tag:www.econsultancy.com,2008:/topics/legal-and-regulations Latest Legal content from Econsultancy 2016-11-21T15:30:00+00:00 tag:www.econsultancy.com,2008:BlogPost/68547 2016-11-21T15:30:00+00:00 2016-11-21T15:30:00+00:00 How advertisers are being exploited by fake news sites Patricio Robles <p>In many cases, these fake news sites were not intended to sway public opinion but instead to generate ad revenue for their creators.</p> <p><a href="https://www.buzzfeed.com/craigsilverman/how-macedonia-became-a-global-hub-for-pro-trump-misinfo">According to</a> BuzzFeed News, teens in a small town in Macedonia were behind more than 100 pro-Trump sites that were set up to capitalize on interest in Trump to, in some cases, generate thousands of dollars a month in revenue from advertising.</p> <p>And <a href="https://www.washingtonpost.com/news/the-intersect/wp/2016/11/17/facebook-fake-news-writer-i-think-donald-trump-is-in-the-white-house-because-of-me/">according to</a> a Washington Post report, one fake news site owner, Paul Horner, makes $10,000 per month from AdSense. One of Horner's sites, abcnews.com.co, features articles with the following headlines:</p> <ul> <li>Obama Signs Executive Order Declaring Investigation Into Election Results; Revote Planned For Dec. 19th</li> <li>Fireman Suspended &amp; Jailed By Atheist Mayor For Praying At Scene Of Fire</li> <li>Drug Kingpin Joaquin ‘El Chapo’ Guzman Escapes Mexican Prison For The Third Time</li> <li>Obama Signs Executive Order Banning The National Anthem At All Sporting Events</li> <li>World’s Biggest Starbucks Opening In Phoenix AZ: Roller Coaster, Underground Water Slide &amp; Robot Baristas</li> </ul> <p>While Horner says that he "like[s] getting lumped in with the Onion" and that there is "purpose and meaning behind" what he does, unlike the Onion, abcnews.com.co is arguably not a parody site.</p> <p>The domain and logo are clearly intended to play off of the brand of the real ABC News, and articles begin with AP, an obvious false reference to the Associated Press, which of course has nothing to do with the content on Horner's site. </p> <p>Despite the fact that Horner's site violates AdSense's <a href="https://support.google.com/adsense/answer/1348688">policies</a> against misrepresentative content, which cover "deceptively presenting fake news articles as real" as well as "falsely implying having an affiliation with, or endorsement by, another individual, organization, product, or service," Horner's site includes advertising from Google AdSense.</p> <p>On an article entitled <em>Donald Trump Tweets Image Of His Penis – WARNING: Graphic Content </em>that includes a fake photo of the president elect with the real ABC News logo, this author was served ads from brands like AT&amp;T, The Wall Street Journal and Panera Bread.</p> <p>Needless to say, none of these brands likely intended for their ads to show up on abcnews.com.co or this fake article.</p> <p><img src="https://assets.econsultancy.com/images/0008/1661/fakeabcnews.png" alt="" width="794" height="475"></p> <h2>Asleep at the wheel</h2> <p>That reputatable and supposedly well-policed ad networks are being used to serve ads to such low-quality sites, to the detriment of their advertiser clients, <a href="https://econsultancy.com/blog/68259-are-online-advertisers-wising-up-about-content-quality/">is not news</a>.</p> <p>But with big companies like Google and Facebook facing higher levels of scrutiny following the 2016 election, it's possible that the lackadaisical enforcement of their policies could start to become more problematic.</p> <p>While <a href="https://econsultancy.com/training/courses/programmatic/">programmatic</a> has increased advertiser focus on the concept of <a href="https://econsultancy.com/blog/68198-how-people-based-marketing-is-redefining-effectiveness-in-programmatic-ad-buying/">buying audiences</a>, and many brands have come to prioritize reach, there is growing evidence that content quality has a significant effect on campaign efficacy.</p> <p>For example, a comScore study earlier this year found that <a href="https://econsultancy.com/blog/68086-ads-on-premium-sites-drive-67-greater-brand-lift/">ads on premium sites drive 67% greater brand lift</a>.</p> <p>Another recent study found that ads following political ads <a href="http://www.mediapost.com/publications/article/287639/political-ads-found-to-suppress-effectiveness-of-b.html">had a negative impact on brand perception</a>, again demonstrating that content and context can be just important as who ads are shown to.</p> <p>Obviously, networks like AdSense, despite their increasingly obvious shortcomings, aren't going away any time soon, but the spotlight on fake news should serve as a wake-up call to the industry that there is a lot of unnecessary waste that needs to be dealt with for the long-term health of digital advertising.</p> <p>Both Facebook and Google have <a href="https://www.theguardian.com/technology/2016/nov/15/facebook-google-fake-news-sites-ad-networks">updated their ad network policies</a> to reaffirm that they'll be going after fake news sites, but how easy that will be achieved remains to be seen.</p> tag:www.econsultancy.com,2008:BlogPost/68523 2016-11-14T14:00:00+00:00 2016-11-14T14:00:00+00:00 10 ways the Donald Trump presidency could affect tech and media Patricio Robles <p>Here are the 10 ways Donald Trump's presidency could impact tech and media...</p> <h3>1. A corporate tax reform boon</h3> <p>President-elect Trump has promised to enact corporate tax reform and lower the corporate tax rate significantly. This would likely be a major boon to tech companies.</p> <p>If Trump's corporate tax reforms are substantial enough, it's possible that companies like Apple, Oracle, Google and Facebook would no longer have to turn to tax strategies like the <a href="https://en.wikipedia.org/wiki/Double_Irish_arrangement">Double Irish</a>.</p> <p>Instead, they could officially conduct more of their business in the US and repatriate the billions of dollars they have stashed away in foreign countries, potentially spurring greater investment and M&amp;A activity on the US side of the pond.</p> <h3>2. Trade challenges</h3> <p>While corporate tax reform has the potential to be a boon to tech companies, particularly those with large hordes of cash parked overseas, Trump's tough talk on trade could present challenges to a number of companies.</p> <p>For example, during his campaign, Trump criticized Apple for not making more of its products in the US. In fact, at one event, he stated:</p> <blockquote> <p>We're going to get Apple to build their damn computers and things in this country instead of in other countries.</p> </blockquote> <p>It's not at all clear that corporate tax reform and other policy initiatives would provide enough incentive to make manufacturing of devices like the iPhone in American factories viable economically, but if Trump doesn't relent, companies like Apple could find themselves targeted for manufacturing overseas.</p> <h3>3. Less regulation, sort of</h3> <p>Trump has vowed to substantially reduce government regulation. In some respects, that could be good news for tech companies, many of which have turned to heavy lobbying efforts in recent years to protect their interests from government regulators.</p> <p>And Trump's proposed reforms to financial regulations like Dodd-Frank could make it easier for small businesses to access capital.</p> <p>But despite his calls for cutting regulatory red tape <em>bigly</em>, large tech and media companies could find themselves in the crosshairs of the Trump administration.</p> <p>For example, during the campaign, Trump, a vocal critic of the media, said he would block the proposed AT&amp;T-Time Warner merger.</p> <p>He also took aim at Amazon, and said that Amazon CEO Jeff Bezos has "a huge anti-trust problem because he’s controlling so much, Amazon is controlling so much of what they are doing."