What will the transparency fight mean for digital advertising?

Congressional lawmakers on Thursday touted their digital ad transparency legislation as a way of applying current rules governing television and radio campaign marketing to the internet.

But some practitioners worry that the law is unworkable and could aggravate Google, Facebook and Twitter enough to hinder future campaign advertising.

Facebook has already warned that ads targeting specific issues and religious or ethnic groups will faced added scrutiny.

If the Honest Ads Act that Democratic Sens. Mark Warner (Va.) and Amy Klobuchar (Minn.) are pushing becomes law, it would place additional legal disclosure requirements on Facebook or any platform that receives $500 in advocacy spending and which has an average of 50 million or more unique visitors annually.

If the ad spending isn’t properly disclosed in the newly required database, there could be fines and other liabilities for the online platforms, Klobuchar said Thursday at a Capitol Hill press conference.  

“It’s really putting this on par with where broadcast and radio are today,” she said.

That idea has practitioners scratching their heads and wondering if the senators, who have both spent millions of dollars on advertising during their campaigns, truly understand the online ecosystem.    

“Which agency is going to fine Facebook if the public file isn’t correct? Who’s going to be in charge of corralling the hundreds of thousands of advertisers who hit Facebook every day? There’s no authority to do this,” one Democratic media buyer told C&E. “I think this has a snowball’s chance in hell of getting through as it’s currently crafted.”

The law does have bi-partisan support. Sen. John McCain (R-Ariz.), who is also backing the bill, didn’t attend the Senate presser, but said in a statement that the legislation “would address this serious challenge by expanding landmark campaign finance law to apply to internet and digital communications platforms that command a significant audience.” Moreover, Reps. Derek Kilmer (D-Wash.) and Mike Coffman (R-Colo.) are backing the House version.

Now, other practitioners told C&E that they were reviewing the bill. Before it was unveiled on Thursday, several consultants questioned how it would work.

Leaving the federal regulatory debate aside, the more immediate impact to the digital ad ecosystem will come from changes made by the platforms themselves. And there, some consultants are hopeful those quick shifts will be a net positive for digital advertisers in 2018.

“While we fully believe that Facebook and other platforms should be a place to have open discussion, we believe the people having those discussions should be real people,” Amy Kelleher of the Democratic firm Bully Pulpit Interactive said at a recent C&E breakfast discussion on the state of digital advertising. “We need to crackdown on bots and fake profiles.”

Earlier this week, BPI released a series of recommendations to increase transparency in the digital ad space, encouraging a ban on the use of fake social profiles by campaigns.

Katie Spannbauer, the advertising director at the Republican digital firm Targeted Victory, said her firm not only welcomes the changes Facebook is implementing to its ad process, but believes a longer term move to greater transparency in reporting will ultimately lead to more money spent on digital advertising.

“With TV buys, everyone knows what everyone else is buying. In digital, no one really knows,” said Spannbauer who questioned whether the Clinton campaign might have poured more into digital advertising in key states ahead of Election Day 2016 if the campaign knew how large Trump’s digital spend really was. “We’re hoping more transparency ultimately gets more ad budget to digital.”   

As for the regulatory effort moving through Congress, there are major questions that remain unanswered. For instance, what would a new public database of online campaign ads look like, and how will it be accessed? If a website receives 50 million or more unique visitors but is based in, say, Canada, what obligation does it have to comply with U.S. regulations? Will last-minute online spending be treated the same as IE spending, which could be incredibly burdensome to the site required to do the reporting?

During a news conference, Sen. Warner cited Russian online meddling in the 2016 election as an impetus for the bill. He noted the recent report about a Twitter account purporting to be representative of the Tennessee GOP, but was actually being run by Russians.

“Campaigning is changing,” Warner said, and that requires digital be subjected to the “same kind of disclosure requirements” as TV or radio.

The problem with that argument, some consultants say, is that it has few of the same characteristics. To wit, TV stations are beholden to the FCC for their licenses and therefore have an impetus to comply with reporting requirements. Websites like Facebook, Google and Twitter are not.

“The people who drew up the language are coming at it like old school broadcast and radio, and applying those to the internet,” the Democratic media buyer said. “They have very little idea how the sausage is actually made.”

As the legislative sausage making gets underway, at least one industry trade group pledged to work with lawmakers.

“Preventing interference in U.S. elections is essential, and our industry is committed to sensible reform that achieves that goal while preserving free expression,” Dave Grimaldi, EVP of Public Policy, at the Interactive Advertising Bureau (IAB) said in a statement.

By:  Sean J. Miller
Source: Campaigns and Elections