The American Privacy Rights Act (APRA) could drastically change digital advertising. By requiring explicit consent for using sensitive data, APRA could potentially hinder small businesses and publishers, threatening their ability to effectively target and personalize ads.
The race to a federal U.S. data privacy law has been a slow trudge to victory, and the American Privacy Rights Act (APRA) is no different. While the supporters and detractors of the act understand the need for a federal privacy law, some of the minute details cause contention.
If passed, APRA could significantly impact advertising by defining sensitive data as “online activities over time and across third-party websites,” requiring express consent for its collection or sharing.
While the bill allows opt-out for targeted advertising (excluding measurement, first-party, and contextual advertising), the inclusion of online browsing data as sensitive means targeted advertising data can’t be used without consent. Publishers focusing on first-party data will benefit if ARPA passes, but the shift from opt-out to opt-in will be disruptive.
If a data privacy law like APRA passes, small businesses may face significant challenges in digital advertising. As you all know, personalized ads play a crucial role in helping SMBs compete with larger brands, reach targeted audiences, and measure campaign success. Still, concerns about data privacy and its impact on small businesses’ data collection and attractiveness to advertisers remain. The federal government and publishers want to craft a law promoting strategic advertising that balances personalization and consumer privacy protection.
Advertiser Perceptions, in collaboration with the Connected Commerce Council and Google, recently released a survey highlighting the impact of personalized digital ads on small to medium-sized businesses in the US. At a virtual press conference some SMBs shared their experiences with data-driven advertising and discussed concerns about APRA. Here’s what they had to say.
APRA Could Potentially Kill Personalized Advertising, and Ultimately, Publisher Revenue
Advertiser Perceptions, a research firm specializing in advertising, regularly engages with top agencies and brands to gauge market insights. They conducted the survey to understand how the use of personalized digital ads impacts the success of advertisers and publishers.
The study surveyed a wide range of advertisers, including SMBs with fewer than 500 employees and large national advertisers, to understand their current use of personalized digital advertising and the potential effects of not utilizing these ads. The results reveal that 82% of respondents attributed 2023 revenue growth to customized ads. Without these ads, one in five businesses would face closure or layoffs, and nearly half would need to raise prices.
The results for publishers are even more dire. Data shows that 37% of publishers will face layoffs or closures, 45% might implement paywalls, and two-thirds will increase ad volume. If you read the news, it’s evident that many publishers are already dealing with these issues. These ads are crucial for small businesses to compete with larger brands and measure ad effectiveness.
Personalized digital advertising enables small businesses to reach target audiences and measure the success of their campaigns. According to Advertiser Perceptions, seven in ten businesses use these ads to find new customers, and three in five use them to reach local customers, significantly extending their reach beyond traditional methods.
Simply Lakita: Will Smaller Publishers Suffer if APRA Passes?
Lakita Anderson, an online food blogger based in Panama City Beach, Florida, runs a recipe website called Simply Lakita, where she shares modern comfort food recipes with a twist. Since starting her blog in 2013 and turning it into a full-time business in 2016, she has built a significant following with over 700,000 readers and 15,000 Instagram followers. Initially partnering with brands through influencer campaigns, she found the process exhausting and shifted her focus to monetizing her blog through digital ads.
Transitioning to digital ads allowed Anderson to streamline her operations and focus on content creation, significantly reducing the burnout she experienced with brand partnerships. Her blog’s success is closely tied to the ability to show relevant ads to her readers, which is made possible by collecting anonymous data about their preferences and behavior.
This data is essential for attracting advertisers who want assurance that their marketing efforts reach the right audience. As a result, Anderson’s revenue model relies heavily on effectively using this data to maintain and grow her income.
Recently, Anderson participated in a hill briefing with staff from Representative Neal Dunn and Representative Craig’s offices to discuss the potential impacts of APRA on her business. She argues that APRA could severely hinder her ability to collect the necessary data to attract advertisers, which is crucial for her revenue.
“While consumer privacy is important, APRA fails to strike a balance that also considers the needs of small businesses,” said Anderson. “Access to this data is necessary to prove the value of ad placements on her website to advertisers, potentially jeopardizing my primary source of income. This legislative change could force me to reconsider my entire business model, threatening the viability of my blog and the livelihood I have built around it.”
Implementing Privacy-Conscious Advertising Practices
Experts recommend strategies to help small businesses deal with potential data privacy law changes while leveraging personalized digital advertising.
It starts with educating lawmakers on the crucial role of personalized ads for small businesses and the risks of overly strict privacy laws. Publishers should push for legislation that protects consumer privacy without stifling their ability to target customers effectively. However, if this does happen, businesses should diversify their advertising approaches and explore alternative revenue models, such as subscriptions or paywalls, in case personalized ads face restrictions.
Still, privacy compliance is of the utmost importance. Data experts like Advertiser Perceptions and publishers like Anderson believe there needs to be guidance around using personalized advertising in a privacy-sensitive manner, like employing aggregated data and anonymized profiles. Additionally, it promotes technological solutions that enable personalized ads without extensive user data, such as contextual advertising or machine learning.
This is especially important for smaller publishers who do not have the same resources, and possibly even education, about the ins and outs of privacy and personalized advertising. It’s up to everyone in the industry to advocate for small businesses in the data privacy policy discussions to ensure their interests are met and that new regulations balance privacy concerns with business needs.