</p> <p>If Trump follows through on his promise to reduce regulation, it could be a boon to some, including startups and small companies, but tech and media titans might find that Trump's pro-business policies aren't always pro their big business.</p> <h3>4. Sayonara net neutrality</h3> <p>Trump's desire to reduce regulation could mean the end of net neutrality, perhaps the biggest area where many tech and media companies have asked for government regulation.</p> <p>Trump has referred to net neutrality as a "top down power grab" that could be used to enable censorship and, given his comments, one telecom analyst has said that "net neutrality has a big target on its back" in the Trump administration.</p> <h3>5. More infastructure</h3> <p>While Trump won the US presidency as the Republican candidate, he has historically identified as a Democrat and many of his policies are at odds with Republican ideology.</p> <p>This is perhaps most apparent in his desire to spend up to $1trn on infrastructure, more than double the amount proposed by his Democratic opponent.</p> <p>Trump's infrastructure spending plan <a href="http://www.wsj.com/articles/donald-trumps-infrastructure-plan-faces-speed-bumps-1478884989">faces many hurdles and might not even be realistic</a>, but if he is able to up infrastructure spending substantially, tech and media companies could of course be beneficiaries.</p> <h3>6. Less access to international talent</h3> <p>While much of Trump's tough talk on immigration has been focused on illegal immigration, his populist campaign rhetoric and promise to put American workers first suggests that changes to legal immigration programs could also be on the horizon.</p> <p>In particular, large tech companies like Google and Facebook claim that they need access to more talent that they can find in the United States, and rely on the H1B visa program to bring engineers and other highly-skilled employees from outside the country.</p> <p>If Trump's immigration reforms target the H1B program and make it more difficult to hire workers from abroad, or Trump's presidency keeps foreigners from wanting to immigrate to the US, the talent shortage could be exacerbated. </p> <h3>7. A faster-growing economy and healthier middle class</h3> <p>Trump made economic growth and a healthier middle class a central part of his campaign pitch. He even went so far as to suggest that he would drive GDP growth as much as 5% or 6%. </p> <p>While there are plenty of reasons to be skeptical about Trump's audacious economic promises, if he is somehow able to solve the problem of stagnant GDP growth and, most importantly, revitalize the economy in the parts of the U.S. that have lagged, it will likely be good news for tech and media companies that need a healthy consumer economy to sustain long-term success.</p> <h3>8. Less direct access to Washington</h3> <p>While PayPal co-founder, Facebook director and venture capitalist Peter Thiel <a href="http://www.theverge.com/2016/11/11/13602026/peter-thiel-trump-transition-team-facebook">will serve on Trump's transition team</a>, unlike his predecessor, President Barack Obama, Trump has relatively few friends in Silicon Valley.</p> <p>In fact, <a href="http://www.npr.org/sections/alltechconsidered/2016/10/31/500114584/peter-thiel-stands-out-in-silicon-valley-for-support-of-donald-trump">some 95% of campaign donations from tech employees went to Hillary Clinton</a>.</p> <p>Tech CEOs like Tim Cook and Jeff Bezos have made conciliatory statements following Trump's victory but it's unlikely that Silicon Valley will continue to have the access to the Trump White House that it has had to the Obama White House.</p> <p>For tech firms that have become prolific lobbyists and made themselves a part of the revolving door between Washington DC and the private sector, that could make life more difficult. </p> <h3>9. Clashes over national security</h3> <p>Since he launched his campaign, Trump has talked tough about national security, and terrorism in particular.</p> <p>Despite its relative coziness with the Obama administration, Silicon Valley has still clashed numerous times in recent years with Washington DC over national security issues such as encryption and data sharing.</p> <p>A more aggressive Trump administration could cause even bigger clashes that test the restrictions on government's access to individuals' data and devices.</p> <blockquote class="twitter-tweet"> <p lang="en" dir="ltr">Boycott all Apple products until such time as Apple gives cellphone info to authorities regarding radical Islamic terrorist couple from Cal</p> — Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/700796528844103680">February 19, 2016</a> </blockquote> <h3>10. Bubbles bursting</h3> <p>Already, some are suggesting that Trump's victory, and the <a href="http://www.recode.net/2016/11/9/13574396/donald-trump-victory-silicon-valley-meltdown">horrified responses from many in tech and media to it</a>, are evidence that Trump has started to pop a cultural bubble that exists in tech and media centers like Silicon Valley and New York.</p> <p>But it's also possible that a Trump presidency could lead to the bursting of economic bubbles.</p> <p>While Trump has promised faster and more evenly-shared economic growth, he also called the stock market "a big bubble" during the campaign and stated that "if rates go up, you're going to see something that's not pretty."</p> <p>His <a href="http://www.wsj.com/articles/donald-trump-attacks-federal-reserve-yellen-during-debate-1474946709">criticism of the Federal Reserve</a> and suggestion that Federal Reserve chair Janet Yellen was propping up the stock market for political reason drew scorn, but many do believe the low interest rate environment that has been in place since the 2008 financial crisis has helped fuel Silicon Valley's latest boom.</p> <p>If Trump's policies reduce the flow of investor dollars, intentionally or unintentionally, it could be bad news for tech and media companies that aren't able to survive without continued access to large amounts of investor capital.</p> tag:www.econsultancy.com,2008:BlogPost/68518 2016-11-11T14:54:58+00:00 2016-11-11T14:54:58+00:00 Following Donald Trump's election, the war against algorithms has begun Patricio Robles <p><a href="https://econsultancy.com/blog/66613-new-amazon-algorithm-to-shake-up-product-reviews/">On Amazon</a>, an algorithm determines which product reviews should be highlighted. <a href="https://econsultancy.com/blog/67515-twitter-unveils-new-timeline-feature-what-you-need-to-know/">On Twitter</a>, an algorithm determines which tweets should appear at the top of each user's timeline. <a href="https://econsultancy.com/blog/67656-instagram-is-shaking-up-its-feed-with-an-algorithm-what-brands-need-to-know/">On Instagram</a>, an algorithm determines in what order posts should be displayed.</p> <p>In short, it's almost impossible to find a popular digital service that doesn't in some way employ algorithms to deliver content to users.</p> <p>For marketers, the <em>algorithimization</em> of the web has been a fact of life for years.</p> <p>While <a href="https://econsultancy.com/blog/66378-facebook-s-algorithm-update-what-it-means-for-marketers/">changes</a> to algorithms have been the source of angst and frequently complaint, marketers have been forced to accept the fact that their success or failure on the web will in large part be determined by algorithms they don't control and their ability to understand them and make the most of them.</p> <p>Some marketers, of course, have fought against the way algorithms are used. For example, numerous companies have accused Google of tweaking its algorithm to favor its own properties, and such claims have frequently been cited in discussions about whether regulators should pursue <a href="https://econsultancy.com/blog/66277-google-could-face-eu-antitrust-charges-imminently-report/">anti-trust charges</a> against the search giant.