IPG's Arun Kumar warns marketing will become the next 'tobacco' unless industry speaks up

Arun Kumar, Chief Data and Technology Officer of Interpublic Group (IPG) believes this is the right time for India as a market

Arun Kumar, Chief Data and Technology Officer of Interpublic Group (IPG), makes a plea to all marketers to stand up and talk about the value of marketing, otherwise, people are "going to dub you ‘the next tobacco’." He elaborates that in a world where data privacy is a concern, marketing is getting a bad name. According to Kumar, advertising is seen as manipulation rather than free speech of a brand. He says a part of the fault is a lot of marketers don’t talk about what they do and why advertising is valuable.
 
Kumar's role at ad holding company IPG was created back in 2017. He oversees the development and implementation of global product and technology solutions across the network. Kumar's mandate also covers Kinesso and Matterkind, which bring together top talent in data, technology, and addressable activation to deliver data-driven marketing solutions for IPG clients.

During a recent visit to India, Kumar spoke exclusively to Storyboard18 and shared his views on the influence of big tech, data privacy and regulation, and how global marketers view India. He believes this is the right time for India as a market because many global advertisers are starting to see it in the same context they viewed China a few years ago. “I think there is an increased realisation that you have to approach India on India’s terms. I feel this is the time when a lot of solutions can scale because there is a demand for those solutions.”

Edited excerpts.
 
Q. What are the kind of solutions that a market like India needs?
In India, you don’t have a proper reference graph. Whereas in other markets, there is a common understanding of the consumers. There is a reference graph that connects the offline data set to the online. You don’t have that in this country. Therefore, what I would call establishing the identity of people and connecting offline to the online world is absent. In a market like India, where retail lives both in the physical world and in the ecommerce world, tying those two together is going to be important. Managing identities is also going to be crucial for keeping reach because India is a market that is heavily dependent on third-party cookies. And when that is going to go away, it is going to be replaced by identifiers that are far less effective in helping marketing and therefore driving growth for a lot of the ecommerce industry.
 
Q. What are the new age identity solutions where third-party cookies are phasing out? How disruptive is it?
It is going to be very disruptive and what you are going to find is that there is going to be a greater concentration of power in the hands of the ‘walled gardens’. They are going to have the information about the consumers and it is not going to leave those walls. And it is essentially students marking their own homework or marking their exams. There is going to be no one who is going to tell you whether what they are claiming is right or not. They are going to get granular data, whereas you are going to get aggregate data.

Also read: The era of borderless data is ending

What is happening around the world, and I think it is going to start to happen in India as well, is that every single brand or marketer, whatever category they are in, is focused on building their own first-party data sets and having their private graphs. This means that if the platforms are going to undermine your relationship with the consumer then it is incumbent on you as a brand to make sure that every time they do come in contact with you, whether it is a store, site or a call centre, whether they complain or they buy or return the product, you get all these streams of information.

Q. What's the challenge then?
The problem is that these streams are never unified. A very simple use case is that I can be registered in two different databases with the same organisation under three different names, and four different addresses. And there might be no recognition that my wife and I belong to the same household. You may not know the relationship. All of those need to start getting tied up. Because if you don’t tie them up, the ‘walled gardens’ are going to tie them up. So how are you going to say that your campaign hit the reach and frequency goals? Reach and frequency is most fundamental to media. If you can’t go across platforms or across devices to measure reach, then how are you correlating that to marketing effectiveness?

Q. So how can you correlate?
The only way you can do that is if you have a direct relationship with consumers and if you can map their behaviours. A lot of the new regulatory laws coming through are saying get the consent from consumers. This means you need to have a direct value exchange with them. 'They will give you the information in exchange for something. And that exchange needs to be valuable, otherwise, why the hell would I give it?' I think there are going to be categories or products for which this is not going to be important. For example, if you are selling salt, you don’t need to know who people are. But if you are selling luxury vehicles, you need to know. So the idea is to build private graphs and then connect them across the main graphs to the rest of the ecosystem. So do I know everything about the consumer? That is my private graph, but how to find her in the wider ecosystem across all media sets of contact points, that’s the cross to main graphs. And then you need to connect those two. And like I said for the private graphs and cross to main, you need reference graphs, otherwise, you can’t normalise the data set. Those are some of the things that India needs right now.
 
Q. In your view, what kind of understanding do marketers have, especially in a market like India, about this entire shift?
From what I have seen, I wouldn’t say that there is a lot of awareness. There is still a lot of focus on price. The problem with the price is that price doesn’t necessarily translate to value. So a lot of the benchmarks that you have today are going to go away in two years. You are not going to be able to compare apples to apples. If there is going to be disruption anyway, you are going to start to change how you view the environment. Many marketers are not aware, some are asleep at the wheel, and others are hoping there will be some kind of a solution to preserve the status quo. But I won’t blame them because even at a global level, we typically find that there is slowly a recognition that there is going to be transformation. Some organisations are faster than others. But the awareness is pretty low.
 
