The UK Information Commissioner’s Office (ICO) has said that it will crack down on adtech companies that have their “heads firmly in the sand” over issues in the processing of user data as part of a reform of real-time bidding.

In a blog post, Simon McDougall, ICO Executive Director of Technology and Innovation said that there is a systemic problem in the adtech real time bidding (RTB) industry. RTB is the process by which ad impressions are bought and sold through real-time auctions, with the winning bid having their ad displayed on a site.

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This involves the processing of user data, with the site’s publisher collecting “information about the user’s device, the user themselves and the visit made to the website”, which is then shared with adtech companies so they can decide what to bid.

ICO raises concerns over adtech industry

In June last year, the ICO published a report on the adtech industry, warning that current RTB practices remain “problematic” due to issues surrounding transparency and consent.

The ICO said that it has seen “examples of basic data protection controls around security, data retention and data sharing being insufficient” within the UK online advertising industry, which is worth £13bn, and has concerns that some organisations risk breaching data protection laws.

Despite giving organisations until the end of 2019 to “read, internalise and act upon” the report, the ICO said in December that “some of what is happening now appears to us to be unlawful” and has said that it may be necessary to take formal regulatory action in the future.

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However, the ICO also highlighted some positive changes in the adtech industry, with the Internet Advertising Bureau (IAB) UK developing its own guidelines for “security, data minimisation, and data retention” and changes Google’s proposal to phase out “support for third party cookies within the next two years”.

The ICO urged organisations to “engage with the industry reform and transformation, and to encourage their supply chain to do the same”, with McDougall stating that while some organisations have made progress, he was still “disappointed that there are some who are still ignoring our message”.

Aaron Goldman, CMO at 4C Insights said:

“The latest ICO update will have significant consequences for ad tech companies operating on the open web and in particular using real-time bidding. These latest developments along with Google’s announcement that it will do away with third-party cookies spell doom for demand side platforms that are not interoperable within and across walled gardens. Going forward, the imperative for publishers and broadcasters will be to create closed ecosystems with opt-in consumers and enable brands to connect with consumers on multiple screens through targeted placements.”

Read more: GDPR fines: €114m so far, but far more expected.