The war on user privacy continues this week as Meta has been ordered to stop behavioral advertising in Norway.
Meta received the order on July 14 from the Norwegian Data Protection Authority.
The order states that Meta can no longer serve behavioral ads targeted at consumers on Facebook and Instagram. The ban begins on August 4 and will last for three months.
Let’s take a closer look at the ban order itself and what it means for advertisers, now and in the future.
Background on banning personalized meta ads
In an earlier ruling on July 4, the Court of Justice of the European Union stated that Meta was “unlawfully collecting data from individuals to target them with advertisements without their explicit consent and based on the company’s ‘legitimate interest.’
In addition to the EU ruling, Meta is being investigated by the Irish Data Protection Commission for similar advertising practices.
In January 2023, they fined Meta $410 million because they believed the company was violating the privacy of European consumers. Since Meta appealed the decision, this particular investigation is still ongoing.
As the Irish privacy regulator leads compliance with the General Data Protection Regulation (GDPR) across Europe, countries in the region can make their own decisions for up to three months.
As a result of the ongoing investigation, Norway is the first country to issue such a ban on Meta just this week.
The ban on behavioral ads explained
At first glance, it appears that Meta cannot serve personalized ads to consumers.
As an advertiser, this kind of news is enough to keep you up at night.
However, as we delve deeper into the banning order, it clarifies what is still acceptable and the implications of non-compliance.
According to the order, Facebook and Instagram can still serve personalized ads based only on the “About” section of a user’s profile. Because a user gave this information willingly, this is not against non-consent policies.
Meta may still serve contextually targeted ads that are not based on user tracking.
If Meta is found to be in breach at any time, they will face a hefty daily fine of NOK 1 million. This equates to about US$99,495.
The order offers an option to lift the ban, but only if Meta finds and demonstrates a new way to legally process personal data under the GDPR. Users should also be allowed to opt out of targeted advertising based on tracking.
Advertising implications of the ban
So does this mean that advertisers who want to reach the Norwegian population can no longer use Facebook or Instagram ads?
Absolutely not.
However, there are some possible outcomes that could happen due to the ban:
Users will still see ads, but possibly more frequently and repeatedly.
Ads that users see and interact with will become less relevant.
Advertisers’ CPMs could skyrocket due to targeting limitations.
Although these are only speculations, these scenarios are not far-fetched.
If companies pause or disable the use of the Meta ad platform during the ban, this means less competition. Less competition can result in the same ads being repeatedly shown to a user. As a result:
Higher ad frequency and CPM
Ads are less relevant to users
Small businesses are likely to be most affected, especially if meta ads were the main driver of business. They may have to shift their paid media strategy without the targeting mechanics they’re used to in order to avoid losing business.
On the other hand, Facebook might decide to continue running ads as usual because of the amount of ad revenue it receives. They could see the daily fine of ~$95,000 as a minimum expenditure to maintain the level of income.
To sum up
Metadata collection and privacy practices will be under a microscope for the next few months, if not longer.
Although Norway is the first country to enact such an order, there could be others to follow suit. Currently, there are no reports of other countries announcing a similar ban.
These rulings and bans may set the stage for other forced changes in a world of complex and ever-changing privacy regulations.
We will update you as more news comes.
Featured Image: Ivan Marc/Shutterstock
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