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Low transparency, low regulation online political ads skyrocket

Mark Zuckerberg (David Ramos/Getty Images)

Digital advertising has been thrust into the spotlight as more information comes out about Russia’s use of digital ads in the 2016 election, a strategy Facebook executive Rob Goldman believes “stoked fear and hatred amongst Americans.”

Political investment in digital outreach has skyrocketed in recent years, and both Barack Obama and Donald Trump revolutionized the use of digital advertising in their presidential campaigns.

In 2014, digital ads made up less than 1 percent — or $71 million — of political ad spending, according to a recent report by Borrell Associates, an advertising research group.

In the 2018 midterms, spending on digital ads is expected to make up around 22 percent — or $1.9 billion — of overall political advertising.

That marked a 2,539 percent growth in spending on digital political advertising while other advertising mediums took a large dip, according to the report.

The use of digital mediums for political messaging is only expected to jump in coming years, said Kip Cassino, the author of the report.

The growth comes in large part because platforms like Facebook, Twitter and Google can now offer ad buyers something more than traditional platforms: less oversight, decreased transparency and lower prices matched with the heightened ability to pinpoint specific demographics.

“The concept of being able to target and send a message to a person no matter where they are, no matter what they’re doing, through their mobile device is one that, if it works, would be the Philosopher’s Stone in political advertising,” Cassino said. “You’re going to see a lot of money spent to test this concept.”

Data from Borrell Associates 2018 Local Political Advertising Outlook report.
*2017, 2018, 2019 and 2020 data is based off of projections.

‘Huge holes in our disclosure system’

As fears of Russia meddling continue and midterm spending is expected to reach record levels, politicians from both parties are debating ways to fill what Tyler Cole, legislative director for the advocacy organization Issue One, called “huge holes in our disclosure system.”

The Federal Election Commission (FEC) is expected to consider a proposal Thursday that would do just that.

Currently, a 2002 law written before the internet was even on the political spectrum requires political ads to include disclaimers on who paid for the message. There are exemptions on small forms of advertising — like campaign buttons — and in cases where disclaimers would be considered impractical — like skywriting messages.

In 2011, when digital advertising became more prevalent, Facebook asked the FEC for an exemption from those disclosure requirements. FEC commissioners deadlocked on the decision, unable to agree on which ads should require disclaimers.

Without clear guidelines, Cole said platforms have largely “shoehorned” ads into those exemptions, not explicitly disclosing the source of political ad buyers.

“The biggest thing that’s problematic is … the disclosure regime was created at a time before online advertising was prevalent,” Cole said. “It was barely a twinkle in anyone’s eye.”

Digital loopholes

Because of the older regulations, it’s also harder to track digital ad spending, the content of those ads, their targeted demographics and even their buyers.

The FEC tracks general information on how much campaigns, political action committees (PACs) and outside spenders spend on advertising through TV, radio and print.

More granular information can be gleaned from broadcast, cable and radio because stations are also regulated by the Federal Communications Commission (FCC). Stations are required to disclose more details, such as the ad buyer and what times the ads ran.

Those details allow researchers to pull out trends and determine things that might otherwise be hidden, such as the messaging and the targets of the ads.

Political Ad Spending 2014 v. 2018

Medium 2014 Spending ($ in millions) 2018 Projected Spending ($ in millions) Percent change
Broadcast $4,796 $3,362 -29.9%
Newspapers $660 $554 -16.1%
Out of Home $635 $318 -50.1%
Radio $619 $55 -8.9%
Cable $585 $995 +70%
Telemarketing $520 $481 -7.5%
Direct Mail $284 $249 -12.5%
Other Print $127 $103 -19.1%
Online/Digital $71 $1,878 +2,539.2%
Totals $8,299 $8,503 2.5%

Data from Borrell Associates 2018 Local Political Advertising Outlook report.

But for digital, there is no regulating body like the FCC.

So often, the only people who can see the actual contents of ads are the targets and the political group behind the screen.

