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January 23, 2020,

CCPA Implementation and the Future of Advertising

Originally published on Morning Consult.

As we get closer to the day when Attorney General Xavier Becerra issues the next draft of rules for the implementation of the California Consumer Privacy Act, we must solve for the law’s purpose — to increase consumer control and understanding of the use of their data. This is particularly important for those of us in the digital advertising industry because our ecosystem is complex, interconnected, and somewhat opaque.

We believe that a CCPA compliance solution requires four key elements:

1) Surfacing to consumers the fact that the company they are directly interacting with and third party companies are engaged in the collection and sale of their personal information when that is happening.

2) Ensuring that consumers have the option to bar any or all of them from “selling” (as CCPA defines it) that information.

3) Signaling those choices to the rest of the ecosystem, and

4) Creating legally binding obligations on all participants to respect those choices.

The jobs and wealth the digital advertising ecosystem creates and the innovation it fuels are worth billions of dollars. In the United States alone, digital advertising industry is worth more than $100 billion, with a significant portion of that wealth created going to California, the largest market in the country. For the last two decades companies that understand we need a set of rules in our industry have made a strong effort at self-governance, recognizing that not all uses of data or ways of getting it are ethical.

But as with any new economic revolution, the digital age is due for new law. As an industry, we are trying to contribute in good faith to the legislative and regulatory processes and help inform policymakers and consumers of what is at stake. We also want to assist in the construction of data governance solutions without concentrating the market in the hands of a few walled gardens nor leaving it so open as to allow continued opaque participation by too many people that are not readily visible to consumers or regulators and inadequately subject to oversight as a result.

There are some who argue that even though the text of the law does not require it, the interpreting regulation should make all consumers essentially invisible in the market, allowing only for advertising targeted on the basis of the context in which it is presented. This would return us to the “Mad Men” days when advertising on television shows and in newspapers dominated the field and marketers had only a general sense of the audiences they were reaching. The application of mathematics and technology allows for smarter marketing, though, and we should move forward embracing the good and guarding against new risk.

The CCPA was not written to turn back time and it would be difficult to articulate a regulatory reason to interpret it that way. Furthermore, the end result would be poor for everyone. It would mean that products (such as golf equipment) would need to be advertised on sites a person interested in those products would be more likely to visit (such as a golf site) regardless of whether the person viewing the ad is in the market for them. It would also mean that the many things a person is in the market for would go unknown to advertisers. In this world, advertising may work sometimes but it would work significantly less well than it does today.

That may be a cost that policymakers are willing to accept because of a perceived value for privacy. If so, they should do so explicitly and recognize the costs to businesses as well as acknowledge that walled gardens would still have huge pools of directly collected data to continue engaging in personalized advertising across their properties, thereby not diminishing consumer vulnerability to risk but rather concentrating it in the hands of a few.

Through collaboration with all stakeholders, we believe that Becerra can evaluate and approve the construction of one or more tools that will provide people with the ability to exercise the privacy protections CCPA requires and preserve the potential of the digital economy going forward. We recognize that the advertising ecosystem is complex and want to engage the attorney general and the public in discourse on proposed compliance solutions, the most prominent of which are the IAB proposal presented last month and the DAA proposal presented this week. Google has also released information on how it will modify its use of data to help advertisers, publishers, and partners manage their CCPA compliance. We will work with any solution that the market embraces and the attorney general approves. We also appreciate and support the efforts exerted by all stakeholders.

We understand that the opaque architecture of the advertising supply chain raises questions about how the wealth created is distributed among stakeholders in it and may not enable full transparency into its operations for publishers, advertisers, and technology companies that enable advertising or for regulators. The incentives and opportunities that architecture creates for access to and the use of data has policy implications for more than just people’s privacy.

Other public interests including competition, innovation, entrepreneurship, and regulatory compliance costs should all should be examined and solved for with due consideration for potential repercussions across the board, both positive and negative. We look forward to helping the attorney general execute his responsibility, will respect the outcomes of that process, and believe it can inform a national standard that Congress can and should adopt.

Daniel Sepulveda is currently the SVP for Policy and Advocacy at MediaMath, a global advertising technology and services company, and previously served at the State Department as ambassador and coordinator for communications and information policy.

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