Letter to the Editor: How would government restrictions on the use of data for online advertising affect small businesses?

Logan Niles, Founder, Pot Pie Factory

Smaller companies like ours are buckling under the weight of unprecedented price increases, supply chain shortages and rising labor prices. To increase our marketing reach on a slim budget, the internet is our best option. Internet marketing is critical to the survival of our business. It’s one of the most affordable, effective forms of marketing at our disposal.

Limiting our options will only hurt us at a time when we need every opportunity possible to stay in business. Small companies like ours are competing with much larger competitors to reach the same customers in a busy, crowded space.

How many Valpaks, grocery store flyers and random postcards from local businesses have you discarded in the last month? We’re all overloaded with physical junk mail. Even if an offer catches our eye, there’s no instant online access or interactivity. Generational shifts have also impacted marketing. For younger generations, digital media is a part of everyday life. How they shop, date and travel: It’s all digital. For most of our customers, shopping online is the norm, and their payment choices are digital too, including at pop-up and live events. The digital economy is a way of life and here to stay. Congress needs to be careful tampering with digital advertising tools that Pot Pie Factory needs to stay in business.

Andrew Whisler, President & COO, Virginia Diner

Over 100 years in business, Virginia Diner has learned and shifted approaches to advertising through changing times and overcome inevitable hurdles.

The idea that politicians could restrict cost-effective online advertising and marketing is daunting. These laws could potentially cripple the way small companies like ours do business in this ever-evolving digital age.

The recent pandemic was devastating for many brick-and-mortar small businesses relying on in-person transactions, especially those in remote, rural areas like ours in Wakefield, Virginia. E-commerce was a lifeline. As consumers spend more time online, they also demand goods be delivered directly to their doorsteps, quickly. Targeted, tailored advertising has become a critical tool for Virginia Diner to identify and serve customers, maintain growth and stay viable in a rapidly changing marketplace.

Traditionally, our core business had been wholesale, with retailers selling our products in brick-and-mortar stores. But during the pandemic, direct-to-consumer sales (DTC) became our biggest revenue channel, generating enough volume for us to stay at full capacity and keep all our team members employed. Proposed restrictions on data-driven advertising would demolish DTC sales. Our ability to identify and advertise to customers inclined to do business with us is at risk. Speaking as a consumer, I enjoy learning about and purchasing unique brands that meet my tastes, which I might not discover without personalized ads. I hope legislation making it hard to use data responsibly and to personalize ads to serve more customers never gets enacted.

Sydney Smarro, Founder, S.S. Creative Co

I founded my small business to help other small businesses grow. Whether they need help amplifying a brand, an artist or selling a product or service, our clients rely on S.S. Creative to connect with more customers, and much of that relies on consumer data.

The last few years have been tremendously difficult for small businesses, especially those I represent. For musicians and artists, live venues where they would typically connect with fans suddenly went dark, halting their ability to grow their brands and promote their work. For many, they could only connect with their audiences using social media and internet advertising.

Consumer data and digital marketing aren’t just nice tools to have: They’ve been essential to my clients’ survival. They range from recording studios and musicians to hair salons and lawyers, and the one thing they all have in common is that during the last two years, every one of them has had to move his or her business online to forge a path to success. The only reason my clients’ businesses are still surviving today is because they can connect with their customers digitally.

Brian Spears, Co-founder & CEO Baby Chick

Baby Chick is a digital media company covering everything from pregnancy and birth to postpartum and parenthood, helping parents make the best decisions for their families. My wife Nina and I started the company on Mother’s Day in 2015. Since then, Baby Chick has influenced over 26 million (primarily) women over the past seven years and gained over 81 million pageviews. If we didn’t have internet advertising, it would be challenging for us to continue operating the company.

Internet advertising has enabled us to grow our business to what it is today, but proposed regulations limiting advertisers’ ability to reach target audiences would hurt media publishers like us. With less precise information, advertisers would likely reallocate budgets from programmatic ad-buying or bid less money on digital ads, which would negatively impact Baby Chick’s revenue and our family’s income. The readership experience would suffer if site visitors weren’t seeing ads relevant to their interests and Baby Chick’s unique content. If Congress enacts restrictions on using data for advertising, it would be extremely difficult to deliver the content our customers enjoy and to pay our staff.

John Deighton, Harold M. Brierley Professor of Business Administration Emeritus at Harvard Business School

New markets are constantly emerging on the internet. That’s why we see the IBM and AOL of one era replaced by the Google and Spotify of the next. That’s why today direct-to-consumer brands like Madison Reed in hair care are winning market share from giants of the industry, and brands like Allbirds are finding entirely new markets. This pace of innovation is only possible because companies are leveraging data about consumer behavior to create truly customer-centric products, services and media.

When television was the main way brands built their businesses, 200 advertisers were responsible for about 88% of network television revenue in the U.S. TV advertising was the only way to reach most households in a visual medium. It was costly, requiring relationships with big ad agencies and minimum campaign spends.

High barriers made it hard for small firms and startups to advertise at all. By contrast, millions of small businesses today are finding customers on Amazon, Facebook, Google and niche platforms like Marriott and Uber Eats with the help of data-driving advertising. There’s also “earned media.” In the open environment of the internet, millions of times a day social media users are promoting their favorite brands on Instagram and TikTok.

Used responsibly and transparently, data does not harm competition and innovation. It fosters it, as my research for the Interactive Advertising Bureau shows. A healthy economic future depends on fair and creative use of data.