“If I spend $100,000 on television, we can find that information: what race is the ad concerning, how much did they spend, what media market was it run in?” Cole said. “If I take that same money and put it into a YouTube ad with the exact same info, there is no requirement for me to report to anyone who the ad was targeting.”

The lack of regulation, in turn, makes it more difficult to determine who may be legally and illegally buying digital messaging.

“It makes it difficult to monitor whether political advertisers are complying with the law,” said Brendan Fischer of the Campaign Legal Center. “It makes it harder to counter false messages … It makes it much harder to hold candidates accountable if they’re elected.”

To track digital spending, researchers like Cassino have to be creative. In its study, Borrell Associates subtracted money spent on ads in every other medium from the total money spent on ads to come up with the projected amount spent on digital mediums. 

An election battleground

Paired with that is an enhanced capability for political influencers to zero in on social media users based on their interests, demographics, age or location.

“If you want soccer moms in a certain metro area who like shopping at Walmart or if you’re looking for college students who like Starbucks on Facebook, you can craft your messages to be most effective for that particular subset of the population,” Cole said.

Digital platforms also offer lower prices, allowing advertisers to buy more ads for the same price.

According to Cassino’s report, overall ad spending between 2014 and 2018 increased only 2.5 percent, despite reports that advertising frequency has jumped significantly.

(AP Photo/Andrew Harnik)

The internet became a key election battleground in 2008 when Obama harnessed the use of digital advertising in his campaign. That was only magnified by the Trump campaign in 2016.

Now, top election spenders like Restoration PAC, a major Republican-backed super PAC, are beginning to ride the incoming digital wave.

The committee, which attributes a significant portion of its funding to megadonor Richard Uihlein, spent $2.7 million on broadcast advertising and just $168,000 on web advertising in the 2016 election, FEC data shows.

But in the upcoming 2018 election, the PAC has already spent about $1.3 million on web advertising, trailing behind on broadcast spending with $430,227.

“People are going to see what the Trump people did and try to emulate it to the extent that they can,” Cassino said.





Legislative, regulatory proposals

After facing scrutiny from Russian meddling through Facebook ads, Mark Zuckerberg, Goldman and other Facebook executives announced the platform was taking steps to increase transparency and disclosure.

Days before that, Twitter announced a similar policy.

“The main goal of the Russian propaganda and misinformation effort is to divide America by using our institutions, like free speech and social media, against us,” Goldman wrote in a string of tweets last month.

But attempts to self-regulate haven’t stopped federal, state and local governments from proposing their own regulatory measures ahead of the 2018 midterms.

On March 8, the FEC will consider a proposal for new regulations in a public hearing. The proposal, written by Ellen Weintraub, a Democrat and vice chair of the commission, would hold online advertisers to the same disclosure requirements as traditional mediums.

“This rulemaking will not eliminate that threat,” Weintraub wrote in memorandum about the proposal. “But it is a small step forward that the Commission must take both to ensure that the American citizens are informed about the source of political advertising on the internet and to improve our means of deterring and detecting illegal conduct.”

The move follows similar legislative attempts by Senators Amy Klobuchar (D-Minn.), Mark Warner (D-Va.) and John McCain (R-Ariz.), who introduced the Honest Ads Act in October 2017.

The bill, which also had a companion in the House, would require digital platforms like Google, Facebook and Twitter to release information about the purchasers and targets of online political ads, and require those ads to be made publicly available.

The idea has also gained traction in state legislatures. Recently, the Vermont State House advanced a bill that would require state and local buyers using Facebook and Twitter to identify who they are and who they’re supporting in their ads.

Rep. John Gannon, the bill’s sponsor, said online advertising could have a magnified effect on the state and local level, especially since the cheaper alternative to broadcast ads gives less-funded candidates more spending power.

“It seems like we’re headed into a world where online advertising is going to be a bigger and bigger factor in elections,” Gannon said. “Especially here in Vermont, where we have relatively small districts, social media advertising can be a very effective approach to advertising because you can drill your ad down to the town level.”

Read From Source… [OpenSecrets Blog]

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