Can Digital Media Continue to Thrive?

The internet and advertising were made for each other.

In fact, in many ways, advertising provided the crucial support for the internet and mobile’s unprecedented growth through the infusion of the massive revenue it generated. Advertising thrived in this new digital media environment because, among other reasons, the cost of entry was extraordinarily low, and the internet provided a way to quickly reach a broad geographically dispersed audience. The internet and mobile allowed advertisers, whatever their economic level, to reach across miles and oceans, and offer consumers advertising directed to their specific interests and needs. Advertisers also could constantly monitor their messages’ effectiveness and modify their ads and advertising campaigns immediately if their messages were not succeeding.

These capabilities dramatically leveled the marketing playing field and permitted new entrants to challenge longstanding industry giants. Facebook began in a dorm room; a garage gave birth to Amazon; and Google emerged out of a college seminar. Yesterday’s upstarts are today’s internet and mobile giants fueling the economic gains of today’s economy. 

Recently, however, a cascade of new laws and regulations are challenging many of the fundamental underpinnings of the digital media growth model. These initiatives are placing tightening restrictions on advertisers’ use of data and effective outreach to consumers.

First came the General Data Protection Regulation (GDPR) that imposed a highly limiting opt-in regime for data use throughout the European Union. Shortly thereafter, the California Consumer Privacy Act of 2018 (CCPA), the most sweeping and restrictive privacy law ever passed in the U.S., was approved. Follow-on CCPA privacy regulations developed by the California Attorney General further constrain advertisers’ use of data.

The CCPA regulations (which became effective this summer) allow for the imposition of global browser settings that threaten to effectively convert the CCPA’s opt-out provisions into an opt-in regime. The final CCPA privacy regulations removed the requirement that consumers affirmatively select their choice to opt out and that there not be any pre-selected settings. As a result, intermediaries (browsers) can now create global mechanisms that cast a single consumer opt-out preference (a Do Not Sell signal) to the entire internet marketplace, and so these global browser opt-out signals could well become default settings. Consumers may end up inadvertently being opted out of transfers of data they do not wish to restrict. Limiting such data sharing clearly does not help consumers because it limits the receipt of valuable information they likely wish to acquire. 

This seemingly endless march of restrictive privacy proposals is far from over.

Barely four months after the new CCPA regulations went into effect, Californians will be faced with a new complex privacy ballot initiative. The proposed California Privacy Rights Act (CPRA) would limit data collection and use even further. The CPRA, which will be voted on by California voters this November, is modeled in many ways on the GDPR, which itself has resulted in significant restrictions on advertising. The CPRA would create for the first time in the U.S. an administrative agency whose sole function is to regulate alleged privacy violations and the ability to impose further restrictive regulations in regard to privacy and data use. 

These trends are likely to accelerate substantially in 2021. The COVID-19 pandemic rightly diverted numerous states’ attention to immediate responses to this virtually unprecedented challenge and many other state legislatures were forced to adjourn early. However, this left a raft of inconsistent privacy proposals lined up for early action creating high odds of an evermore Balkanized privacy marketplace. That is why ANA and other major organizations in the advertising and business community so strongly are urging, through the Privacy for America Coalition, for the adoption of a federal privacy law that will supersede multi-state inconsistent privacy rules.

This federal paradigm will create a unified set of standards for companies that collect and use data, enforced by a greatly strengthened FTC, while protecting consumers no matter where they live and giving advertisers clear, fair rules to follow. The paradigm will shift the burden to manage privacy from consumers to businesses, while ensuring consumers’ access to a rich array of products and services sustained by data.

Without this type of strong federal action, the digital engine that has created a major boost to economic growth in the U.S. for many years will be slowed substantially and make our ability to rebound from the steep marketplace downturn due to the COVID-19 crisis far more difficult and problematic.