As lawmakers across the country move to regulate online advertising at the state level, strategists are increasingly concerned about the impact such laws will have on digital advertising campaigns.
Maryland and Washington state have newly-minted laws on the books while Connecticut, Hawaii, and California are among a number of other states where bills to further regulate digital advertising are under consideration.
For political consultants, there’s a general unease about the broadness of new state laws, particularly in Washington state and Maryland, several strategists told C&E. As a result, the approach at the moment is one of caution, which in the short-term means less digital advertising in those states. Among the biggest concerns: navigating new disclosure requirements at the state level, clunky verification processes, and ambiguous language in some state statutes.
"There are some platforms that are able to be compliant,” said Mark Jablonowski, managing partner and chief technology officer at DSPolitical. “For example, Facebook ads can be done in Maryland because they’re able to track and report everything. But, chances are, if you’re not buying ads on Facebook or a similar platform which has the reporting capabilities all built in, you’re doing something illegal [in that state]."
Google currently isn’t accepting ads for state and local elections in either Maryland or Washington state. The company cites an inability to comply with the requirements in those states, specifically the need to maintain a publicly available disclosure database and supply what is essentially real-time disclosure on ad buys. The laws in both Maryland and Washington state require platforms to keep detailed public records of their ads, who pays for them, and who’s meant to see them.
Much of the concern on the part of state legislators has been sparked by worries over foreign interference and a lack of action at the federal level. The Honest Ads Act, for example, has made no progress on Capitol Hill, and the Federal Election Commission appears unlikely to act ahead of the midterm elections this fall.
Earlier this summer, the FEC held two days of public hearings to weigh new rules on digital ad disclaimers. At the time, FEC Vice Chair Ellen Weintraub said the goal was to have the agency “get a rule in place this year,” but most observers think that’s unlikely.
One major concern on the part of digital ad professionals is that legislators in many states are moving full speed ahead to get new laws on the books instead of working more collaboratively with industry experts. The result may very well be more laws like those in Maryland and Washington State that essentially freeze some digital advertising campaigns.
“The real losers are first time candidates and underdogs who need to do more communicating to get their message out, and the winners are the entrenched candidates and interests,” said Patrick McGill, a digital strategist at the Democratic firm Blueprint Interactive.
While it will take at least a cycle or two to assess the full impact of such state laws, McGill contends smaller campaigns that lack the time and resource to wade through a myriad of new, and sometimes unclear, ad requirements are at an immediate disadvantage.
“If you’re a first-time candidate in a local race, you don’t have the time to figure out how this all works, or what platform is going to let you advertise. You need easy access to these platforms, and they’re not making it easy for you right now,” he said.
Every digital strategist C&E spoke to insisted they aren’t seeing overall digital spend decrease in states like Maryland and Washington state. Instead, campaigns are redirecting that spend to other digital channels, they said.
“Digital campaign spending will not go down,” said Jordan Lieberman, VP at a4 Media. “You’ll see some shops that are less sophisticated or less equipped to comply with new regulations redirect their online spends towards more primitive tactics in several states.”
As for what’s next, there’s at least some speculation Maryland’s law will result in a legal challenge. Meanwhile, the Digital Advertising Alliance (DAA) has designs on standardizing the existing patchwork of rules as it aims to come up with an even-handed framework that will allow the industry to begin to self-regulate.
"The ad tech community at large is coming up with a system for disclosures and disclaimers on the ad — a much needed industry response to the myriad regulations that are coming up on a state-by-state basis,” said Jablonowski. “It’s about trying to come up with a universal standard used across the board so we don’t run into these issues. I wish legislators would consult with industry experts to produce a law that is capable of being utilized, as opposed to forcing some folks to go dark."