</p> <p>But by and large, Google has escaped a Microsoft-like crackdown, perhaps in part because marketers themselves are an unfavorable lot to regulators and the public.</p> <p>Now, however, a real war against algorithms appears to be underway.</p> <p>Recently, German Chancellor Angela Merkel voiced the concern that "algorithms, when they are not transparent, can lead to a distortion of our perception, they can shrink our expanse of information." She <a href="https://www.theguardian.com/world/2016/oct/27/angela-merkel-internet-search-engines-are-distorting-our-perception">explained</a>...</p> <blockquote> <p>I'm of the opinion that algorithms must be made more transparent, so that one can inform oneself as an interested citizen about questions like ‘what influences my behaviour on the internet and that of others?'</p> </blockquote> <p>Her concerns are being echoed by others following Donald Trump's stunning upset victory over Hillary Clinton in the 2016 US presidential race.</p> <p>Now, many are accusing Facebook's algorithm of helping Donald Trump win the election he wasn't expected to win by allowing misinformation to be widely spread across its network.</p> <p>Writing for New York Magazine, Max Read <a href="http://nymag.com/selectall/2016/11/donald-trump-won-because-of-facebook.html">went so far as to claim</a> that "Donald Trump won because of Facebook."</p> <p>He argues: "The most obvious way in which Facebook enabled a Trump victory has been its inability (or refusal) to address the problem of hoax or fake news.</p> <p>"Fake news is not a problem unique to Facebook, but Facebook’s enormous audience, and the mechanisms of distribution on which the site relies — i.e., the emotionally charged activity of sharing, and the show-me-more-like-this feedback loop of the news feed algorithm — makes it the only site to support a genuinely lucrative market in which shady publishers arbitrage traffic by enticing people off of Facebook and onto ad-festooned websites, using stories that are alternately made up, incorrect, exaggerated beyond all relationship to truth, or all three.</p> <p>"All throughout the election, these fake stories, sometimes papered over with flimsy “parody site” disclosures somewhere in small type, circulated throughout Facebook: The Pope endorses Trump. Hillary Clinton bought $137m in illegal arms. The Clintons bought a $200m house in the Maldives.</p> <p>"Many got hundreds of thousands, if not millions, of shares, likes, and comments; enough people clicked through to the posts to generate significant profits for their creators.</p> <p>"The valiant efforts of Snopes and other debunking organizations were insufficient; Facebook’s labyrinthine sharing and privacy settings mean that fact-checks get lost in the shuffle.</p> <p>"Often, no one would even need to click on and read the story for the headline itself to become a widely distributed talking point, repeated elsewhere online, or, sometimes, in real life."</p> <p>While Trump himself claimed throughout his campaign that the media was treating him unfairly, a claim that seems to have resonated with his supporters, many others are, like Reed, largely <a href="http://www.niemanlab.org/2016/11/the-forces-that-drove-this-elections-media-failure-are-likely-to-get-worse/">attributing</a> Clinton's loss to internet-spread misinformation instead of, say, <a href="http://adage.com/article/campaign-trail/hillary-clinton-wrong/306676/">her messaging</a>.</p> <h3>Algorithms aren't perfect, but people aren't either</h3> <p>Not surprisingly, those who appear to be unhappy with the results of the US presidential election seem to be leading the criticism of Facebook and the algorithms that help determine what content is displayed to users.</p> <p>But that doesn't mean they don't have a point. They do.</p> <p>There is a real debate to be had about the power Google, Facebook and others wield through their algorithms because the potential for abuse and harmful effects is real.</p> <p>For example, in 2012, Facebook conducted a psychological study by tweaking the number of positive and negative News Feed posts displayed to a random selection of over half a million of its users.</p> <p>It did not alert them to the fact that they were part of a study or obtain their permission. For obvious reasons, the study, which found that emotions could be spread through social networks, <a href="http://www.nytimes.com/2014/06/30/technology/facebook-tinkers-with-users-emotions-in-news-feed-experiment-stirring-outcry.html?_r=0">was widely criticized</a>.</p> <p>But, psychological studies that push ethical boundaries aside, it's not clear that there's an easy way to address concerns that algorithms are directing people to potentially bad information.</p> <p>Some suggest that Facebook and others need to involve humans.</p> <blockquote class="twitter-tweet"> <p lang="en" dir="ltr">Facebook needs a public editor. About three years ago. <a href="https://t.co/TVLGEnn9Gr">https://t.co/TVLGEnn9Gr</a></p> — Vacation Alex (@alex) <a href="https://twitter.com/alex/status/796815389917184000">November 10, 2016</a> </blockquote> <p>But humans aren't perfect. If companies like Facebook start relying on human editors to vet the content that circulates on their services, they will arguably cease to be technology platforms and instead come to function as media organizations.</p> <p>That would open many new cans of worms as humans are themselves vulnerable to bias and manipulation.</p> <p>For example, during the election cycle, Facebook found itself under scrutiny when former Facebook staffers <a href="http://gizmodo.com/former-facebook-workers-we-routinely-suppressed-conser-1775461006">claimed</a> the world's largest social network routinely suppressed conservative news from its "trending" news section.</p> <p>The accusation that the one of the world's most influential companies was engaging in censorship to favor liberal news sources led CEO Mark Zuckerberg to meet with conservative leaders. The company subsequently decided to rely more heavily on algorithms instead of an editorial team.</p> <p>Perhaps the most balanced solution to the challenges algorithms present would be to increase transparency as Germany's Merkel has suggested.</p> <p>But this too isn't likely to have the intended effect. If companies like Google and Facebook provided the intricate details about how their algorithms function, the knowledge would almost certainly be used by those seeking to manipulate them for personal gain.</p> <p>In addition, the average person probably isn't going to have the interest or technical knowledge required to understand the mechanics of these algorithms even if this information was accessible to them.</p> <p>Finally, bad information isn't going away. Human editorial controls – and censorship – might be able to reduce the spread of information deemed inaccurate or harmful, but misinformation and its ill effects existed well before the internet came along.</p> <h3>An inconvenient truth</h3> <p>Founding father Thomas Jefferson wrote, "A properly functioning democracy depends on an informed electorate."</p> <p>With over half of adults in the US getting news through social media today <a href="http://www.journalism.org/2016/05/26/news-use-across-social-media-platforms-2016/">according to Pew</a>, there is no doubt that social media plays an increasingly important role in how the electorate is informed.</p> <p>But Jefferson also wrote of the importance of education and critical thinking:</p> <blockquote> <p>An enlightened citizenry is indispensable for the proper functioning of a republic. Self-government is not possible unless the citizens are educated sufficiently to enable them to exercise oversight.</p> </blockquote> <p>The 2016 US presidential election, following the UK's Brexit vote, has turned algorithms into something of a scapegoat.