• March 22, 2022
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Proposed Legislation Targets Data-Driven Advertising

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Three U.S. legislators, Reps. Anna Eshoo (D-Calif) and Jan Schakowsky (D-Ill.) and Sen. Cory Booker (D-N.J.), recently introduced the Banning Surveillance Advertising Act, which would prohibit advertising networks and facilitators—companies that serve ads or collect or process personal information for serving ads—from using personal data to target advertisements and prohibit advertisers from targeting ads based on protected class information, such as race, gender, and religion, and personal data purchased from data brokers. The bill makes explicit that contextual advertising based on the content with which a user is engaging is allowable. It also makes an exception for broad location targeting to recognized places, such as municipalities.

“The ‘surveillance advertising’ business model is premised on the unseemly collection and hoarding of personal data to enable ad targeting. This pernicious practice allows online platforms to chase user engagement at great cost to our society, and it fuels disinformation, discrimination, voter suppression, privacy abuses, and so many other harms. The surveillance advertising business model is broken,” said Eshoo.

“Surveillance advertising is at the heart of every exploitative online business model that exacerbates manipulation, discrimination, misinformation, extremism, and fundamentally violates people’s privacy in ways they would never choose if given a true choice. The Banning Surveillance Advertising Act will put a stop to this repulsive practice and therefore protect consumers by removing the financial incentive for companies to exploit consumers’ personal information and help stop a morass of online harms,” Schakowsky said.

“Surveillance advertising is a predatory and invasive practice. The hoarding of people’s personal data not only abuses privacy, but also drives the spread of misinformation, domestic extremism, racial division, and violence,” Booker said. “With the introduction of the Ban Surveillance Advertising Act, advertisers will be forced to stop exploiting individuals’ online behavior for profits and our communities will be safer as a result.”

Predictably, the advertising industry has voiced strong opposition to the bill, saying it would essentially eliminate data-driven advertising

The Interactive Advertising Bureau (IAB) slammed the bill, saying it would effectively eliminate internet advertising in the United States, jeopardizing an estimated 17 million jobs primarily at small and midsize businesses.

IAB CEO David Cohen argued that “data-driven digital advertising is the heart of online commerce.”

“Banning personalized ads would severely impact an increasingly important economic sector, stifling innovation and dramatically harming the small business community who use data-driven advertising to promote their goods and services and reach customers all over the world,” Cohen said. “This bill would make advertising less precise, more expensive, and raise costs for everyone.

“Everything from online retail to the new creator economy could cease to exist,” Cohen said further. “This terrible bill would disenfranchise businesses that advertise on the Internet and hundreds of millions of Americans who use it every day to find exactly what they need, quickly. It could eliminate the commercial internet almost entirely.”

Grace Briscoe, senior vice president of client development at Basis Technologies, sees the bill going well beyond limiting sensitive personal data collection, saying it could be very detrimental to publishers who rely on advertising revenue and smaller, third-party players.

Forrester Research analysts, though, say the bill shouldn’t come as a shock to anyone, noting that consumers have been complaining about awkward, creepy, or harmful ad experiences for years.

The analyst firm also points out, though, that not all consumers are against ads. In fact, 53 percent of U.S. online adults would rather see ads than have to pay for online content. But, at the same time, it acknowledges that 59 percent say it’s not OK for companies to track their activities across devices to send more relevant ads, and 54 percent are not willing to share personal advertising to receive more relevant advertising.

While the Banning Surveillance Advertising Act isn’t law yet, Forrester says marketers should start to make changes to their advertising practices. Among its recommendations, the company says marketers need to prioritize consumer transparency and choice, focus on the value exchange, and base targeting strategies on the depth of the brand/consumer relationship.

Forrester analysts also suggested the following four marketing strategies to get ahead of the legislation:

• Kick your zero- and first-party data strategy into high gear. First- and zero-party data strategies help build sustainable, consumer-friendly, and insights-driven connections between brands and people. Beyond capturing emails, create short, simple interactions to ask customers for a few pieces of information about themselves in context and in exchange for value.

• Test contextual targeting now. Contextual targeting allows advertisers to place ads to relevant content. Launch your testing road map now to start learning how new targeting approaches work for you. Consider cost, effectiveness, scale, and sustainability in a privacy-first world. And look for partnership opportunities with your key media publishers for contextual and other audience signals.

• Take a hard look at your agency and adtech partners’ long-term strategies. Agencies and adtech partners with a diversified approach to audience insights, targeting, and measurement will fare better when facing drastic changes handed down from walled gardens and regulatory bodies. Look for partners that go beyond identity-based ad targeting, have larger innovation budgets, and can clearly articulate their own position on issues like consumer consent, transparency, and choice.

• Refresh your consumer journey with an eye toward contextual moments and media. Develop audience profiles that unlock insights about consumers’ needs, wants, and behaviors. Use these insights to reveal pain points and moments of delight along the customer journey to inspire new contextual environments and customer engagements that don’t rely on precision targeting.

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