The following is a guest piece by Beth Egan, associate professor of advertising at Syracuse University’s S.I. Newhouse School of Communications. Opinions are the author’s own.
After 25 years of helping businesses advertise to the right audiences and teaching advertising data and analytics, I know what works in this industry and who wins and loses when big changes happen. So it’s frustrating to sit on the sidelines of academia and not shout “foul!” when the government goes after big tech and starts meddling in advertising regulation, which will ultimately hurt small businesses the most.
Before the internet, mass media advertising was king. Television, radio and billboards were effective for large companies that wanted to sell lots of products to millions of people. Age and gender were the only real data points that mattered unless you advertised specialty products in specialty content, like magazines and broadcast programming targeting kids or minority communities. Most small businesses advertised using yellow pages, classified ads, community newspapers and coupon mailers.
Today digital media supports millions of small business advertisers and hundreds of thousands of small creators and publishers. Digital advertising works because small businesses can find the people most likely to be interested in their product or services based on what they show interest in online, which helps to avoid wasting money. Equally powerful is the real-time data advertisers receive about what ads are working, enabling many small advertisers to make small test buys and invest in those that work.
We’ve all seen ads pop up on our phones, and it seems like they know what we’re thinking. When I first moved to Syracuse, New York, I bought a warm winter coat online to survive the brutal winter. Unsurprisingly, an ad for that same product appeared on my phone a few days later. If ad platforms were spying on me, they would have known I bought the jacket and would not have advertised it to me.
What’s actually happening is platforms like Google and Instagram, where many small businesses run ads, are using anonymous data about our behavior and search history to group people together with similar interests, and ads are shown to each group depending on what appeals to them. Let’s be clear — browser data collected and stored isn’t personally identifiable, like email addresses and phone numbers. It’s just telling a story about how an anonymous person spends time online.
Small advertisers are the biggest digital advertising winners because it is the great equalizer. In a recent Data Catalyst Institute survey, 57% of small business advertisers report that digital ads generated more than $50,000 in annual revenue, 82% say digital ads are more effective than billboards and television and 80% say digital ads help them compete against larger companies.
Unfortunately, our elected officials fail to understand how data is actually collected and used, and many falsely claim that digital ad platforms like Google and Facebook spy on people.
Federal agencies are threatening new regulations, some in Congress want to cripple digital ads, and Florida legislation could also prove extremely harmful. Any new laws or regulations making data collection harder or nonexistent would be catastrophic for small businesses relying on digital ads. They would also harm consumers. Someone who likes mom-and-pop restaurants might start getting Applebee’s ads. That doesn’t help anyone except the big corporate brand.
The truth is digital advertising democratizes the internet by helping small businesses grow. Whether using ads to reach their target audience more effectively and efficiently than traditional advertising or selling ad space on their website or app, digital ads help entrepreneurs get started, find customers, make money and compete with much bigger brands.
I understand that privacy matters and it’s important for Congress to pass a national data privacy law that protects consumers and allows small businesses to continue using digital advertising. But breaking or completely overhauling the entire digital ads market is the wrong solution, and small businesses shouldn’t bear the brunt of bad policy.