The Drum Awards for Design 2022

Live in - hours - minutes

New US bill aims to kill targeted advertising: the industry reacts

Following the introduction of a new bill that aims to put an end to targeted advertising altogether, various stakeholders and industry bodies – including the Interactive Advertising Bureau – have voiced their opposition, arguing that such a bill would damage businesses large and small.

The Banning Surveillance Advertising Act, introduced this week, could have a massive impact on the ad industry as well as harm small businesses, according to experts.

Two House Democrats, Reps. Anna G. Eshoo (CA) and Jan Schakowsky (IL), as well as Democratic Senator Cory Booker (NJ), together on Tuesday introduced the new bill. The proposed legislation aims to bar advertisers and developers from using consumers’ personal data to serve targeted ads, with exceptions for broad-based geographic targeting. In particular, the bill explicitly prohibits advertisers from targeting ads based on demographic data such as race, gender and religious beliefs. However, it explicitly allows for contextual advertising, an approach that serves ads based on the content of a page or environment.

All three Congress members issued strongly-worded statements condemning the practice of targeted advertising. 2021 presidential hopeful Booker 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. With the introduction of the Banning Surveillance Advertising Act, advertisers will be forced to stop exploiting individuals’ online behavior for profits and our communities will be safer as a result.”

In the aftermath of the announcement, advertisers, publishers, developers and media experts have come out in opposition to the bill. An especially critical castigation was issued by industry group the Interactive Advertising Bureau (IAB), which includes over 700 brands, agencies, media firms and tech companies.

Small businesses beware

The impact of the bill will be far-reaching – not only in the advertising industry, but it will also directly impact up to 17m US internet-related jobs. It will also make it harder for small businesses to reach critical customers, according to those in opposition.

The IAB’s chief executive David Cohen said in a statement: “If the sponsors understood the devastating effects this bill would have, not only on the advertising industry but also on our entire economy, they wouldn’t have introduced it. Data-driven digital advertising is the heart of online commerce, representing an ever-increasing share of US GDP. It also drives the increasing diversity of products and services consumers rely on for information, education, entertainment and connectivity.”

To support his argument, Cohen referenced recent research conducted by IAB that indicates that between 2016 and 2020, the internet economy grew at a sevenfold rate of the total US economy and is today creditable for 12% of the country’s GDP. In its statement, IAB warned that the passage of such a bill could put 17m internet-related jobs at risk.

IAB argues that a large portion of these 17m jobs belong to small businesses, which would feel an outsized impact of the bill’s passage. Lartease Tiffith, IAB’s executive vice-president of public policy, tells The Drum: “The bill would hurt small businesses and creators who rely on digital advertising to acquire new customers and promote and sell their goods and services. Small businesses and creators rely more heavily on digital advertising to reach customers globally.”

Other industry players agree that the bill overlooks small businesses’ needs. “The downstream effects of this proposal to small and medium businesses does not seem to be a consideration in this bill, particularly as changes to privacy already favor companies with larger datasets,” says Michael Neveu, who is Namer at Media.Monks’ director of data. “Limiting targeting to contextual and broad geography removes audience engagement tactics used by many local businesses, and will create upward cost pressure, and benefits businesses with direct relationships to publishers, all further favoring large businesses.”

Making advertising ‘less precise and more expensive’

Beyond concerns that the proposed legislation would unfairly hamper the growth potential of small and medium-sized businesses, its implications are far-reaching. Eric Seufert, analyst at mobile marketing firm Mobile Dev Memo, says that there’s no doubt that “the impact of this bill would be vast, effectively rendering personalized advertising illegal.”

The protections spelled out in the bill go further than even Apple’s stringent AppTrackingTransparency (ATT) framework, a policy introduced last year by the tech titan that gives users the ability to easily block advertisers and developers from tracking their behavior across different apps and websites.

While ATT hampers the “co-mingling of first- and third-party data,” it doesn’t put other restrictions or outright bans on ad targeting. Suefert says the Banning Surveillance Advertising Act would “gut the advertising industry” by eliminating targeting and personalization altogether and only permitting contextual advertising.

However, experts believe the bill is unlikely to gain enough bipartisan Congressional support to pass. For one, Rep. Anna G. Eshoo represents swathes of Silicon Valley. Seufert says: “Constituents tend to prefer that their Representatives do not destroy their local economies.” He says the bill “was not designed to be successful,” implying that perhaps it was introduced as a form of virtue signaling on sponsors’ parts.

Eshoo has introduced two similar bills in the recent past – neither of which show promise of passing anytime soon, according to GovTrack.us, a site that weighs the various factors that may impact whether or not a bill is enacted.

“This bill would make advertising less precise, more expensive and raise costs for everyone,” said the IAB’s Cohen in the statement issued yesterday. “Reasonable and responsible data use provides tremendous benefits to consumers, the economy and society, ensuring our nation’s competitive position globally.”

For more, sign up for The Drum’s daily US newsletter here.