Risk and compliance: User-generated content and third-party data

Jason Pollock
By Jason Pollock | 15 December 2022
Germaine Hendrick; image supplied.

This is the fifth article in a miniseries about risk and compliance. Read the first article here, along with perspectives from DoubleVerify, InfoSum, Scope3 and The Australian Data and Insights Association about what risk and compliance means to them.

AdNews spoke with Germaine Hendrik, APAC marketing lead at Quantcast, about brand risk around user-generated content, third-party data sources and the importance of consumer perceptions. 

How have you seen the attitudes change towards compliance and risk over your time in the industry?

"I think it’s safe to say that compliance and risk in the media industry has only grown in importance over time. 

"The rise of social and content sharing platforms over the years (Instagram, YouTube, Twitter etc.) has given digital consumers a voice and made mobile devices a gateway to the world. This has in turn, given rise to omnichannel advertising, which has been one of the most defining developments in media over the last decade or so. 

"Consumers are now dictating where and how they want to engage with, and be sold to. Naturally brands have to advertise where their customers browse. However, the speed at which social technologies are advancing is making it hard for brands to keep up and stay on-trend with their advertising strategies, while seamlessly navigating around internal concerns with brand safety and compliance risk.   

"Combine this with an ever-changing and fragmented privacy landscape in Asia-Pacific – where consumer privacy laws vary from country to country–and what we have is a lot of uncertainty. My view is that the majority of companies in APAC today are scrambling to adapt their marketing strategies to a world where context and relevance is paramount in advertising. Marketers must now also consider marketing risk as important as any other business risk."

What sort of compliance and risk issues should be front of mind now for organisations?

"Brand risk is a key one for the media industry, particularly businesses investing in platforms that centre around user generated content (UGC). TikTok, for example, has become the most widely used social media platform in recent years, with users in APAC doubling the number of users in North America from 2018-2021.  

"But like any other UGC-centric content sharing platform, issues such as concerns with control, language and messaging challenges continue to exist, making brand safety a concern for advertisers on the platform. That and, focusing on what’s most important, measuring the engagement and context of advertising ROI on the platform. 

"The other big risk concerns data, which is the lifeblood of the digital economy. A fragmented privacy landscape in Asia-Pacific means that marketers in the region must deeply understand local privacy laws in order to tailor communication and promotional strategies for different countries. 

"As the media industry moves into a first-party data world, organisations must also be cautious of how they acquire first-party datasets.  

"Today, very little data is not captured in some shape or form when an interaction takes place between a consumer and a brand. The average marketing organisation uses 91 different tools as part of the marketing stack. Collectively, this can result in a massive amount of unmanaged and retained data, which can pose potential risks."

What’s driving the creation of such new roles as marketing risk officers?

"Risk management has become a significant part of the marketing function now that companies must consider brand reputation, brand safety and consumer perceptions in their advertising strategies. For large enterprises that operate globally, this becomes even more important to manage. 

"Take Mastercard for example, which appointed a head of risk management for integrated marketing and communications in 2019, before the pandemic led to a surge in digital adoption along with its associated risks. Setting up a risk management function within Mastercard’s marketing division three years ago has enabled the business to better cope with the fallout of the pandemic, according to Raja Rajamannar, chief marketing and communications officer, who said that marketing risk "requires full-time attention, it cannot be an integral part of some other role". 

"As companies invest more into digitally marketing their businesses, and as the privacy landscape in Asia-Pacific continues to evolve, risk managers are going to become an essential part of the marketing organisation, the same way that legal teams started to collaborate with marketing teams on messaging years ago."

What role can CMOs play in mitigating risk and ensuring compliance?

"The prevalence of social media and ‘live’ consumer broadcasting has the potential to create an immediate and lasting negative impact on a business’s brand and reputation.

"CMOs overseeing marketing risk management as a function of their organisations must address specifically:

  • What is their marketing risk and compliance management strategy
  • How agreed frameworks and systems are implemented 
  • How they are accountable to consumers and stakeholders in the case of a marketing risk event"

What solutions can organisations roll out to ensure they’re compliant?

"Businesses can create and reinforce marketing risk training, including helping employees understand what constitutes marketing risk, potential pitfalls, consequences, and steps to take to avoid risks.

"Being cautious with third-party data sources. Many businesses still using third-party data are exposing themselves to potential marketing compliance pitfalls due to there being a lack of full control or visibility over the data that they’re using and where it’s coming from. The diminishing trust between consumers and advertisers as a result of third-party data sources is one of the reasons third-party cookies are slowly being depreciated.

"In a privacy-first, consent-first world, marketers must fully vet their third-party data sources, or start making strides towards creating a marketable database using first-party data only. This means that marketers must also choose their advertising and marketing vendors with compliance in mind."

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