] Axel Springer is also going its own way.

One big upside for IAB Europe is that its Framework contains open source code and an SDK. For a full unpacking of what’s there see the Consent String and Vendor List Format: Transparency & Consent Framework on GitHub and IAB Europe’s own FAQ. More about this shortly.

Meanwhile, the adtech business surely knows the sky is falling. The main question is how far.

One possibility is 95% of the way to zero. That outcome is suggested by results published in PageFair last October by Dr. Johnny Ryan (@JohnnyRyan) there. Here’s the most revealing graphic in the bunch:

Note that this wasn’t a survey of the general population. It was a survey of ad industry people: “300+ publishers, adtech, brands, and various others…” Pause for a moment and look at that chart again. Nearly all those proffesionals in the business would not accept what their businesses do to other human beings.

“However,” Johnny adds, “almost a third believe that users will consent if forced to do so by ‘tracking walls’, that deny access to a website unless a visitor agrees to be tracked. Tracking walls, however, are prohibited under Article 7 of the GDPR…”

Pretty cynical, no?

The good news for both advertising and publishing is that neither needs adtech. What’s more, people can signal what they want out of the sites they visit—and from the whole marketplace. In fact the Internet itself was designed for exactly that. The GDPR just made the market a lot more willing to start hearing clues from customers that have been laying in plain sight for almost twenty years.

The first clues that fully matter are the ones we—the individuals they’ve been calling “users,” will deliver. Look for details on that in another post.

Meanwhile::::

Pro tip #1: don’t bet against Google, except maybe in the short term, when sunrise will darken the whole adtech business.

Instead, bet against companies that stake their lives on tracking people, and doing that without the clear and explicit consent of the tracked. That’s most of the adtech “ecosystem” not called Google or Facebook.

Google can say it already has consent, and that it is also has a legitimate interest (one of the six “lawful bases” for tracking) in the personal data it harvests from us.

Google can also live without the tracking. Most of its income comes from AdWords—its search advertising business—which is far more guided by what visitors are searching for than by whatever Google knows about those visitors.

Google is also also relatively trusted, as tech companies go. Its parent, Alphabet, is also increasingly diversified. Facebook, on the other hand, does stake its life on tracking people. (I say more about Facebook’s odds here.)

Pro tip #2: do bet on any business working for customers rather than sellers. Because signals of personal intent will produce many more positive outcomes in the digital marketplace than surveillance-fed guesswork by sellers ever could, even with the most advanced AI behind it.

For more on how that will work, read The Intention Economy: When Customers Take Charge. Six years after Harvard Business Review Press published that book, what it says will start to come true. Thank you, GDPR.

Pro tip #3: do bet on developers building tools that give each of us scale in dealing with the world’s companies and governments, because those are the tools businesses working for customers will rely on to scale up their successes as well.

What it comes down to is the need for better signaling between customers and companies than can ever be possible in today’s doomed tracking-fed guesswork system. (All the AI and ML in the world won’t be worth much if the whole point of it is to sell us shit.)

Think about what customers and companies want and need about each other: interests, intentions, competencies, locations, availabilities, reputations—and boundaries.

When customers can operate both privately and independently, we’ll get far better markets than today’s ethically bankrupt advertising and marketing system could ever give us.

Pro tip #4: do bet on publishers getting back to what worked since forever offline and hardly got a chance online: plain old brand advertising that carries both an economic and a creative signal, and actually sponsors the publication rather than using the publication as a way to gather eyeballs that can be advertised at anywhere. The oeuvres of Don Marti (@dmarti) and Bob Hoffman (the @AdContrarian) are thick with good advice about this. I’ve also written about it extensively in the list compiled at People vs. Adtech. Some samples, going back through time:

I expect, once the GDPR gets enforced, I can start writing about People + Publishing and even People + Advertising. (I have long histories in both publishing and advertising, by the way. So all of this is close to home.)

Meanwhile, you can get a jump on the GDPR by blocking third party cookies in your browsers, which will stop most of today’s tracking by adtech. Customer Commons explains how.