IAB Public Policy Newsletter – March 2023

Mar. 28, 2023

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Live in Washington: IAB’S 2023 Public Policy & Legal Summit

IAB is excited to host our annual 2023 Public Policy & Legal Summit live in Washington, D.C. on Monday, April 3rd. This special event – free to qualified industry representatives and policymakers – is dedicated to the digital media and marketing industries’ most pressing concerns, as political parties, federal and state governments, and countries compete to set data and internet policy. Join the waitlist now.

How will brands, agencies, publishers, and technology platforms protect our clients and consumers? How will we continue to deliver personalized experiences, innovation, jobs and growth? IAB has assembled policy and legal experts from every corner of our industry and both the private and public sectors to help you navigate through the thorniest issues facing your business. The day’s agenda includes state compliance, federal privacy legislation and enforcement, international data agreements, Connected TV, as well networking opportunities to discuss every subject with your peers.

Never has there been a more important time for our industry to convene and chart a course through the increasingly complex legal and policy landscape confronting digital advertising.

Digital Ad Petitions Flood FTC

For now, Republican and Democrat members on the House Energy and Commerce Committee agree on the need for federal privacy legislation, but bipartisanship could be a temporary condition. As Rep. Marc Veasey (TX-33) explained at IAB’s Annual Leadership Meeting in January, consequential legislation faces long odds in a narrowly divided House and Senate. On the other hand, the Federal Trade Commission (FTC) lost its last Republican commissioner.

IAB is seeking balance. An “Advanced Notice of Proposed Rulemaking” from the agency describes the ordinary collection, aggregation, and analysis of consumer data as “commercial surveillance,” a definition so broad that potential FTC rules would criminalize the internet itself. “Surveillance advertising” had earlier appeared in a petition from an activist group urging commissioners to ban “hyper-targeted personalized advertising.” According to surveys, the vast majority of people prefer personalized advertising.

Continuing the trend this year was another petition from a Brooklyn law professor criticizing free content, sophisticated real-time bidding, and improved audience measurement. The petition demands the FTC develop and mandate complex technology to improve ad markets. As IAB notes in our response, even if the FTC had the expertise and resources to develop such a solution, requiring everyone to participate would stifle experimentation and innovation. IAB’s OpenRTB is voluntary. IAB-supported self-regulatory bodies like the Digital Advertising Alliance are effectively setting and enforcing consumer protection rules.

These attacks on digital advertising would reduce competition, raise costs and decrease consumer choice, counter to the FTC’s mission. They also raise legal and constitutional issues. In laws governing the FTC, Congress reserves the right to legislate questions of “vast economic and political significance” and foresaw the folly of mandating specific technology. IAB has registered our concerns that exceeding its proscribed boundaries jeopardizes the FTC’s core functions.

State of the States

In the states, data privacy laws are proliferating, creating a complicated patchwork of compliance requirements. IAB’s Multi-State Privacy Agreement helps marketers, agencies, publishers, and ad tech companies abide by laws in California, Colorado, Virginia, Connecticut, Utah and surely more to come. At the same time, IAB’s public policy team is helping state lawmakers understand our data-driven economy, correcting flaws in draft bills, and working to harmonize them across the country. We’re advocating for a federal privacy bill that would supersede the others and reverse cascading compliance costs.

Data privacy legislation in Oregon could cost local businesses billions of dollars. According to some estimates, similar legislation in California could cost businesses in the state as much as $55 billion. That’s just the start. Another study found annual costs to American businesses could be anywhere from $98 to $122 billion to comply with a patchwork of state laws, totaling at least $1 trillion over ten years. Rather than strengthen consumer protections, bills like Oregon’s would weaken them, requiring businesses to re-identify anonymized data.

Ignoring the benefits of digital advertising, Oregon’s S.B. 619 would prohibit retailers, restaurants, and others from reaching customers with relevant information. It would prevent health, emergency and other public services from reaching at-risk audiences. In addition to its many misunderstandings, the bill would enact stiff penalties for failing to navigate them, opening a Pandora’s Box of litigation. Yet digital advertising is an innovative industry that increases choice and lowers costs for consumers, delivers personalized online experiences Americans have come to expect, and subsidizes free content and services for anyone with an internet connection. In a letter with partner organizations, IAB sets the record straight.

Oregon’s bill is just one example of IAB’s advocacy work. Our public policy team is active in Texas, Illinois, Maryland, Washington and every state where digital advertising issues are emerging. None is more important than Florida, where a bill targeting “Big Tech” would fail to protect residents’ online privacy, deny employers and job creators opportunities to earn revenue, and force free content and services behind paywalls, disproportionately affecting low-income groups. While it may seem politically expedient to lawmakers, the bill would harm their ability to communicate with constituents. In the name of protecting consumers’ privacy rights, it would prevent a range of advocacy groups, nonprofits, and charities from exercising their rights to free speech.

A direct attack on the ad-supported revenue model, Florida’s data privacy bill illustrates the danger to our entire industry of legislation to punish “Big Tech.” It comes just as competition in the digital media industry from retail and streaming companies is accelerating. Vague language could restrict personalized as well as contextual advertising. Singling out companies with $1 billion or more in revenue, like other such bills it misunderstands the role larger publishers and platforms play in the success of small businesses, providing access to nationwide audiences and easy-to-use digital advertising tools. At the same time, artificial revenue ceilings discourage new businesses from reaching their potential. The bill takes aim at consumer device manufacturers as well. Not only would it affect technology companies, however. Legislation in Florida would diminish the ability of every business to advertise online and the quality of their customers’ experience, while doing little to protect data privacy.

