While the New York Privacy Act may be well intended, it could negatively affect publishers by diminishing the value of their ad inventories and expose them to greater legal liabilities.
The bill (SB 6701), introduced by state Senator Kevin Thomas, will require companies to obtain permission from consumers before processing their data for ad targeting and would permit consumers to bring class-action lawsuits over violations, as Digital News Daily reported this week. That requirement to obtain opt-in consent makes New York's law more restrictive than the privacy laws in California or Virginia, which give consumers the right to opt out of data processing.
The bill also authorizes a so-called private right of action, giving consumers the right to sue for alleged violations of a consumer "bill of rights." Those rights include a notice of how their data is being processed and sold, and the ability to correct or delete data. Publishers could face an onslaught of class-action lawsuits from consumers alleging their rights were violated.
In that sense, New York's privacy bill is more expansive than the laws in California and Virginia, which also give businesses a chance to cure violations before enforcement.
Trade groups including the Association of National Advertisers, American Association of Advertising Agencies, Interactive Advertising Bureau, Network Advertising Initiative and American Advertising Federation are opposed to the bill. They argue the state should consider the benefits of consumer data in digital advertising. The consumer benefits include free access to ad-supported content. In that sense, the New York privacy law may hurt lower-income consumers who won't see news and information behind a paywall.
Amid my misgivings about New York's proposed privacy law, I've also considered the possibility that publishers won't feel much effect from it. They can still collect first-party data from consumers and seek their consent in using the data for ad targeting. It will still be important to build a trusting relationship with readers by clearly explaining privacy policies. Alternatively, publishers can offer ad-free options to paying subscribers.
Meanwhile, publishers already have had to prepare for the loss of third-party cookie tracking and device identifiers that help with audience targeting. In response, many publishers are participating in efforts to develop other methods of audience tracking that promise to give consumers more privacy protections.
However, unless those methods are effective at helping advertisers to reach deduplicated audiences, publishers could see the value of their ad space decline. As audiences become more anonymized, publishers can continue to emphasize their strengths in contextual targeting.
Still, New York's proposed privacy law is too restrictive and will create more legal headaches for companies that collect consumer data, including publishers.