Data Privacy Bills Could Negatively Impact Niche Small Businesses

Congress is considering new legislation to protect consumer privacy. But limiting the ability to use certain user data in ad targeting could be devastating for some small businesses.

For example, J. Landress Brass is a New York City-based company that makes, sells, and repairs brass instruments. Owner Josh Landress largely uses online ads that target people who play these instruments.

He told Spectrum News 1, “I need to be able to find those people out there, and without having access to those ads and that reach to that market, it would be detrimental to my business and other businesses like mine.”

Essentially, if Landress wasn’t able to use search data and information about people’s actual interests, he would have to send ads out to a much larger, more generic group. This would ultimately cost the business more and would be significantly less effective. Those extra costs may even get passed along to consumers.

A recent report from the Connected Commerce Council suggests that targeted digital ads are a big deal for most small and medium sized businesses. In fact, 69 percent of these respondents said they use targeted ads to find new customers. And 59 percent agreed that they’re more effective than other types of advertising.

Currently, the most prominent privacy law that Congress is considering is the American Privacy Rights Act, which would regulate what types of data websites can collect. This may ultimately put this type of targeted advertising at risk.

Many industry experts agree that some federal legislation is needed, especially since there are currently many variances in state laws. So providing clear rules for companies throughout the U.S. could make things more straightforward. However, more insights on how such legislation might impact small businesses should be an important factor in any decisions.

Syracuse University Associate Professor of Advertising Beth Egan said to Spectrum News 1, “The challenge that we’re finding as an industry is that the folks drafting the legislation don’t truly understand how the digital advertising ecosystem works, therefore they’re not taking into consideration the real-world ramifications of small businesses needing to adhere to the structure that they have in place under the current guidelines.”

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