The digital Wild West

By June 14, 2016Latest News

A revolutionary system that’s been around for over 25 years, the World Wide Web is arguably one of the best inventions of modern times. A rich network that’s now essential for communicating, collaborating and transacting; it makes us smarter, saves us time and enables us to be in several places at once.

Greatly impacting the way we go about our lives; when it comes to issues like our privacy and online security, the internet is the Wild West of the modern era. Not just the scourge of the individual, thanks to the growth of digital advertising and E-commerce, the badlands of the digital Wild West are having a devastating impact on businesses too.

The final frontier

The boon of rapid technological advancement has brought with it many challenges. From unchartered territory to sophisticated cyber crime, the possibilities of the digital world can also be its greatest downfalls.

Besides adblock, one of the biggest factors currently turning digital to deadwood is fraud. The World Federation of Advertisers estimates that marketers could waste more than $50bn a year on digital advertising by 2025 due to fraud. A figure based on the expectation that over the next decade global investment in digital media will grow to $400bn-$500bn a year, it’s likely at least 10% of this will be exposed to cybercrime.

For years industry regulators have tried and failed to prevent fraud by strengthening security and making it increasingly difficult for bots to imitate the activity of human web users. Earlier this year Google claimed that in 2015 it had disabled more than 780 million ads for violating its policies, and now has a dedicated staff of more than 1,000 people combating bad ads.

While this is only one component that makes the digital outback as dangerous as it is, digital advertising fraud is a great example of several companies working in isolation with no standardised solution in place to govern the industry.

Here in the UK, it’s likely that the EU will step in to create a regulation that’ll govern the advertising practices in each member state. Businesses will be forced to implement comparable systems or face heavy fines.

A good example of the EU enforcing a standard of codes in the digital Wild West is 2011’s EU e-Privacy Directive which later went on to become 2012’s Cookie Law, with mixed success. Looking to create a level playing field for the future, the EU’s currently consulting on a Digital Single Market. This would merge 28 national markets into a single market prompting fairer competition across the continent.

One looming change to the way the digital Wild West operates is being debated by businesses across the country. As of April 2016 the EU has approved an update of its 1995 Data Protection Directive, which required member states to protect people’s fundamental rights and freedoms (in particular their right to privacy with respect to the processing of personal data).

The new EU Cyber Directive, known as the General Data Protection Regulation (GDPR), will come into force on 25 May 2018. Viewed as a means to strengthen and unify data protection for individuals within the EU, it aims to give citizens back the control of their personal data and to simplify the regulatory environment for international businesses operating within the EU.

Under the EU data protection regulation, a wide range of companies will have to protect and administer data to strict guidelines and inform authorities within 72-hours if they’ve suffered an attack or data breach. Along with the guidelines come hefty fines for non-compliance in the UK – approximately 5% of worldwide turnover.

Brexit: a calamity or blessing?

As the nation waits to descend on the ballot box come Thursday 23 June 2016, public opinion on which Brexit box to tick remains divided. If the UK stays in the EU it will have no choice but to comply with the Union’s past, present and future efforts to tame the digital Wild West.

However, if a “leave” vote prevails, the UK could become the cyberlibertarian capital of Europe, advocating decentralised technology initiatives with less dependence on central government.

While no outcomes of an exit are certain, it’s likely the UK will be required to serve two years’ notice of its intention to leave, and negotiate a withdrawal agreement. Before it burns the breeze away from the EU, it’s likely the UK would have to heavily update its legislation in order to comply with fundamental EU rules and trade restrictions.

Another possibility is that the UK eventually remains having negotiated a better position. Either way, as it’ll be impossible to sever ties immediately, the UK may be in a unique position to pick and choose which EU bandwagons it wants to hitch itself to, in the short and longer term.

It might well be possible to have the best of both worlds with the UK adopting the European Free Trade Association (EFTA) model, popularised by use in Norway. If this were to be an option, the UK would be allowed to remain party to the European Economic Area (EEA) Agreement and benefit from free trade arrangements and be included in the EU single market.

During the time that protracted negotiations will take place in order to establish what non-EU regulation looks like, it’s almost a guarantee that the GDPR will come into force. It’s probable that the UK will have already complied and put new systems in place before a Brexit takes effect, which could potentially be beneficial. For even in the event of a Brexit, UK businesses offering services to EU citizens will need to demonstrate they have the same level of data protection as is required under the GDPR.

It’s too early to say exactly how Brexit could impact specialist areas such as digital marketing and digital advertising. However, as Brexit fears have hit consumer confidence levels in recent months, so too have they impacted how much brands are prepared to invest in marketing.

The Institute of Practitioners in Advertising’s (IPA) quarterly Bellwether report found that instead of spending as usual in above-the-line environments brands are increasing their digital advertising budgets. Despite the current economic and political concerns digital is widely seen as a tried and tested medium with maximum effectiveness.

A study from the Internet Advertising Bureau (IAB) and PwC found that the digital marketing industry was worth £8.6bn in the UK in 2014, up 16.4% year on year – expected to rise again this year. In a non-Brexit world, the government predicts the digital market as a whole will grow at a rate of 5.4% by 2020, with an additional 1.4m digital professionals required over the next five years.

Indeed whatever happens regarding the wider economic fallout of a Brexit vote, digital will likely be well insulated due to the high demand for technical skills. With an already apparent digital skills gaps within the UK’s business landscape, emerging technological trends in areas such as mobile and cloud computing; big data and analytics; the automation of routine tasks; and new applications of social media will only serve to enhance this further. Likewise, due to the high probability of UK GDPR compliance, strong growth in demand for cyber security and data protection job roles is expected.

As the digital industry is so directly linked to the future of business in the UK, creating jobs almost three times faster than the rest of the economy, the move away from an outlawed digital Wild West is crucial whatever happens. The UK would just need to make sure it can negotiates a pathway to safe and continued trade with the EU or else it could end up chewing gravel.