• by Ray Schultz , Columnist, June 26, 2024

Publishers and small business advertisers are being threatened by a plethora of state privacy regulations that could limit their ability to serve personalized ads.  

“Already this year, states such as Kentucky, Maryland, Nebraska, New Hampshire, and New Jersey have joined numerous other US states in enacting data privacy laws designed to limit the ways businesses can collect and use information about people,” says Digital Advertising: Balancing Regulation and Growth Opportunities for American Businesses, a study by Connected Commerce Council (3C) and Advertiser Perceptions. 

While most such laws focus on the consent, collection, storage and use of personal data for business practices, others are vague and each one is slightly different. 

On the federal level, Congress is considering the American Privacy Rights Act (APRA), a law that would restrict the collection of data that drives digital advertising.

Why is this an issue? Because 69% of all US SMBs use digital ads to find new customers. And 82% can attribute revenue growth in 2023 to personalized ads.

Drilling down, 75% utilize personalized digital ads to find new customers in their community; 83% do so in Florida.

Publishers would be especially hurt. Over 60% of the large publishers negatively warn that banning personalized ads would harm their revenue, ad sales, and overall business. 

In fact, such a ban would deprive 65% of US publishers of over a quarter of their annual revenue, the study states. 

The most common strategy to mitigate this would be to add paywalls or increase the number of ads. Among small publishers, 45% would implement paywalls or subscription models if personalized ads were banned. And 68% would increase the number of ads.

More than 50% would reduce non-essential business expenditures, like travel and employee perks. 

“For publishers, many of these effects ultimately lead to less vibrant businesses producing less content that’s less accessible,” the study concludes. 

On the advertiser side, three in 10 US SMBs said their overall revenue would decrease if they did not use personalized digital ads, and one in five large advertisers fear the same. 

Moreover, roughly one in five SMBs and large advertisers alike expect their marketing costs will increase, and three in 10 anticipate fewer leads and lower sales.

In Minnesota, more than two thirds of SMBs would raise their prices in the absence of personalized ads.

“Small businesses lean heavily on digital advertising,” says Lauren Fisher, GM of business intelligence for Advertiser Perceptions. “Specifically, they rely on personalized digital ads to reach customers, grow their revenue, and compete with bigger players in a cost-efficient way.” 

Advertiser Perceptions, in partnership with the Connected Commerce Cloud and Google, surveyed 1,200 small and medium-size businesses, 200 large advertisers and 200 publishers in March-April 2024.