Digital advertising giants are finally feeling some legislative pressure after long seeming virtually immune, due to the EU’s Digital Markets Act.

But that legislative pressure doesn’t occur in a vacuum – brands and marketers who use any of the largest players in digital advertising need to keep on top of the changes the DMA is enforcing and, in some cases, they’ll need to adapt.

Here’s an explanation of the Digital Markets Act, why it matters for digital advertisers, and our recommendations for a future where the industry’s largest giants have their power put into check.

Photo: Guillaume Périgois

WHAT IS THE DIGITAL MARKETS ACT?

Entered into force in November 2022 and, for the most part, applicable in May 2023, the Digital Markets Act is an ambitious legislation aimed at curtailing unfair practices from digital marketing’s biggest players.

The act takes specific aim at ‘gatekeepers’, core platform services with significant influence in the market, which puts giants such as Alphabet, Meta, TikTok, and Microsoft in the spotlight.

An unprecedented pressure is put on them in the form of fines of up to 10% of worldwide turnover for the preceding financial year – that’s far from a speeding ticket.

The DMA’s regulations aim to create a fair, level playing field for both businesses and consumers, meaning that independent advertising tech platforms as well as end consumers have their interests protected.

That means that acts such as suppressing third-party apps and using user data without explicit permission fall foul of the DMA.

Photo: Scott Graham

HOW IS THE DMA AFFECTING ADVERTISING?

How much of an effect the DMA will have on digital advertising in the long term is still to be seen, but the potential is large.

A large part of the reason why the DMA’s effects are still being figured out is that gatekeepers are pushing back, delaying, and attempting to make incremental, rather than large changes wherever possible.

As a great example, Meta sought to placate DMA regulators by introducing a paid subscription option to opt out of ad targeting in late 2023, a move that was seen as cynically attempting to abide by the letter of the law if not the spirit. The EU’s opinion on whether that truly constitutes an opt-out of targeting and profiling is still being formed.

TikTok has recently wrapped up a high-profile stall, with their (predictably doomed) November 2023 challenge in courts that they should not be designated a ‘gatekeeper’ being struck down in court in February 2024. That decision is currently being appealed.

However, major changes are beginning to take hold. Taking TikTok as an example, they’ve recently needed to create a data portability API to allow third-party developers to use user data that TikTok collects in their own apps (with user permission).

Expect more high-profile changes regarding gatekeepers’ sharing data between their own platforms, obtaining explicit user consent for using their data, not limiting user choice, and much more in the near future.

HOW SHOULD BRANDS ADAPT TO THE DIGITAL MARKETS ACT?

It’s imperative that brands wanting to have impactful digital advertising keep up with the changes being instigated by the gatekeepers as a result of the DMA.

In some cases, such as with Meta’s subscription offer, the changes to digital advertising on Meta’s platforms are minimal. In TikTok’s case, however, the playing field for third-party apps is leveling out, meaning more opportunities are opening up.

There are cases where brands should expect personalization on gatekeeper platforms to be less effective due to DMA regulation, for example with the major ruling that data sharing between a gatekeeper’s platforms needs to be restricted.

While gatekeepers are very unlikely to totally lose their effectiveness as a result of the DMA, advertisers should still look into alternatives to compensate for their lower effectiveness in the near future. DMA-compliant advertising has significant overlap with cookieless advertising solutions such as leveraging first-party data, attention measurement, and contextual targeting.

Contextual targeting in particular has grown as an effective privacy-protecting alternative to gatekeeper platforms due to major improvements in technology enabling relevant targeting without the use of third-party tracking cookies.

Featuring machine-learning-powered semantic targeting and innovatively interactive video advertising across channels including CTV, ShowHeroes’ SemanticHero provides future-proof advertising avenues.

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