Q. Data privacy has become a hotly debated topic and a complex one. What could be a simple solution that will probably be a win-win for both consumers and brands?
There needs to be a common set of standards. The best industry I would look at is the telecom industry. When you pick up your cellphone and you say, 'I am going to make a phone call', you don’t worry about whether the recipient has the same phone brand, network or carrier. It is because there is a common set of standards. There is 4G and everyone is adhering to it, and it doesn’t matter what carrier you have. If you were to transform the digital ecosystem to telecom, what it means is you have to take out your phone and if your phone and another person’s phone are different, then it won’t connect because there is no standard.

First thing is to set up standards and the standards cannot be set by Facebook, Google, Amazon, Microsoft and so on. They need to be set up by a wide body of experts who are technically proficient and who are not pushed by any vested interest. There can’t be different versions of privacy. You can’t have Apple saying allow this information and someone else saying the opposite.

Also read: Why adtech needs to focus on privacy-compliant personalisation

Advertising increasingly in many markets is almost in the position where tobacco was many years ago. And it always astounds me when people look at advertising and marketing in the same light. There is this belief and even in regulatory circles in western countries where influence as a word is used conjointly with manipulation. So advertising is seen as manipulation rather than free speech of a brand which says 'you need to buy me as opposed to somebody else'.

Q. How did it get to that point?
Part of the fault is a lot of marketers don’t talk about what they do and why it is valuable. But any law that comes up, first of all, there needs to be a national law. There shouldn’t be state-wise laws. There need to be some standards that balance both interests. For example, define what are sensitive data types that are off the table. What are data sets that people can use and how can they use them? Some principles should be legitimised. Because businesses need to know certain pieces of information to service consumers. You can’t make it all conditional basis consent. Because how many times is the consumer going to give consent and to how many people? Any law should be cognizant of something that most people forget—marketing is a key factor that funds democracy.

Q. Let's unpack that a bit.
So, if you unpack that, think about the free press. Subscription revenues do not drive the free press. If you want a multiplicity of opinions, the multiplicity of opinions needs to be funded. It is funded by advertising. So if you remove the ability to do precision targeting or for us to understand the value of online news sites, a number of these online sites are going to die. They are not going to get the funding. Therefore, many opinions in the niche are going to die out. That is going to fundamentally impact democracy.

Back to the second point. All these regulations mean that the companies have to spend a lot of money on compliance. There are almost billions of dollars that are being spent in the US around the CCPA (California Consumer Privacy Act of 2018) for them to be compliant. Who do you think is paying the price for it? Do you think companies are not passing the price pack to the consumers? Suppose I told you, in this inflationary time, that your grocery bill has just gone up by 5 percent because of the privilege of not having your cookie shared elsewhere. Isn’t that a choice that you should make? Whether you are willing to pay 5 percent more or OK with the data being shared? So there is a lot of lack of transparency from people who are demanding transparency.

The privacy activists don’t speak about the economic cost or the jobs that will be lost. The fact that marketing drives a lot of opinions that exist in a democracy. This idea is that it is all manipulation and influence. Again, you have to specify use cases. And by the way, it all started with Facebook and Cambridge Analytica and blew up with politics. Has political advertising escaped in the western world? No. Has the ability of hackers to get your data gone down? No. Has government surveillance gone down? No.

None of the laws that have been constructed is focused on the problems that started the conversation. And instead, cost consumers and are painting marketing as a bad act. And a part of the problem is that our marketers are not standing up and being heard. We are there in many regulatory bodies around the world. We have testified in front of the Senate in the US. We were the only people to do that from any holding company. We didn’t find any advertisers around us. My plea to marketers is if you don’t stand up and talk about the value of marketing, people are going to dub you the next tobacco.
 
Q. There is too much power in the hands of Big Tech and even today for digital solutions the entire industry is dependent on a handful of big tech companies. Do you see that changing?
There is a concerted effort with all the regulatory changes in Europe and the US. They are also asking questions like whether should we break them up, should we change the business models, and so on. I think some of it will come to play. However, I would again go back to 'are you creating policies that would allow startups to grow?' The reason why you would have those big tech players grow in the first place is that there was freedom for them to grow. Those big tech players have now made it impossible for startups and VC companies to operate in that space.

Also read: Martech trends that will dominate India market in 2022 and beyond
 
Q. Or will they simply acquire it?
Yes, in the VC world, if you are operating in certain areas and it is very close to, let’s say, something like Amazon operates, it is called ‘Death Zone’. Because you are either going to be acquired or not be successful. That is what lawmakers need to focus on. Are you creating an equitable market? A lot of this happens because they are allowed to mark their own report cards. ‘I am a platform and I also sell my products’. 'I am supply side, buy side, I am analytics and I also do attribution.' And a lot of these acquisitions were allowed. You have to undo some of them and you have to be very careful about the principles of the digital market. For example, in a non-digital market, you have ‘antitrust’. The same principle is not applied in the digital world. The regulators block so many of the M&A opportunities in the physical world which they are very reluctant to do in the digital space. And now they complain that these companies have become too big.

Also read: Why gaming companies are acquiring adtech firms and capabilities
 
Q. You seem to have a strong opinion against the regulators.
My issue with the regulators is that they are engaging with very few sets of people who are largely privacy activists. There are a lot of privacy activists lobbying on one side, and big tech on the other side. And I don’t think this is truly representative of the entire ecosystem. There are no marketers or third-party service providers who have an opinion on this. And in some cases, they don’t even know that these conversations are on.