</p> <p>And while we should discuss and debate the role they play in all aspects of our society, from how marketing messages are delivered to consumers to how news is disseminated to citizens, we should also be very careful that we don't blame algorithms for our own shortcomings.</p> <p>If we do, it will sadly pave the way for an Orwellian web that is less free and more subject to the abuses of concentrated power.</p> tag:www.econsultancy.com,2008:BlogPost/68500 2016-11-08T14:39:57+00:00 2016-11-08T14:39:57+00:00 Will the Tesco Bank attack dent trust in startup banks? Patricio Robles <p>Like many banking upstarts, Tesco Bank is competing on experience, a largely digital focus and rates. Unlike most upstarts, it has the power of a huge non-banking brand behind it.</p> <p>While Tesco Bank is far from a banking behemoth, it has managed to build a profitable business with its customer base exceeding 7m.</p> <p>But now, all of its gains are threatened by "a systematic, sophisticated attack" that affected 40,000 of the banks 136,000 current accounts and led to money being taken from more than 20,000 of them.</p> <p>The Evening Standard called it "the most serious hack on the UK banking sector in recent history." </p> <p>In response, Tesco Bank has blocked online debit card payments and says that it will reimburse any losses from the apparent hack. "Customers are not at financial risk," Higgins has reassured customers.</p> <h3>A game-changer</h3> <p>While cybercrime targeting financial accounts has become commonplace, the Tesco Bank attack is noteworthy for a couple of reasons.</p> <p>First, while Tesco Bank is pointing out that relatively small amounts of money were taken from most accounts, the means by which a large number of accounts were apparently compromised is concerning. As the BBC <a href="http://www.bbc.com/news/business-37891742">explained</a>...</p> <blockquote> <p>...what is different is that it involves tens of thousands falling victim in a 24-hour period to what appears to be an automated process, rather than individuals clicking on links in phishing emails or having their details stolen after downloading malicious software.</p> <p>That could involve the attackers exploiting a vulnerability in the bank's website - or even gaining physical access to a branch and then the central systems.</p> </blockquote> <p>Second, customers are not happy with Tesco Bank's response. Affected customers reported difficulties in reaching customer service, and some who were able to reach customer service agents were apparently told that they would have to wait days for a resolution. </p> <blockquote class="twitter-tweet"> <p lang="en" dir="ltr"><a href="https://twitter.com/tescobankhelp">@tescobankhelp</a> <a href="https://twitter.com/TescoBankNews">@tescobanknews</a> My available balance has gone down by £700 without making a tx. I cannot get through by phone!!!</p> — Christopher Mills (@chrismi1) <a href="https://twitter.com/chrismi1/status/795222803628883968">November 6, 2016</a> </blockquote> <p>Even though branchless banks like Tesco Bank pride themselves on the 24/7 access they provide customers via phone, web and mobile apps, this incident highlights the fact that otherwise sufficient support networks might not be adequate when crisis strikes.</p> <h3>A possible setback for upstart banks, but what about fintech?</h3> <p>Already, observers <a href="https://www.ft.com/content/5e5e6778-a4d1-11e6-8b69-02899e8bd9d1">like The Financial Times's Claer Barrett</a> are questioning whether the Tesco Bank attack will bolster trust in high street banks at the expense of startups.</p> <p>While she points out that major high street banks are also vulnerable to security breaches, and big banks are <a href="https://econsultancy.com/blog/68334-wells-fargo-scandal-shows-why-banks-are-vulnerable-to-fintech-startups">not immune to reputation-threatening scandals of their own</a>, this incident could create a perception problem for the Tesco Banks of the world.</p> <p>Given that <a href="https://econsultancy.com/blog/68240-78-of-mobile-banking-customers-are-satisfied-with-the-service-stats/">78% of mobile banking customers are satisfied with the service</a>, if big banks can convince consumers that they're more secure, or let the failures of their startup competitors do that for them, it could make it much more difficult for Tesco Bank and others to lure consumers with promises of better experiences, lower fees and/or higher rates.</p> <p>Whether the Tesco Bank attack has an impact beyond the banking sector remains to be seen. Some <a href="https://www.bloomberg.com/gadfly/articles/2016-11-07/tesco-bank-hack-will-be-warning-to-fintech-s-upstarts">suggest that</a> "the fallout will be felt across the wider fintech industry," but while security is an issue for all financial service providers, there's arguably less risk in other sectors that have been targeted by fintech startups.</p> <p>For example, fintech players focused exclusively on markets like lending face very different risks, and few markets are arguably as sensitive to security as banking.</p> <p>So while it's possible that the Tesco Bank incident will cause consumers to think twice about doing business with a young fintech company, the effects will probably remain most pronounced in the market for bank challengers.</p> tag:www.econsultancy.com,2008:BlogPost/68475 2016-11-01T15:03:00+00:00 2016-11-01T15:03:00+00:00 What marketers need to know about Facebook's ethnic affinity ad targeting Patricio Robles <p>The article was published by ProPublica, which bills itself as "an independent, non-profit newsroom that produces investigative journalism in the public interest."</p> <p>The organization published the article after it showed how Facebook's ethnic affinity targeting options could potentially be used by Facebook marketers in a discriminatory manner.</p> <p>Here's what marketers need to know about those options, and the controversy that's swirling around them.</p> <h3>Ethnic Affinities don't directly correspond to race</h3> <p>Facebook's Ethnic Affinity filter includes options like "African-American," "Asian-American" and "Hispanic" but it does not directly allow marketers to target or exclude users based on race.</p> <p>Instead, users can be assigned to an Ethnic Affinity category based on their behavior on the social network, such as the Facebook Pages they like.</p> <p>While in some cases this effectively acts as a proxy for race-based targeting, Facebook does not ask users to identify their race.</p> <h3>This targeting has been around for years</h3> <p>Despite the fact that ProPublica's article has sparked debate and discussion about it, Facebook's Ethnic Affinity targeting isn't new.</p> <p>Marketers on Facebook were first given the ability to target the Hispanic ethnic affinity group two years ago.</p> <h3>Facebook isn't the only company offering this kind of targeting</h3> <p>Christian Martinez, Facebook's head of multicultural sales, noted in <a href="http://newsroom.fb.com/news/h/driving-relevance-and-inclusion-with-multicultural-marketing/">a blog post</a> addressing the controversy: "Most of the leading companies in the online ad space offer multicultural advertising options."</p> <h3>There are arguably legitimate uses of Ethnic Affinity targeting</h3> <p>Facebook's Martinez suggests that Ethnic Affinity targeting is beneficial to both marketers and the people they're trying to reach.</p> <blockquote> <p>Living in the US, most of the advertising that I see in traditional media is targeted to people in the majority — people who don’t look like me, who don’t speak Spanish, and who may not share my experience. The experience of ads constantly reminding you that you’re different from the majority is incredibly marginalizing, and it’s not right. </p> </blockquote> <p>He offers several examples of how Ethnic Affinity can address this.</p> <blockquote> <p>Advertisers may...focus on reaching any group directly. For example, a nonprofit that’s hosting a career fair for the Hispanic community can use Facebook ads to reach people who have an interest in that community. And a merchant selling hair care products that are designed for black women can reach people who are most likely to want its products.