WPP, InfoSum & the Privacy/Transparency Paradox

I’m Alan Chapell. I’ve been working at the intersection of privacy, competition, advertising and music for decades and I’m now writing for The Monopoly Report. If you have a tip to share in confidence, find me on Twitter or Bluesky.

Our latest Monopoly Report podcast is out with guest Rob Leathern - entrepreneur, product/technology leader at Google and Meta and former colleague of mine at Jupiter Research. Rob shares his thoughts on how to improve the ads space - and how “bad” ads can harm consumer trust.

The Privacy / Transparency Paradox

On April 3, WPP announced that they had acquired data clean room platform InfoSum. The terms of the deal were undisclosed. Lot’s of palace intrigue behind those headlines that many are whispering about… but few have the gumption to say out loud.

You may be wondering – why is the privacy/regulatory guy opining on this?

Well… Data Clean Rooms are a core part of a recent wave of privacy-enhancing-technologies (PETs) that have sprung up over the past several years. Some believe that PETs are the future of digital media.

I have my doubts.

Even if you buy into the notion that PETs solve a privacy issue (mixed results), they tend to exacerbate the ecosystem wide transparency and trust issues. I call this the privacy / transparency paradox. The problem with lots of the PETs being created is that they require others to take your word that those tools work as advertised. Not saying that these problems can’t be fixed. Rather, I’m saying that few have been able to effectively do so to date.

The DCR business model

I hope this isn’t taken the wrong way. It’s really difficult to time the market – even with a great idea. But as of today, it’s really not clear whether DCRs – in all their incarnations - are a viable business as a standalone. (I’m not the only person who thinks this). But that’s not to say that they can’t add value within in a portfolio of other services (which is clearly what WPP is attempting to do here – and what Google, Amazon and other larger DCR players are doing).

The existential issue with DCRs is that they haven’t yet evolved into a clear value proposition that is widely understood by the market. Had cookies been fully deprecated a few years ago, or if lawmakers hadn’t poured cold water over the concept of de-identification, things may have played out differently - as it would have forced the marketplace into action. But as of today, DCRs remain “interesting” but perhaps not “critical” tools - and that’s before you try to scale. Lots of the ID-less ad solutions are facing similar headwinds.

In that way, adoption probably isn’t yet what many of those tools were hoping for when they began their journeys. And in hindsight, the Superset guys were probably wise to get out of the casino on the early side.

Synergies within WPP?

I think the synergies here really depend on how you see DCR services being sold over time. Some are claiming that ad agencies will be driving advertiser adoption of data clean rooms. I’m not convinced that will be the case over the long-term. For reasons I share below, I can see some value in offering a bespoke suite of agency-owned tools designed to compete with the walled gardens. But as others have noted, having a clean room doesn’t get you access to the walled garden data. And as I’ve said a bunch of times, the number of platforms that don’t offer much in the way of data on campaign results is only increasing.

Accordingly, if the problem you’re looking to solve involves working around or building on top of walled garden ad platforms, better solutions might be found elsewhere.

Will other Agency Holding Companies follow suit?

Conventional wisdom suggests that Omnicom and Publicis could be looking to acquire their own DCRs in order to keep pace. I’m of a few different minds when it comes to other HoldCo’s following WPP down this path:

• Cost – As of today, there isn’t a long list of DCRs that can be purchased for anywhere close to what I believe WPP paid for InfoSum.

• Agnostic – Personally, I find it hard to believe that advertisers will choose a particular agency based on which DCR they happen to own. In my view, being DCR agnostic might be the better option.

• Data – Publicis and Omnicom/IPG have each placed bets on acquiring data assets, while Brian Lesser and WPP seems intent on building platform tools. Will Brian try to buy a data company at this point - particularly given all the interesting stuff going on in AI that might just reduce the demand for targeting data? Probably not. On the flip side, my gut tells me that Omnicom and IPG will continue to focus on data over platform tools. I honestly hope it plays out that way as it’ll be interesting to see whether platform beats data over time.

• Weaning off of Big Tech(?) – On the other hand, if your goal is to be less dependent on big tech, then query whether you want to be more dependent on AWS, Samsung or even Snowflake. That speaks to trying to bring all this in house. But again – if you’re paying a premium, you’re placing a huge bet that DCR’s are the future. I’m not sure that’s a safe bet as of today.

What about Privacy?

You may be surprised that it took me this long to get around to writing about the privacy considerations. I thought it better to share some of my other thinking as a baseline - as it impacts the privacy analysis. But here goes….

• Agencies & Privacy - Historically speaking, advertising agencies have consistently taken the position that privacy rules somehow don’t apply to them. Yes, it’s less so than it was even a few years ago. But that mindset still exists. I’ve lost count of the number of times I’ve had an ad agency provide me with an MSA that: (a) gives the agency full control and ownership of all data and (b) exempts them from all privacy rules and associated liability. That’s a long-winded way of saying: buying a DCR fits perfectly into that cultural geshtudnik.

• Background on DCRs - DCRs have been positioned as these magic boxes where the rules of privacy are somehow relaxed because the data is so well secured. That enables some DCR companies to engage in a bit of doublespeak stating that data never leaves their Platform (except when it does in aggregated/de-identified or segments - never mind the actual definitions of those things). It’s not the DCR platforms’ fault given how state privacy laws work, but few are willing to publicly state whether or not the processing within a particular DCR data flow counts as a sale or share of personal data. What better home for a privacy-umph platform with opaque data flows than an agency holding company?

• First-Party Data fallacy – Assuming we all can agree on a definition of first-party, I’ll agree that first-party can be a strong indicator of quality. One day I’ll write a full piece on this, but part of my problem with using “first-part data” as a construct is that too many within the industry overstate the term so they may use it as a get out of jail free card on privacy. When a holding company touts their third-party data broker acquisition as a source of quality first-party data, then someone needs to revisit their definitions. (Btw, Arielle Garcia and I touch on this on TMR pod).

• Case in Point - I read that one of the benefits of the InfoSum acquisition is that it gives “WPP and its clients access to InfoSum’s vast data stores”. I recognize that this is just hyperbole someone spewed out to a reporter – and what they probably mean here is “potential” access… not… ya know…. actual access to another company’s data. But that’s kind of my point.

Just because you agency owns a platform doesn’t necessarily mean that any of your clients putting their data into that platform have any interest in sharing said data with the agency’s other clients. So either the above referenced release is an admission that they are planning on violating privacy rules – or they are overstating the synergistic value of the deal.

My money is on the latter.

I’ll be traveling next week. So unless Judge Brinkema returns with a decision on the Google DOJ ad tech trial, I won’t be posting on April 16.

If there’s an area that you want to see covered on these pages, if you agree/disagree with something I’ve written, if you want tell me you dig my music, or if you just want to yell at me, please reach out to me on LinkedIn.