IAB is monitoring legislation at every level of government, educating policymakers about the benefits of digital advertising, and working hard to stop bad bills. We’re also advocating for a nationwide solution to an entanglement of state laws. To learn about what’s happening in statehouses across the country, join the waitlist for IAB’s Public Policy & Legal Summit next week. Spots filled up quickly this year. We’re working hard to accommodate every guest.

Small Business to the Rescue

Almost 80% of small businesses agree that digital advertising generates more revenue than traditional advertising and helps them compete with much larger competitors. Small advertisers depend on digital ads. So do small publishers. Internet for Growth is sharing their success stories and concerns about the future of digital advertising with policymakers in Washington, D.C., who may not understand our industry’s importance to Main Street USA.

Coalition members across the country are writing to their federal representatives, regulators at the FTC, and local media to explain the difference digital advertising makes to local entrepreneurs – leveling the playing field for people of all backgrounds, breaking down geographic barriers, and creating communities of shared values and interests online and off. As food blogger LaKita Anderson told the audience at ALM, she and other small businesses and creators are an extension of our larger industry. Digital advertising helps Americans realize their dreams, said Celinda Cruz, who joined LaKita onstage. Their voices are crucial to convincing lawmakers of digital advertising’s value to constituents and the threat of misguided legislation and regulation.

“Commercial surveillance” rules and poorly worded privacy bills could eliminate third- and even first-party data supporting basic business functions, not just digital advertising. As Chariese Blue, a Colorado restaurant owner says, “Protecting consumer privacy online is vitally important, but lawmakers need to take a thoughtful and careful approach that doesn’t just gut digital advertising and tip the scales in favor of big corporations who can afford to flood the market with untargeted ads, suffocating small businesses like mine.”

Internet for Growth members including Chariese will visit Washington, D.C., this spring to deliver their message in person to elected leaders. Since launching in early 2022, Internet for Growth has met with dozens of U.S. representatives and senators, joining IAB in our efforts to advocate for an under-appreciated, under-pressure industry. We’re all in this together.

2023 Starts with a Bang

2023 started with a bang for digital advertising. In January, in the pages of the Wall Street Journal, President Biden exhorted Democrats and Republicans to “unite against Big Tech abuses.” He repeated his argument in his State of the Union address a few weeks later, calling for strict limits on targeted advertising and a total ban for children.

What makes for good politics may not always not make for good policy, however. Legislation and regulation to punish a few companies, such as federal “commercial surveillance” rules or the latest data privacy bill in Congress, would have repercussions for every Internet user. Proposed changes to children’s advertising, too, would have widespread consequences, especially for families who rely on free, ad-supported educational content.

Our industry cares about protecting kids. IAB publishes children’s advertising guidelines, and our public policy team is working with FTC staff to update the Children’s Online Privacy Protection Act. We’re helping legislators and regulators to craft policy that better protects Americans’ data privacy, prevents discrimination, promotes healthy online discourse, and increases competition and consumer choice. IAB represents hundreds of members at the cutting edge of privacy technology and online safety. IAB Tech Lab is leading solutions.

Digital advertising creates jobs and economic growth, but missing almost entirely from President Biden’s New Year’s resolution was any recognition of our industry’s important role in the national economy, society and culture. At stake could be as many as 17 million internet-dependent jobs and nearly 12 percent of annual U.S. GDP, not to mention nearly half of all advertising jobs. The irony is that most people prefer targeted advertising saving them time and money.

Rather than tilt the playing field, as the President claims in his op-ed, digital advertising levels it for small businesses, most of whom would be unable to advertise at all without social media, web or search ads. Competition for ad dollars is stronger than the President suggests. While members of both parties attack digital advertising from the stump, our industry should be shouting our achievements from the rooftops.

Preventing a Bipartisan Mistake in Congress

2022

Washington, D.C. is increasingly focused on digital advertising. At a House Energy & Commerce Committee hearing in March, Republicans and Democrats joined forces to re-start work on a data privacy bill that failed to earn a wider vote last year. Provisions in the American Data Privacy & Protection Act of 2022 (ADPPA) would have been more burdensome than Europe’s General Data Protection Regulation (GDPR). IAB advocated for changes.

In Europe, GDPR has depressed investment and innovation, especially harming small businesses, baffling the average internet user and tech professionals alike. Introducing prohibitive web warnings to the user experience, GDPR has mainly been a boon to EU insiders. Politico calls it “the most heavily lobbied EU law in the bloc’s history” causing chaos and confusion among regulatory authorities.

IAB’s public policy team is helping U.S. legislators to craft better data privacy legislation that would alleviate the rising costs of multiplying state laws, while avoiding Europe’s mistakes. With other industry partners, we relaunched Privacy for America this year. The legislative framework underscores the importance of data-driven advertising to the U.S. economy, consumer preference for relevant ads, and a balanced approach to data privacy. The ADPPA could have labeled information available in the Yellow Pages as “sensitive data” leading to fines and penalties.

The House Energy and Commerce Committee isn’t the only one tackling data privacy, nor is Congress the only branch of government. The House Financial Services Committee already advanced a data privacy bill this year. Senate Democrats introduced a bill addressing online health data, and bipartisan senators introduced a children’s online safety bill. Federal agencies are heeding the President’s call for a crackdown on “targeted” digital advertising. Wherever possible, IAB is supporting sensible proposals and pressing for changes to prevent unintended consequences.