Are Big Changes Coming to Digital Ads in 2022?

In the United States, proposed legislation, agency rulemaking, and the promise of a decentralized web could lead to significant changes in how digital advertising works this year or in the not-to-distant future.

On January 18, 2022, Representative Anna Eshoo (D-CA), Representative Jan Schakowsky (D-IL), and Senator Cory Booker (D-NJ) introduced the Banning Surveillance Advertising Act.

The proposed legislation would prevent ad platforms, including Facebook Ads and Google Ads, from targeting individuals based on some forms of personal information and behavioral data.

The act is the most recent move in a wave of privacy-focused actions that could impact digital advertising.

Surveillance Advertising

According to the bill, “An advertising facilitator may not target the dissemination of an advertisement…with a list of individuals or connected devices; contact information of an individual; a unique identifier that may be used to identify an individual or a connected device; or other personal information that can be used to identify an individual or a connected device.”

That definition of surveillance advertising essentially describes most of the audience-based digital ad targeting before Apple introduced new privacy options for its devices last year.

When Apple allowed iPhone users to choose whether to share information, advertising changed. Facebook, in particular, saw the move as damaging to its business. Some companies reported increased customer acquisition costs. But privacy experts argued that not enough was done since many forms of individual targeting are still possible.

FTC Rules

In September 2021, Accountable Tech, an advocacy group, asked the U.S. Federal Trade Commission to create new rules that ban digital ad targeting.

The Accountable Tech request would have an effect similar to the proposed Banning Surveillance Advertising Act.

“Surveillance advertising — the core profit-driver for gatekeepers like Facebook and Google, as well as ad tech middlemen — is the practice of extensively tracking and profiling individuals and groups, and then microtargeting ads at them based on their behavioral history, relationships, and identity,” the group wrote in an open letter.

“These dominant firms curate the content each person sees on their platforms using those dossiers — not just the ads, but newsfeeds, recommendations, trends, and so forth — to keep each user hooked, so they can be served more ads and mined for more data.”

The FTC has not taken action, but it could.

Web3

Lawmakers and privacy advocates are not the only ones attacking individual ad targeting. Techies are too.

Web3 is all the rage. It describes a decentralized, blockchain-driven replacement for the worldwide web that ousts tech giants in favor of cooperatives.

Without getting bogged down in the particulars of how the blockchain or peer-to-peer networks could restrict personally identifiable information (PII), know that some web3 advocates plan to pay people for viewing ads.

The idea goes like this. First, no one’s PII could be shared without express consent. Second, when someone did share PII and that information was used for ad targeting, the individual would be paid.

It is possible to imagine a web3 social media network wherein grandmothers earn a small side income looking at photos of their grandchildren and seeing an occasional ad from an arts and crafts retailer such as Michaels.

Ad Impact

It is possible or even likely the Banning Surveillance Advertising Act won’t pass, the FTC won’t issue new rules, and a web3 replacement for Facebook won’t emerge anytime soon.

But digital advertising is changing.

Legislative bodies, privacy advocates, and at least some folks developing the next generation of internet protocols and applications want advertising to transform.

Each group may have different reasons, but the outcome will be the same: We are likely near the end of behavioral targeting for ads.

There are a few ways ads might change.

• Contextual advertising. Advertisers will use more contextual advertising, placing ads where likely customers are.

• Traditional advertising. Some companies may use so-called traditional ads. Shared direct mail, for example, is already popular with subscription ecommerce companies and retailers.

• Paid participation. Some companies could pay users to view ads even before any substantial impact from web3.

• Ad tracking alternatives. New ad technologies could emerge that satisfy legislation and offer a way of showing ads based on behavior. Google has several such proposals, including Federated Learning of Cohorts or FLoC, which targets groups of people rather than individuals.

The Counter Argument

Some have argued that so-called surveillance advertising is relevant advertising.

Tracking individuals, these folks suggest, is beneficial to the advertiser and the consumer. Vegans don’t see ads for pulled pork. Children don’t see ads for booze. And the ads consumers see are presumably specific to their interests.

Proponents of that argument, however, appear to be fighting an uphill battle and will need to demonstrate the value of personalized ads to prevail.