Authored by:

Gianna, Privacy Engineering Consultant at Tueoris

In the United States, state-level initiatives lead data privacy regulation. Significant laws were implemented in several states in 2023, with more expected in 2024, including Texas, Oregon, and Montana. The California Privacy Rights Act (CPRA), enhancing the earlier CCPA, sets a robust example by establishing a dedicated enforcement agency and extending consumer rights to opt out of data sharing for advertising. Federally, progress is slower, yet a bill introduced by Senator Mike Lee seeks to transform digital advertising by restricting the control of major tech companies and increasing transparency, reflecting a growing demand for clearer industry practices.

At the federal level, momentum is building, albeit slowly. A new bill, spearheaded by Utah Senator Mike Lee and supported by a bipartisan group, aims to drastically reshape the digital advertising sector. This proposed legislation, known as the Competition and Transparency in Digital Advertising Act, targets major players such as Google, Meta, and Amazon. It would prohibit entities with over $20 billion in digital ad revenue from controlling both the technology and marketplaces that manage ad transactions. Additionally, companies earning more than $5 billion from digital ads would need to prioritize customer interests and enhance transparency concerning data collection, bidding processes, and associated fees. While this bill is still making its way through the legislative process and has not yet become law. However, its implications for the future of digital marketing could be substantial.

CTDA Highlights

Understanding the CTDA Act’s Objectives

At its core, the CTDA Act seeks to diminish the overwhelming control exerted by large tech companies over the digital advertising sector. Specifically, it targets companies generating over $20 billion in advertising revenue, such as Google, Meta, and Amazon, and would prohibit them from owning multiple stages of the digital advertising pipeline. This move is intended to foster competition and prevent these giants from monopolizing the ad space.

Transparency: A Major Pillar of the CTDA Act

A key element of the CTDA Act is enhancing transparency in digital advertising. The legislation would require that firms provide detailed performance data to their ad-buying customers, aiming to eliminate any opacity that currently exists in how ads perform and how ad spaces are awarded. This would ideally level the playing field, ensuring that no company, regardless of its size, can favor its products unfairly.

Potential Impacts on Marketers and Tech Giants

Should the CTDA Act pass into law, large tech firms may have to divest parts of their businesses related to digital advertising, thereby losing the ability to simultaneously act as player and referee in the advertising game. This could lead to a more diversified advertising landscape but might also introduce some short-term challenges for marketers.

For marketers, the increase in transparency and competition could be a double-edged sword. On one hand, it promises more straightforward dealings and potentially better terms as monopolistic practices are dismantled. On the other hand, marketers may face increased costs and less precise targeting as they lose access to the integrated services provided by companies like Google and Meta.

Strategies for Marketers Moving Forward

As the CTDA Act progresses through the legislative process, it’s a prudent time for marketers to explore and strengthen alternative marketing strategies, such as email and programmatic marketing. Diversifying marketing efforts can prepare businesses for any shifts in digital advertising dynamics that result from new regulations.

Summary – Staying Informed

This bill, if passed, could compel giants like Google to divest significant portions of their advertising operations, introducing unprecedented transparency to programmatic advertising for both advertisers and publishers. While the bill’s future remains uncertain, its progress to the Senate floor and its bipartisan support highlight a significant shift towards greater transparency and fairness in the digital advertising industry. The dialogue surrounding these legislative efforts reflects a growing demand among Americans for a digital advertising industry that is more transparent and accountable, moving from opaque operations to a more illuminated and scrutinized environment.

Marketers should remain informed and consider adjusting their strategies to anticipate changes in the digital advertising landscape. This proactive approach will help ensure that businesses are well-positioned to adapt to any new regulatory environment.