Zuckerberg’s Senate appearance stokes fears of over-regulation in digital advertising

by | May 10, 2018

Should digital advertisers be worried about upcoming legislation that could potentially hamper their successful marketing campaigns? Over-regulation in digital advertising is a primary concern for brands, advertisers, and publishers in the U.S. and abroad, as calls for new legislation gain steam.

Digital advertising has been placed in the spotlight as information about Russia’s use of digital ads on Facebook and other platforms during the 2016 election continues to draw scrutiny. On April 10th, 2018, Facebook CEO Mark Zuckerberg appeared before Senators who expressed exasperation and concern over Facebook’s handling of the situation. Throughout the more than 10-hour hearing, the topic of regulations that apply to customer data and digital advertisements were a hot-button topic, leaving many in the industry on the edge of their seats.

While the 2016 presidential election has played a key role in the recent focus in digital advertising, the growth of the medium, specifically in the political arena, has invited scrutiny over the last half-decade. In 2014, digital ads made up less than 1 percent of political ad spending. By 2018, that number had skyrocketed to 22 percent, according to a recent report by Borrell Associates. That marks a 2,539 percent growth in digital political ad spending.

over-regulation in digital advertising
Source: OpenSecrets

Political digital advertising has grown extremely rapidly since 2014 and appears poised to surpass broadcast advertising spending in the coming years.

According to experts, this is just the beginning. Using digital mediums for the delivery of political messaging is expected to see huge growth in the coming years. Whether or not the 2016 election had drawn the level of scrutiny that we are currently experiencing, this level of growth would have eventually led down the same path.

Today, there are few laws that regulate political advertisements on digital mediums. A 2002 law that was developed before the internet was even a significant source of political messaging requires that all advertisements include disclaimers informing consumers who paid for the message. But, even that isn’t set in stone as there are multiple exemptions on smaller advertising campaigns.

The issue received increased attention again in 2011 when Facebook asked that the FEC consider an exemption from political disclosure requirements under the 2002 law. At the time, FEC commissioners could not agree on the matter and no decision was ever reached. The lack of movement in this arena has played a key role in the subject receiving increased attention from lawmakers and consumers, culminating in the controversy surrounding the 2016 presidential election.

Broad digital advertising regulation is coming

It doesn’t take a lot of foresight to see that regulation in digital advertising is on the horizon. While the focus has been specifically on political digital advertising, the recent revelations about Cambridge Analytica’s mishandling of consumer data almost guarantee that future regulations will deal with consumer data collection and digital advertising at large. These scandals, combined with the recent implementation of the EU’s GDPR show that there is a rising interest in broader regulation for digital advertising platforms.

The question is not if regulations are coming, but rather when and what they will look like. Many speculate that the United States could start by using the EU GDPR as a basis for their own regulations. If that were true, advertisers could expect the regulations to focus on simplified data collection consent, required notification of breaches, and improved systems for capturing and storing consumer data securely.

How can digital advertisers prepare for new regulations?

Without any idea of what might be on the horizon, it’s easy to assume that the sky is falling when it comes to digital advertising, but advertisers should take a deep breath and relax. While the GDPR did raise some concerns about over-regulation in digital advertising, the general consensus is that while the new regulations are significant, they are as inhibiting as many worried. If the U.S. were to adopt similar policies there would be changes in the industry but they would be manageable for most firms.

There are a few steps that all digital advertising firms should take to prepare for future regulations:

Stay on top of new developments

It’s hard to give advice about how to prepare without knowing what advertisers specifically need to prepare for. As new information comes to light, advertisers should pay close attention to the types of policies and changes that are being discussed. If the Zuckerberg hearing taught us anything, it’s that U.S. Senators are not, by and large, well-versed on these technical topics and educating lawmakers may take some time, which could delay new regulation. As new information becomes available, pay attention and use that information to make preparations.

Use the GDPR as a guidebook

While there is no guarantee that U.S. lawmakers will use the GDPR as a guidebook, there is a good chance that new regulations will take some cues from the legislation. In particular, lawmakers are expected to grant similar rights to consumers regarding ownership and usage of their data. If you already do business in the EU, you have to adhere to these standards. To get ahead of things, you can begin to implement similar policies in the U.S. and in other jurisdictions around the world to prepare for upcoming changes.

Get your opinion heard

Leading up to new digital advertising legislation, there will be opportunities for advertisers to present their case and play a role in the shaping of future regulations. Whether on the local, national, or international level, take advantage of opportunities to play a part in this process and provide insight. While the focus may be on Facebook and large advertising platforms, new regulations will affect thousands of ad firms, brands, and publishers around the world.

A new landscape in digital advertising

The recent controversies surrounding consumer data protections and digital advertising have stoked fears of over-regulation in digital advertising. Those fears are rational, as the U.S. Senate appears under-educated on the subject and under heavy public pressure to regulate large platforms like Facebook. However, with no indication of what U.S. advertising regulations could look like, it is important that advertisers keep a close eye on new developments and prepare ahead of time for changes that are undoubtedly on the horizon.

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