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How Blockchains Can Help the Ad Industry Comply With the GDPR

The privacy and data protection requirements incumbent upon advertisers are about to grow stricter as a result of the General Data Protection Regulation (GDPR). But the regulation also introduces a new opportunity.

This challenge is a chance for the growth of blockchains in the advertising industry. Advertisers and publishers can leverage blockchain technology to satisfy new privacy regulations, while at the same time gaining efficiency and cost savings.

In order to help them do so, ad tech pioneer MadHive has released a blockchain-based solution for GDPR data management.

“The Open-GDPR platform, when installed, will be able to cryptographically store data and protect companies from violating GDPR sanctions,” said Stacy Huggins, co-founder and CMO of MadHive. “The Open-GDPR platform uses blockchain as an audit trail to manage the new privacy rights.”

New Privacy and Data Protection Requirements

The GDPR, which the European Union approved in 2016 and takes effect in 2018, regulates how data and user information of all kinds are stored, shared and processed. Although the GDPR is an EU law, it has truly global implications because it applies to any organization that operates in, uses technology located in or engages the citizens of the EU. 

Among the GDPR’s main rules is a requirement for entities that handle or control private data, or rely on other companies to perform those tasks for them, to adopt processes that are both “private by design” and that protect data “by default”. The GDPR also requires that organizations provide EU citizens, upon request, an explanation of how data-driven algorithms have been used to make decisions about them. 

According to the GDPR website, “Under the new regulation, data subjects have the right to access their data and be provided with how it is being used.”

With the right to be forgotten, a data subject can request that a company erase their personal information, and in some cases, halt dissemination of their data with third parties. With MadHive’s Open-GDPR solve, data management can be tracked and verified by issuing cryptographic keys and writing digital signatures (hashes) to a blockchain.

GDPR Privacy Regulations and the Ad Industry 

The GDPR applies to all industries, but it creates particular challenges for advertisers, because the ad industry has traditionally not processed data in ways that are private by design or that protect data by default. 

Typically, advertisers work with third parties to manage data and to build targeting segments.

This creates potential problems for GDPR compliance, because there is always a threat of data leakage which makes the chain of custody virtually impossible to track. When user data is collected and managed by a third party, advertisers have no way of ensuring that the data is managed and protected in ways that comply with the GDPR. Nor can advertisers explain to individuals how data was used to deliver ads to them, because only third parties will have access to that information.

The fact that advertisers do not work directly with private data does not make them exempt from GDPR requirements. The GDPR data privacy and protection regulations apply to organizations that outsource data management operations to third parties, even if those third-party processors are not based within the EU.

One solution to this compliance challenge is for advertisers to ensure that data management platforms meet the GDPR regulations. However, GDPR compliance problems are not the only deep-seated challenges for the traditional advertising industry. Therefore, rather than attempting to modify the current process to make it GDPR-compliant, adding the use of a data chain of custody is a cost-effective solution.

Using Blockchains to Solve Compliance Challenges and Save Money

This is where blockchain technology comes in. Using the blockchain, details about user data and its role in driving ad placement can be recorded on a distributed ledger, rather than placed in the centralized hands of an ad server or a data management platform. Because the distributed ledger is accessible to everyone, users will be able to help themselves to the audit trail to see who has the cryptographic keys to access certain data sets.

“The blockchain records the immutable fact that a company complied with the request and has revoked third-party access to the data in addition to removing the subject’s data from their own database,” said MadHive CEO Adam Helfgott. “Companies will be protected against fines by querying a blockchain to prove their compliance, if audited.” 

This approach will greatly reduce the reporting burden on advertisers. It will also eliminate compliance issues resulting from the outsourcing of ad placement to third-party organizations whose privacy and data protection practices may not comply with the GDPR.

Last but not least, blockchain-based ad placement will significantly improve cost margins for advertisers and publishers alike. The latter stand to enjoy a larger share of advertising revenue due to more transparency in the supply chain eliminating common arbitrage practices. 

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