January 28 marks the annual Data Privacy Day, which is more than just a date of awareness, but rather a calling for our industry to work towards advancing data privacy as we kick off a new year. On a day that many marketers might’ve missed as they recover from CES and then transition into the IAB Annual Leadership Meeting, it also marks one week into a new presidential administration.
Once again, the US-based advertising industry faces a year ahead where it must navigate a patchwork of state laws that grows more cumbersome by the day. These challenges stem from inconsistent definitions, usage and reporting requirements, all of which get retested each time a new state rolls out regulation. With Iowa’s new law going into effect this month, there are thirteen states with their own privacy regulations in effect with more passed that take effect later this year or next. Tennessee will join later this year, and Indiana in 2026, meaning that more than 20% of the union will be governed by their own rules and regulations.
The state-by-state regulatory approach has made it hard for brands, despite their best efforts and intentions, now to mess up. The result - nobody is getting what they want. Businesses are bleeding money trying to adhere to a patchwork of state laws, yet customers still don’t feel protected. Therefore, we must ask the question, have we hit the breaking point?
Privacy compliance and data governance is serious business. It’s also expensive. To safely swim in the data waters of marketing and advertising, companies are now required to invest in technology, staffing, process and resources to maintain even baseline standards. Then if privacy issues arise, lawyers and fees can come into play. Privacy and data governance have taken over as some of the biggest narratives in our industry with regulatory governing bodies handing out fines and requiring registrations, to publishers and conferences leaning into the topic, all of which, carry a heavy cost of time, energy and resources.
While privacy conversations have been happening within the ad industry for years now, it’s still somewhat difficult to ascertain exactly how consumers feel. Research shows that Americans have little faith in social media companies protecting their privacy and are widely distrustful that AI will be used responsibly when it comes to their data. Yet more than half say they simply click “agree” rather than read a privacy policy when they arrive at a website.
So even with the ability to take action when it comes to data sharing, most Americans are still widely skeptical. Clearly, all of the work and money spent on privacy compliance and data governance is not necessarily making consumers feel any safer.
Brands take privacy and data governance seriously these days, which is good. The question becomes, with so many differing laws, so much cost, and little impact on consumer sentiment, at what point do brands simply dismiss an entire market when it comes to advertising? Make no mistake, brands will still sell their goods and services in all 50 states, because it’s very unlikely any national brand would give up on 20% of the market. But will they advertise to consumers in those markets, or simply exclude the entire geographic area? Some wonder if federal privacy reform is getting close to solving these issues, but we are not holding our breath. Until then, marketers should rely heavily on data experts to compliantly advertise wherever their US customers reside and shop.
What about data collection? Are brands going to accept email addresses from customers in certain states, and simply choose never to advertise to those? Does it even serve major brands to include certain states within their data and insights exercises, or should they simply cut those out of their models and rely only on basic sales data in those markets to determine demand and growth opportunities?
It might sound outlandish, but the ad industry saw several companies either vacate the European market – or outright fold – in the wake of GDPR. The more new laws that go on the books, the more expensive it gets to stay in compliance. Some brands may lose revenue in certain markets from decreased advertising, but that might be a small price to pay compared to the costs of maintaining compliance, along with the potential penalties if anything goes wrong.
During this current state of uncertainty, data providers can be the lighthouse that guides marketers safely as they navigate their data privacy journey. Now is the time to lean on these crucial partners and leverage their in-house legal expertise, resources and processes. No one said it’s going to be easy, but with the right partners, there is a path forward.