VOZ launches, but a privacy reform is a threat

TLDR version: The TV industry’s imminent launch of the VOZ platform is a watershed for online advertising, and a hard-won victory. But it comes just as new threats to BVOD advertising revenue loom in the form of tighter privacy rules around the use of personal data for (amongst other things) targeted advertising.

VOZ platform a key component of FTA TV’s future

Accurate measurement of FTA TV viewing in an increasingly multi-platform environment has been a challenge for the industry, and has slowed growth in advertising spend. The 1 May launch of the Virtual Australia ratings system (VOZ) will be a watershed for the TV industry. The system will provide a more accurate measure of the number of viewers across traditional TV and free-to-air apps, justifying ad spend and enabling broadcasters to attract more advertising revenue.

VOZ will soon be delivering daily audience data and a new modelling system to major advertising firms. This will make Australia one of the first countries to have an agreed method for “de-duplicating” the number of viewers watching ads through traditional broadcast and broadcast video on-demand (BVOD) apps, such as 7plus, 10 Play, or SBS On Demand.

The system also covers Foxtel, though Foxtel has signalled that it sees its real advertising future in the SVOD industry where its viewers increasingly are.

The system will help the FTA networks to lift yields and revenues in digital advertising, yields which are already higher than broadcast yields and getting higher as the networks are able to use first- and third-party data to target advertising.

Privacy reforms pose new threat

The Australian Government’s privacy review poses a significant threat to targeted advertising the success of targeted advertising and BVOD advertising in particular.

The Attorney-General’s Department release its report on the review back in February 2023. The Report proposes a complex raft of changes to privacy law, but ones of particular concern to the advertising industry concern the extension of privacy protections to de-identified information and further restrictions on third-party data trading. Coupled with tougher requirements for individuals to opt out of targeted advertising, these proposals could undermine the effectiveness of all online advertising, including BVOD advertising.

Further, tougher restrictions on information trading would advantage platforms like Google (that has a massive multi-decadal trove of first-party data) against FTA TV (which does not).

It is inevitable that tougher approaches to privacy protection are coming, including stronger opt out options for consumers. The regulatory precedents already exist in the EU, and these precedents typically flow through into Australian and New Zealand policies. But we suspect many consumers will be reluctant to shoulder the responsibility for their data management, muting the final impact.

Our concerns are more focussed on the Report’s proposed restrictions on trading third-party data.

Why does this matter?

FTA TV (and FTA radio too) is more dependent on third-party data than the global platforms, and a significant shift here could re-entrench platform dominance of the ad industry, something that the ACCC has railed against for years.

There are conflicting interests in the privacy debate, and privacy isn’t an absolute good. Further, many privacy ‘harms’ can be speculative (the Report waxes for nearly three pages about the possible harms of targeted advertising, disposing of the demonstrated benefits in a mere three paragraphs).

In contrast, the costs of platform economic dominance are real and demonstrated. The ultimate solution here is for the Australian Government to recognise that multiple public goods are in play here, and that the good of privacy protection needs to be balanced against other goods equally in the public interest.

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