The Banning Surveillance Advertising Act (BSAA), a bill proposed by Democrat legislators in the United States in January 2022, has the potential to fundamentally alter the entirety of the ad tech industry, and it’s time leading stakeholders took notice. This is no doomsaying prophecy, there is a realistic chance that markets won’t be able to engage in detailed ad targeting. If this happens, many companies could lose out on revenue.
This is the second attempt from Silicon Valley’s Congresswoman Anna Eshoo to pass strict privacy-related measures of federal control after the California Consumer Protection Act (CCPA) was passed in 2018. The new BSAA bill, however, has raised serious concern in the ad industry once again. Should we entirely eschew Eshoo’s act or can our industry survive despite our valid concerns?
No bull about the bill
For starters, the BSAA will significantly confine digital ad serving mechanisms if passed. The document literally prohibits tech companies from using big chunks of personal data such as gender, race, or religion as well as any other information acquired from third-party providers. That is obviously going to have a big impact on our targeting abilities, and the only useful means allowed by the bill are based on approximate location and on the content consumed by a user.
Under the act, the Federal Trade Commission (FTC) has oversight to prevent violations and supportive litigation, and history points out that whenever the federal agencies get involved you can be rest assured that they will have considerable power. The exact amount of fines the FTC could impose for breaching personal data usage rules are still to be confirmed, but they are likely to be heavy. What’s interesting about this issue is that we got a collective heads up earlier this year without anyone realizing it.
Don’t forget, in March 2021 the FTC also filed the Accountable Tech Organization petition, which urged action to regulate their data collection practices. For sure, this was aimed at the big beast companies like Google and Amazon, but what most commentators missed was the impact it could have on smaller companies too. The petition is still under debate, which means it’s yet to be ratified, but in conjunction with the BSAA the whole privacy regulation train might accelerate and come to a station near you soon.
Is the bill a bull in the ad tech China shop?
The BSAA is an ambiguous document that lacks precision, specifics, and clear terminology when compared to Accountable Tech’s petition and other initiatives like the California Consumer Protection Act. As a result, it may not pass at first reading, but the prospect of more privacy-related ad targeting restrictions is not going anywhere. That’s good for breaking up the dominance of the big beast companies, but where does that leave ad tech?
Generally speaking, the ad tech community has expressed concern that the BSAA and other privacy-related projects will step-by-step lead toward something stricter. Companies focused on internet privacy, like DuckDuckGo and Proton, support the BSAA, which should come as no surprise. Much of the rest of the industry is far more guarded, as it should be, as small steps that restrict our ability to generate revenue from data could grow in size.
What bill supporters think
The main argument bill defenders advocate is that the current situation in the ad world is to one extent or another invades user privacy. “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 misinformation, discrimination, voter suppression, privacy abuses, and so many other harms. The surveillance advertising business model is broken”, said BSAA co-author congresswoman Eshoo. With the introduction of the bill, officials expect to stop advertisers from exploiting user internet activity for profits and build a safer web climate. The US officials who were engaged in document production are also afraid personal data might be used for spreading misinformation, extremism, racism, and other forms of illegal activity throughout the digital environment.
The collective Support for the Banning Surveillance Advertising Act statement composed by numerous representatives from public organizations, universities, internet privacy companies such as DuckDuckGo, Accountable Tech, and Consumer Federation of America proves wide support for the initiative’s attempt to reduce corporate effect on internet privacy. For example, Andy Yen, CEO of Proton believes the initiative will reorient the internet toward security: “The internet has done a lot to help mankind, but it remains built on a business model that is fundamentally at odds with privacy. Targeted advertising not only encourages online surveillance but also exploits consumers while perpetuating issues like misinformation and discrimination.”
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Get the ReportWhat bill opponents think
The opposition believes that personalized ads are advantageous for all sides of ad exchange, including advertisers and consumers. In their view, regardless of an advertising channel, users would rather see relevant promotions for products they actually need and are interested in buying. Marketers, in turn, are saving their ad budgets by only targeting relevant users, which ultimately helps their businesses grow and pay more taxes. In such circumstances, sacrificing a bit of consumer privacy is a fair price to pay.
One of the biggest opponents of change, Meta, started a “Good Ideas Deserve to be Found” campaign in February 2021, in response to Apple’s crusade to disable cookies and app tracking. The company’s head of marketing Andrew Stirk in an interview with CNBC said “The goal is to help people understand the role that personalized ads play for small businesses, for their ability to grow and thrive, and also the role they play in helping discover ideas that might not otherwise exist…”
The rest of the bill-rejecting community generally shares Meta’s take, confirming that the change would harm small businesses that are staying competitive only thanks to digital advertising. Moderate marketers, however, despite admitting the feasibility of such change, believe users should be allowed to consent to such restrictions themselves in the first place. The ones more radical-minded predict catastrophic consequences in case the bill passes. Randall Rothenberg, executive chair at IAB is afraid of massive-scale disruptions like ‘the death of direct marketing practice in the US’.
Will the bill impact CTV?
Ad technology is going to be more profoundly affected by the BSAA than other fields, and one area where media will likely avoid its full impact is in CTV/OTT. For one it’s harder to police ads on television, whether it’s CTV or not, and as most streaming services operate on a subscription basis, suppliers can limit the amount of customer data they process. There’s simply more competition in this sphere too, which drives data gathering innovation, especially compared with online ad tech where the big advertisers have somewhat stifled the market.
The idea of transparent and fair ad delivery systems to treat buyers, sellers, and users equally is a good one, and we should welcome developments that would actually achieve this. Whether or not the BSAA represents full overreach is a subject for debate, but certainly, CTV offers a more secure position from which to work. As for ad tech in general, time will tell about the bill’s full impact on the industry. Currently, it is awaiting a potential vote in the House Energy & Commerce Committee and in the Senate Commerce, Science, & Transportation Committee, meaning it may be accepted with major edits or rejected at all.