</p> <p>That merchant also may want to exclude other ethnicities for whom their hair care products are not relevant — this is a process known in the ad industry as “exclusion targeting.”</p> <p>This prevents audiences for community-specific ads from seeing a generic ad targeted to a large group and helps avoid the offensive outcome that traditional advertising can often create for people in the minority.</p> </blockquote> <h3>Ethnic Affinity targeting has been used to good effect</h3> <p>While ProPublica's article highlights the potential for abuse and even illegal usage of Ethnic Affinity targeting, there are case studies demonstrating that it can be used to good effect to craft messages that are more likely to appeal to specific audiences.</p> <p>For example, movie studio Universal <a href="http://www.bizjournals.com/sanjose/news/2016/03/21/facebook-advertising-targets-based-on-race.html">used it</a> to create different ads for different groups to promote the movie, <em>Straight Outta Compton</em>, which was a box-office hit.</p> <h3>Facebook's policies forbid discrimination</h3> <p>Obviously, there is the potential for Ethnic Affinity targeting to be abused or even used illegally.</p> <p>For example, in the US, the Fair Housing Act of 1968 makes it illegal "to make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin."</p> <p>According to Steve Satterfield, a privacy and public policy manager at Facebook, "Our policies prohibit using our targeting options to discriminate, and they require compliance with the law. We take prompt enforcement action when we determine that ads violate our policies."</p> <p>As part of its investigation, ProPublica placed an ad in Facebook's housing category for a housing forum event and it excluded African-Americans, Asian-Americans and Hispanics.</p> <p>The ad was approved, which ProPublica seemed to suggest proved that Facebook isn't effectively policing potentially discriminatory ads.</p> <p>But as numerous observers have pointed out, ProPublica's ad was for an event at which housing topics were to be discussed; it was <em>not</em> an ad for housing itself, so it is unclear that the rules of the Fair Housing Act of 1968 applied to it in the first place.</p> <h3>Facebook is making one change</h3> <p>According to ProPublica, Facebook says it will move the Ethnic Affinity targeting option out of the Demographics section it is currently in to another, as-yet-specific section.</p> <h3>Marketers are responsible for compliance with the law</h3> <p>There is no doubt that Facebook should be vigilant about abuses of its targeting capabilities, but ultimately, marketers are responsible for compliance with applicable laws.</p> <p>Businesses in highly-regulated markets, such as financial services, cannot and should not expect Facebook and ad platforms to serve as their legal compliance teams.</p> <p>Instead, they should demand that their in-house marketers and external agents understand laws applicable to their digital marketing campaigns and ensure that these laws are followed.</p> <p><em>For more on this topic, read:</em></p> <ul> <li><a href="https://econsultancy.com/blog/67691-content-creators-it-s-time-to-abandon-yourself-to-facebook/"><em>Content creators, it's time to abandon yourself to Facebook</em></a></li> <li><a href="https://econsultancy.com/blog/68463-facebook-a-handy-roundup-of-its-latest-developments-and-commercial-opportunities/"><em>Facebook: A handy roundup of its latest developments and commercial opportunities</em></a></li> </ul> tag:www.econsultancy.com,2008:BlogPost/68407 2016-10-14T16:21:27+01:00 2016-10-14T16:21:27+01:00 The five things every company can learn from the Wells Fargo scandal Patricio Robles <h3>Sales goals aren't bad, but...</h3> <p>In the wake of its scandal, Wells Fargo has vowed to end retail banking product sales goals.</p> <p>"We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers," Wells Fargo CEO John Stumpf said in a statement.</p> <p>But sales goals aren't inherently bad, and Stumpf's statement seems to take the misguided view that sales goals are in conflict with the interests of customers.</p> <p>That isn't the case.</p> <p>What is bad are<strong> sales goals that are unrealistic and that employees don't believe they can meet.</strong></p> <p>The fact that over 5,000 Wells Fargo employees were fired for being involved in the creation of more than 2m fraudulent accounts strongly suggests that Wells Fargo's sales goals were either not tied to reality or that the employees asked to hit them didn't feel they had the support and resources needed to do so.</p> <p>Indeed, one former Wells Fargo employee <a href="https://consumerist.com/2016/09/19/4-things-former-wells-fargo-workers-revealed-about-pressure-to-meet-sales-goals/">said</a> that she was told to increase sales 35% each year, a nearly impossible task given that she was in a small town with a finite customer base.</p> <h3>You need good products to cross-sell successfully</h3> <p>In response to the crisis it faces, Wells Fargo has also instructed employees to stop cross-selling.</p> <p>A memo sent to some Wells Fargo call center employees <a href="http://www.wsj.com/articles/wells-fargo-curbs-product-cross-selling-1473715298">stated</a> "please suspend referrals of products or services unless requested by customers until further notice."</p> <p>While that move may be advisable for Wells Fargo given the current situation, here too it's unwise to draw the broader conclusion that cross-selling is bad.</p> <p>It isn't. </p> <p>The reason it was so problematic for Wells Fargo is that the bank was cross-selling products consumers in many cases didn't want, or wouldn't want if they knew what they were buying.</p> <p>For example, one of the products that employees reportedly pushed hard to customers was overdraft protection, a "potentially costly" offering "they didn’t always need or realize they were getting."</p> <p>Effective cross-selling involves the promotion of quality products that customers might want or need based on their profile or purchase history.</p> <p>It does not involve deception or the pushing of products for the purpose of maximizing revenue without maximizing customer value. </p> <h3>Commoditisation sucks, especially when you don't deal with it</h3> <p>Wells Fargo's apparently unrealistic sales goals and aggressive cross-selling belied a harsh but simple truth: Retail and business banking are increasingly commoditised. </p> <p>Commoditisation is challenging in any industry, but it doesn't have to be a death knell.</p> <p>Wells Fargo could have recognised the nature of the market it is in and implemented <a href="http://www.strategyand.pwc.com/perspectives/2015-retailbanking-trends">customer-focused strategies</a>, but instead, the giant bank appears to have assumed that its existing customer base was an easily exploitable asset that it could take advantage of without consequence.</p> <p>That was a huge mistake.</p> <h3>Fear and pressure are not viable employee incentives</h3> <p>According to Khalid Taha, who worked as a personal banker for Wells Fargo in San Diego for three years, "I had to meet quotas every day, if I didn't then I could be written up and fired."</p> <p>His story mirrors that of other former employees <a href="http://money.cnn.com/2016/09/09/investing/wells-fargo-phony-accounts-culture/">who are speaking out</a>.</p> <p>Many of the rank-and-file workers who were involved in signing customers up for phony accounts didn't have nearly as much to gain monetarily as Wells Fargo executives, one of whom retired with a $125m payday. </p> <p>Instead, the picture that has emerged is one in which most employees who were engaged in the phony accounts scheme were doing so primarily because they felt fear and pressure, which should never be used to motivate employees who are responsible for selling.