In Defense of Tailored Advertising: Key Trade Groups Rally Around Responsible Data Collection to Serve Relevant Ads and Engage Consumers

March 16, 2022

Big Idea: Societal value is generated through interest-based advertising while extending meaningful consumer privacy, business groups told Members of Congress citing DAA earlier this month. DAA Board members push for balanced federal privacy legislation.

Since 2009, Digital Advertising Alliance Principles have existed to extend meaningful privacy safeguards and controls to consumers while enabling a more relevant advertising experience, and facilitating a thriving, competitive digital economy that serves thousands of businesses and millions of consumers. On March 1, 2022, the House Energy and Commerce Subcommittee on Consumer Protection and Commerce, led by Rep. Janice Schakowsky (Chair, D-IL) and Gus Bilirakis (Ranking Member, R-FL), held a hearing regarding a handful of House and Senate bills introduced thus far in the current Congress which could reduce relevance and increase costs for consumers and businesses alike.

In written testimony, two organizations represented on DAA’s Board – the Association of National Advertisers and the Interactive Advertising Bureau – emphatically called for a federal privacy law that would recognize the benefits accrued from the responsible collection of data to serve consumers more relevant ads, while prohibiting uses of data where consumers and businesses are harmed. Both cited DAA’s program as an example of how transparency, consumer control and accountability is extended in the U.S. marketplace.

The Data-Driven Economy Delivers for both Consumers and Businesses

ANA opened its comments underscoring the economic benefits that serve consumers and businesses significantly in the current marketplace citing, in part, DAA research.

“Consumers can access practically limitless free and low-cost information and offerings through the Internet because of data-driven advertising. Without data-driven advertising, many online providers could be forced to shift to a subscription-based model where much of the online world would be accessible to a consumer only upon payment of a fee. An increase in subscription-based services (the predictable result of the proposed bills) would change the egalitarian nature of the Internet by which consumers of all economic backgrounds can access content and offerings on a relatively equal basis. Understandably, consumers prefer today’s Internet. A recent survey of consumer attitudes towards data-driven advertising found that consumers assign a value of over $1,400 per year to virtually free content and information they access online due to data-driven advertising, and 88 percent of respondents stated they find advertising useful for finding new products. In addition, data-driven advertising generates jobs and supports Americans’ livelihoods. For example, advertising supported $2.1 trillion in Americans’ salaries and wages in 2020, a figure that represents 18.2% of total labor income in the United States. As a result, a ban like the one proposed in H.R. 6416 and S. 3520 could threaten Americans’ livelihoods and salaries at a time of significant economic stress.”

Further, ANA reported, “Data-driven advertising enables businesses of all sizes to reach current and potential customers with relevant messaging, services, and products efficiently and inexpensively. The practice helps today’s small and start-up companies evolve into flourishing businesses that lend value to everyday Americans’ lives. Additionally, nonprofits use advertising to solicit donations to further their charitable missions. Surveys show that 74% of small and mid-size entities believe that data-driven advertising is ‘important to the success of their business.’ These businesses rely on data-driven advertising to generate sales and revenue to a much greater degree than their larger business counterparts. A ban of the type contained in the proposed bills would cause many companies, including nonprofits and charities, that use data-driven advertising to reach audiences and compete to lose an essential method of making contact with existing and new customers.”

IAB reported several key marketplace realities to the Subcommittee members, and called for a principles-based approach in a federal regulatory regimen:

  • “Advertising, especially data-driven advertising, provides immense value to society and the economy by opening new markets to small, mid-size, and large businesses alike by enabling them to connect with consumers and compete with each other.
  • The digital advertising ecosystem fosters a competitive marketplace for advertisers, publishers, and technology companies. Overly broad prohibitions would limit competitive opportunities and lead to more marketplace concentration, not less.
  • Data-driven digital advertising increases revenue for online publishers and makes all kinds of Internet companies sustainable.
  • Consumers value the ad-supported Internet and the relevant advertising it delivers and understand their choices regarding data-driven marketing. Consumers are not harmed by data-driven advertising.
  • The proposals to ban or unreasonably constrain data-driven advertising violate First Amendment protections for commercial and individual speech.
  • A national privacy standard rooted in a principles-based approach can address actual consumer harms while allowing for innovation to continue and consumers to still access the services and products they desire.”

Congress Should Consider a Principles-Based Approach to Federal Privacy Legislation

Both ANA and IAB offered the Privacy for America framework as an example of such an approach.

IAB also stated: “In addition, self-regulatory frameworks, such as the Digital Advertising Alliance Self-Regulatory Principles (‘DAA Principles’), allow all consumers, regardless of their state of residency, to opt out of interest-based advertising and have been recognized by the FTC as providing important consumer protections. Consumers recognize the DAA AdChoices Icon and understand that it provides easy access to data controls. Even though consumers are offered various ways to opt out of data-driven advertising, studies show that few actually exercise that choice, underscoring the value they receive from relevant advertising targeted to their interests and needs.”

A third organization, the U.S. Chamber of Commerce, presented its own testimony in support for the current interest-based advertising ecosystem, particularly as it addresses small- and medium-sized businesses (SMBs), stating:

“The Chamber opposes H.R. 6416, the so called ‘Banning Surveillance Advertising Act of 2022,’ which would harm the online advertising ecosystem that has contributed to a thriving internet-based economy. In particular, small businesses would be hard hit by this legislation. Efficient and cost-effective online advertising—across a range of websites, apps, and technologies—saves US small businesses an estimated $163 billion annually. Additionally, consumers preferred tailored and relevant advertising.  Small companies increasingly used digital tools as a lifeline to reach consumers during the pandemic.”

It is absolutely necessary that Members of Congress fully grasp what is at stake in their pursuit of a comprehensive and effective federal privacy law, a need made more acute by a continuing march of a patchwork of U.S. state laws.  Part of that federal effectiveness is ensuring that the benefits of the data-driven economy – one of them being interest-based advertising – are fully available to deliver on their promise of benefit to consumers and businesses alike. I wish to thank our trade association partners for advancing this message so articulately.

DAA continues to serve as an example of how a principles-based approach can deliver both consumer privacy and advertising innovation simultaneously.

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