</p> <h3>A reputation can be destroyed in an instant</h3> <p>Wells Fargo has long been considered one of the most conservative of the large US banks, and emerged from the financial crisis of 2008 with far less reputational damage than most of its peers.</p> <p>But now, Wells Fargo has been turned into the latest poster child for everything that is wrong with the banking industry, proving what billionaire investor Warren Buffett once observed...</p> <blockquote> <p>It takes 20 years to build a reputation and five minutes to ruin it. </p> </blockquote> <p>Ironically, Buffett's firm, Berkshire Hathaway, owns 10% of Wells Fargo, making it the bank's largest shareholder and the <a href="http://www.vanityfair.com/news/2016/09/warren-buffett-wells-fargo">biggest loser</a> in the decline of Wells Fargo's stock.</p> <p>Buffett once stated, "Lose money for the firm and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless."</p> <p>Buffett hasn't yet spoken publicly about the Wells Fargo scandal, but if the octogenarian investor lives by his past words, Wells Fargo's reputational woes could quickly become even more costly.</p> tag:www.econsultancy.com,2008:BlogPost/68334 2016-09-29T15:04:38+01:00 2016-09-29T15:04:38+01:00 Wells Fargo scandal shows why banks are vulnerable to fintech startups Patricio Robles <p>While scandal in the banking sector is no surprise, particularly since the global financial crisis of 2008, many were surprised to find Wells Fargo at the center of one.</p> <p>After all, the bank is considered one of the more conservative of the major banks, and with its headquarters in San Francisco, it's over 2,500 miles away from Wall Street.</p> <h3>Not an isolated dynamic</h3> <p>Unfortunately, as CNN's Matt Egan <a href="http://money.cnn.com/2016/09/22/investing/wells-fargo-fake-accounts-banks/">has detailed</a>, the apparent motivations for the Wells Fargo scandal aren't unique to Wells Fargo.</p> <p>"Banks are under enormous margin pressure," chief of the Office of Comptroller of the Currency, Thomas Curry, told a Senate panel.</p> <p>And an anonymous banker told CNN's Eagan, "There is a blurred line between what's best for the customer and what's best for our sales goals."</p> <p>To achieve those sales goals, employees are incentivized to cross-sell customers on different products offered by their banks. </p> <p>The result, in Wells Fargo's case, was behavior that led to the largest fine in the history of the Consumer Finance Protection Bureau. Additionally, Wells Fargo has agreed to change its sales practices.</p> <p>But while Wells Fargo is thus far the only institution known to have engaged in fraud, there are concerns other banks have been over-aggressively engaging in cross-selling, raising the specter of future scandals yet to be uncovered.</p> <h3>The fintech angle</h3> <p>While the importance of cross-selling has been amplified in today's challenging banking environment, which has seen record low interest rates and ever-increasing regulation, banks are finding it harder and harder to cross-sell because their leverage over customers has decreased significantly.</p> <p>Historically, banks forged strong relationships with their customers and were one-stop shops for many of their needs.</p> <p>An individual who had a personal deposit account with a particular bank would turn to that bank for personal and business loans, mortgages, etc.</p> <p>The internet, and the fintech revolution it fostered, has changed that.</p> <p><strong>Today, most financial services can be obtained unbundled.</strong> That makes it easier for consumers and businesses to shop around, and not surprisingly, the best providers aren't always the banks they have done business with for years.</p> <p>For example, many individuals have found that they can be approved for personal loans faster and at a lower cost by non-bank upstart online lenders than the banks where they've held their deposit accounts for years.</p> <p>For large banks like Wells Fargo, this is a major impediment to cross selling.</p> <p>After all, if it's easy for customers to find other providers that can offer better pricing and/or a better overall experience, there's little incentive for those customers to settle for less just for loyalty's sake.</p> <p>This makes the Wells Fargos of the world very vulnerable.</p> <h3>How can banks respond?</h3> <p>Obviously, the best way for large banks to address this issue isn't to engage in massive fraud.</p> <p>That will only exacerbate the reputational woes of the banking industry.</p> <p>Instead, if banks want to cross-sell more effectively, they need to ensure that the products and services they cross-sell are competitive in terms of pricing and overall customer experience.</p> <p>Of course, that's easier said than done, particularly given some of the <a href="https://econsultancy.com/blog/68215-are-regulations-impeding-financial-services-innovation">challenges in recruiting digital talent</a>, but it's the only real solution.</p> <p>The good news is that banks that can improve their products and services, and develop innovative new ones, will not only be in a better position to cross-sell to their existing customers, but to use those products and services as a wedge to lure new customers who do business with other banks.</p> <p><em>For more on this topic, see:</em></p> <ul> <li><a href="https://econsultancy.com/blog/67202-what-s-the-future-for-big-banks-in-a-fintech-world/"><em>What's the future for big banks in a FinTech world?</em></a></li> <li><a href="https://econsultancy.com/blog/68159-five-ways-fintech-upstarts-are-disrupting-established-financial-institutions/"><em>Five ways fintech upstarts are disrupting established financial institutions</em></a></li> </ul> tag:www.econsultancy.com,2008:BlogPost/68237 2016-08-30T14:49:08+01:00 2016-08-30T14:49:08+01:00 Chipotle ruling shows importance of employee social media engagement Patricio Robles <p>In 2015, fast food chain Chipotle fired an employee, James Kennedy, shortly after he posted a tweet criticizing the company's pay in response to a customer who thanked Chipotle for free food.</p> <p>Kennedy deleted the tweet when confronted by a supervisor, who informed him that the tweet violated the company's social media policy, which prohibited employees from posting disparaging and false claims online.</p> <p>Kennedy was fired when he later started a petition related to employee breaks.</p> <p>In March, an NLRB judge, Susan Flynn, <a href="https://econsultancy.com/blog/67669-what-brands-can-learn-from-chipotle-s-twitter-fiasco">ruled that Kennedy's firing violated labor laws</a> and that his tweet was considered protected speech under the National Labor Relations Act, which allows employees to freely discuss their working conditions. </p> <p>This month, much of Flynn's ruling <a href="http://www.mediapost.com/publications/article/283060/chipotles-social-media-policy-violated-law-says.html">was upheld</a> on appeal. This means the Chipotle social media policy that was in effect at the time was illegal because it could be used to prevent protected speech.</p> <p>The NLRB has been addressing social media issues like those in the Kennedy case <a href="https://www.nlrb.gov/news-outreach/fact-sheets/nlrb-and-social-media">for years</a> now, and has been warning employers about social media policies that run afoul of the law.</p> <p>But the fact that large employers like Chipotle are still having conflicts with employees over their social media use demonstrates the fact that corporate social media policies are still a thorny matter.</p> <h3>A better approach</h3> <p>Even so, companies <a href="https://econsultancy.com/blog/67091-how-l-oreal-uses-social-media-to-increase-employee-engagement">like L'Oreal</a> are using social media to promote positive engagement with employees, providing evidence that with the right strategy and <a href="https://econsultancy.com/blog/11011-the-importance-of-supporting-employees-in-social-media">active support</a>, it's possible to <a href="https://econsultancy.com/blog/66806-how-to-turn-your-employees-into-company-advocates">turn employees into advocates on social media</a>.</p> <p>The benefits of this can be significant and range from increased employee morale to <a href="https://econsultancy.com/blog/66725-how-social-media-can-help-with-recruitment">more effective recruitment</a>.  </p> <p>The NLRB has also made it clear that social media policies can be used to restrict some employee criticisms that aren't covered by the National Labor Relations Act.</p> <p>Given that <a href="https://econsultancy.com/blog/5954-one-in-five-employees-use-social-media-to-criticise-the-boss">40% of employees use social media to criticize their workplace</a> and one in five uses it to criticize a superior, monitoring and addressing all employee social activity is going to be difficult, and doing so without risking a violation of employee rights is in some cases going to be all but impossible.</p> <p>The better, more realistic approach: Focus on developing a compelling <a href="https://econsultancy.com/blog/67502-what-makes-a-good-employee-value-proposition">employee value proposition</a> and understanding what motivates <a href="https://econsultancy.com/blog/66218-the-five-types-of-content-employees-love-to-share-on-social-media">positive employee sharing on social media</a>. </p> <p>While this is more easily said than done, particularly for large companies whose employee ranks don't consist primarily of highly-paid professionals, employee social engagement is arguably as worthwhile an investment as consumer social engagement.</p> tag:www.econsultancy.com,2008:BlogPost/68232 2016-08-29T03:00:00+01:00 2016-08-29T03:00:00+01:00 China introduces far-reaching new internet ad law: Why it matters Jeff Rajeck <p><img src="https://assets.econsultancy.com/images/0007/8461/Us_ads.png" alt="" width="480" height="328"></p> <p>China, by comparison spends a far greater percentage (66%) of its advertising on internet and mobile and a much smaller percentage (24%) on traditional media.</p> <p><img src="https://assets.econsultancy.com/images/0007/8460/China_ad.png" alt="" width="481" height="323"></p> <p>So, even though the overall dollar amount spent in China is less than in the US, the<strong> internet is a much more significant part of advertising in China</strong>.</p> <p>Because of this, China is likely to be a trend-setter for other parts of the world.</p> <p>To learn a bit more about what might be coming to internet advertising in the rest of the world, here is the background and some detail of the new law in China.</p> <h3>Background</h3> <p>In July, 2015 China's State Administration for Industry and Commerce (“SAIC”) amended the Chinese Advertising Law to cover internet advertising.  </p> <p>New regulations were supposed to go in effect last September (2015) but were largely unenforced.</p> <p>Recently, however, there has been renewed interest in regulating online advertising, which may have something to do with the tragic story of Wei Zexi.</p> <h4>The death of Wei Zexi</h4> <p>On April 12, 2016, Chinese student Wei Zexi died after receiving experimental treatment for cancer which he found out about through an ad on China's main search engine, Baidu.</p> <p>The hospital had, apparently, claimed a high success rate for the treatment in the ad.  </p> <p>The ads were also regularly featured prominently in search results as the hospital group was reportedly responsible for nearly half of Baidu's multi-billion dollar ad revenues.</p> <p>Wei Zexi's death drew renewed attention to the Advertising Law from Chinese media, including 250,000 comments on an online editorial on the matter.</p> <p>In apparent response, the regulators not only censured Baidu and issued specific regulations for it, but also followed up with new laws.</p> <h4>Response</h4> <p>On July 4, 2016 the SAIC issued new regulations, the Interim Measures for the Administration of Internet Advertising, which take effect on September 1, 2016.</p> <p>The Advertising Law and the Interim Measures are the first step China's SAIC has taken toward defining and regulating advertising.</p> <h3>The new laws</h3> <h4>Internet advertising defined</h4> <p>There is a lot of detail in the definition of internet advertising in the new law (which you can read about <a href="http://www.lexology.com/library/detail.aspx?g=296c00a7-f562-4012-a6d3-c8ec58463c2f">here</a>), but in brief, <strong>internet advertising is defined as any commercial marketing anywhere on the internet for anything</strong>.</p> <p>The definition is broad and even includes out-of-home displays with web addresses and recommendation engines on ecommerce platforms.</p> <h4>Internet publishers defined</h4> <p>More interesting is how the regulators define a 'publisher.' According to the law <strong>a publisher refers to those who push OR display the advertising.</strong></p> <p>This can include websites, ad tech platforms, influencers, and even internet service providers.  </p> <p>In short, anyone who has the ability to review and prevent an illegal ad from showing can be held responsible.</p> <p>This definition is, again, quite broad and will give the government a lot of flexibility to enforce the law as it likes in the future.</p> <h4>Publishers obligations</h4> <p>The real meat of the regulation, however, are the <strong>publisher's obligations.</strong></p> <p>According to the new law, publishers will need to: </p> <ul> <li>know who their customers are,</li> <li>verify any credentials they give, and</li> <li>verify the ad content.</li> </ul> <p>To handle this, publishers and ecommerce sites will be expected to hire specialists to record customer details, review all ads and block those which do not comply. </p> <p>While there are other things in the law, such as anti-spam clauses and a ban on ad-blockers (<a href="http://adage.com/article/digital/china-ban-ad-blocking/305077/">maybe</a>), the fact that publishers, broadly defined, will be responsible for the claims made by advertisers is among the biggest changes.</p> <p>This means that China has gone from one of the least regulated advertising markets to one of the most, almost overnight.</p> <h3>Example: Baidu</h3> <p>These regulations sound somewhat far-reaching and difficult for companies to comply with.</p> <p>But have a look at Baidu's search results for cosmetics (化妆品).  The top three results are ads and are, as one might expect, marked as promotional posts on the right in blue (商业推广).</p> <p><img src="https://assets.econsultancy.com/images/0007/8465/baidu_2.png" alt="" width="438" height="442"></p> <p>But interestingly there is also a grey link after the domain name (评价) which sends the browser to another page, offering details about the advertiser and fielding comments.  </p> <p>Here it is for one vendor, translated into English by Google.</p> <p><img src="https://assets.econsultancy.com/images/0007/8463/baidu_vendor.png" alt="" width="452" height="267"></p> <p>It seems, therefore, that <strong>Baidu is already taking the regulations quite seriously.</strong></p> <h3>Why everyone should be interested in China's new laws</h3> <h4>1. The new laws raise interesting questions for other countries</h4> <p>Most Western countries have carried over existing advertising legislation to online platforms.  </p> <p>This works well when the advertising model has two players, the advertiser and the publisher, but breaks down when there are multiple parties involved.</p> <p>Unresolved questions include:</p> <ul> <li>Who is responsible for ad content in <a href="https://econsultancy.com/blog/65677-a-super-accessible-beginner-s-guide-to-programmatic-buying-and-rtb/">programmatic advertising</a>?</li> <li>Is checking native ads the reponsibility of the publisher or the agency?</li> <li>What about influencers who appear on a social media site via an agency?</li> </ul> <p>China's legislators have a simple answer, <strong>everyone in the ad chain is potentially responsible</strong>.  </p> <p>While this may seem heavy-handed it will likely encourage the various players to be much more careful with ads than if they felt they could always blame the originator or the delivery platform.</p> <h4>2. The regulation might set a trend</h4> <p>Because the law does address these issues left somewhat unclear in the West, China's approach may attract the attention of Western regulators.</p> <p>As of yet, there have been very few cases of regulators cracking down on behavioural, programmatic, or even <a href="https://econsultancy.com/reports/the-rise-of-influencers/">influencer marketing</a>.</p> <p>One recent example is from the US. The  Federal Trade Commission <a href="http://www.adweek.com/news/advertising-branding/ftc-slams-lord-taylor-deceiving-customers-not-disclosing-its-native-ads-170229">filed a complaint against fashion retailer Lord &amp; Taylor in the US</a> for unregulated influencer marketing.</p> <p><img src="https://assets.econsultancy.com/images/0007/8464/lord_taylor.jpg" alt="" width="486" height="243"></p> <p>There are, however, very few other cases of such action and, in fact, <a href="http://www.prweek.com/article/1390325/brands-agencies-admit-flouting-uks-rules-influencer-marketing">many marketers freely admit overstepping guidelines</a> set by their regulators.</p> <p>If China's approach works without seeming heavy-handed, therefore, <strong>other countries may end up with similar laws governing internet advertising.</strong></p> <h4>3. The new laws could spark innovation</h4> <p>One interesting angle in all of this is because each layer of the ad tech stack is held responsible for content, it is likely that technical monitoring solutions will arise.</p> <p>It will not be easy for publishers, agencies, buy and sell-side platforms, and even brands to ensure that all ads published are compliant.</p> <p>Because of this, new ad tech with compliance features may spring up to help all involved with the process.</p> <h3>So...</h3> <p>Brands that are advertising in China<strong> should become familiar with the legislation as soon as possible.</strong>  </p> <p>As of September 1, 2016 the State Administration for Industry and Commerce will be monitoring for ads which violate the policies set out in the Advertising Law and the Interim Measures for the Administration of Internet Advertising.</p> <p>Those who do not currently advertise in China should, however, take note as well.  </p> <p>Most other countries currently enjoy little or no regulation, but should China's attempts to regulate be effective it would not be a surprise to see such laws appear elsewhere.</p> <p><em>For related information, read Econsultancy's <a href="https://econsultancy.com/reports/the-china-digital-report/">China Digital Report</a>.</em></p> tag:www.econsultancy.com,2008:BlogPost/68215 2016-08-25T14:24:00+01:00 2016-08-25T14:24:00+01:00 Are regulations impeding financial services innovation? Patricio Robles <p>As <a href="http://www.ft.com/cms/s/0/66c75f74-6790-11e6-ae5b-a7cc5dd5a28c.html">detailed by</a> The Financial Times, BBVA is asking the European Commission to make changes to the bonus cap rules, which apply to employees who are "material risk takers" or earn more than €500,000 per annum.</p> <p>BBVA says that the bonus cap rules are making it difficult to compete and innovate, and that they should be amended.</p> <p>Specifically, BBVA would like to see that they're not applied to technology specialists, which the bank notes have seen their compensation increase but who don't expose the bank to the type of risks traders do.</p> <p>"In some cases we compete against US banks or tech companies on acquisitions. Their bonuses are not capped, so we may lose out," BBVA's digital M&amp;A chief, Juan López Carretero, told the FT.</p> <blockquote> <p>If you can design an app so a payment is done in two clicks instead of eight clicks that is valuable but it isn’t putting the bank at risk.</p> </blockquote> <p>BBVA is considered one of the more tech-friendly large banks.</p> <p>It <a href="https://www.bbva.com/en/news/economy/corporate/finance/bbva-acquires-simple-to-accelerate-digital-banking-expansion/">acquired Simple</a>, a US banking startup, for $117m in 2014, <a href="https://www.bbva.com/en/news/general/bbva-acquires-finnish-banking-start-holvi/">and Finnish business banking startup Holvi</a> in March. </p> <p>BBVA has invested in a number of financial services startups, including <a href="http://www.ft.com/cms/s/0/b71ad596-91f3-11e5-94e6-c5413829caa5.html">UK mobile bank Atom</a>, and earlier this year it <a href="http://www.americanbanker.com/news/bank-technology/whats-behind-restructuring-of-bbvas-fintech-venture-fund-1079319-1.html">created an independent venture firm</a>, Propel Venture Partners, to "invest in technology-driven companies that are Rethinking and Rebuilding financial services."</p> <p>With more and more <a href="https://econsultancy.com/blog/67919-five-fintech-start-ups-aiming-to-replace-traditional-banking">startups looking to disrupt traditional banking</a>, rules that make it more difficult for banks like BBVA to recruit top tech talent or acquire promising young companies would indeed appear to be a legitimate concern.</p> <p>But big banks shouldn't fall into the trap of believing that the ability to open their wallets more freely is the key to thwarting would-be disruptors and spurring innovation.</p> <p><strong>First,</strong> in the battle for talent, <a href="https://techcrunch.com/2015/06/25/a-closer-look-at-the-silicon-valley-vs-wall-street-talent-war/">it's not all about money</a>.</p> <p>Many of those who are choosing Silicon Valley over Wall Street and The City aren't doing so just because they see the opportunity to make more money.</p> <p>Big banks are seen by many as stodgy and bureaucratic, making them less attractive for job seekers looking for opportunities that will give them the ability to do interesting work and make an impact.</p> <p>Additionally, the financial services industry's reputation hit post-2008 hasn't helped matters.  </p> <p><strong>Second,</strong> as far as acquisitions and partnerships are concerned, banks will need to prove that they can integrate with the upstarts they acquire and partner with.</p> <p>BBVA appears to be on the right track in this regard <a href="https://www.finextra.com/newsarticle/28693/simple-to-move-customer-accounts-to-bbva-compass-platform">thanks to investment in APIs</a>, but it's still very early in the game and it's not clear that large financial institutions will be able to acquire or partner their way to success.</p> <h3>Regulation to the rescue?</h3> <p>Ironically, regulation might soon provide some relief for banks under attack from fintechs.</p> <p>Their rapid rise has not gone unnoticed by regulators and it's possible that fintech upstarts will soon find themselves subject to much greater scrutiny.</p> <p>For example, in the US, state and federal regulators, including the FDIC, <a href="http://www.wsj.com/articles/greater-scrutiny-looms-for-bank-online-lender-rent-a-charter-deals-1471824803">are eyeing new guidelines</a> that would allow greater oversight of online lenders.</p> <p>If they become subject to more regulation, these upstart non-bank lenders could see many of the advantages they've used to gain market share slip away, making it easier for banks to compete for loan business once again.</p> <p>That could be good news for banks, at least in the short-term, but even if fintechs are saddled with new regulatory burdens, the reality is that <a href="http://www.americanbanker.com/news/bank-technology/what-do-millennials-want-from-banks-everything-nothing-whatever-1079945-1.html">consumer behavior and expectations have changed and continue to change</a>.</p> <p>Banks that want to thrive will need to address this and they can't do that with money alone.</p>