How the Senate’s “Honest Ads Act” Will Affect Online Advertisers

https://upload.wikimedia.org/wikipedia/commons/3/3f/Facebook_Logo_on_Monitor.jpgBy: Patrick Wilson

On October 19th, 2017, a bipartisan group of Senators including Amy Klobuchar (D-MN), John McCain (R-AZ), and Mark Warner (D-VA) introduced legislation that would require more transparency and disclosure of the groups funding online advertising during election season. The purpose of proposed Senate Bill 1989, ‘The Honest Ads Act’, would hold online advertising platforms like Facebook, Google, and Twitter to the same standards as traditional media, such as television and radio.

The Bill requires that platforms with more than fifty million unique monthly visitors keep a public record of the parties that purchase more than $500 in advertising and disclose the purchaser of those ads, which included the ad’s target audience is, the ad rate, the name of the candidate the ad supported, and contact information of the ad. The Bill’s stated goal is preventing foreign nationals from purchasing political ads and potentially influencing the perception of American citizens during election season with false or misleading information. 

The issue first cropped up in 2010 when Google was able to convince a divided FEC panel that it’s ads were brief enough that disclosure information on them was impractical. Facebook made the same argument one year later when it argued that the ads directed viewers to news stories relating to the candidate’s issues rather than directly to the their website. Facebook also claimed that requiring disclaimers on online advertisements are impracticable when the advertisements are so short and do not direct viewers to the candidate’s campaign website. An exception to disclaimer requirement is recognized in the Federal Election Campaign Act so Google and Facebook were able to skirt the issue until the fall out of the 2016 Presidential Election.

In 2016, the Trump and Clinton campaigns (not including political action committee donations) spent a combined $81 million dollars on Facebook advertising. The Trump campaign, led by digital director, Brad Pascale, used Facebook in an especially effective manner to drive turnout and reach voters. This allows campaigns to reach voters that would normally be missed or discounted in advertisements on traditional media. However, utilizing Facebook’s ability to micro-target specific audience segments, the campaign and their supporting groups were able to reach a vast audience with content specifically tailored to their preferences.

However, the Honest Ads Act would close that loophole. In doing so, the landscape for political advertising would change dramatically. The disclosure requirements would also affect Political Action Committees and supporting groups that might normally prefer their involvement to stay hidden. This has ramifications for both parties. For example, outside groups funding democrat Doug Jones in the 2017 Alabama Senate special election were wary of disclosing their involvement in a conservative state. By using social media and replicating the Trump campaign’s success, many of these groups were able to contribute to Jones’s victory, while shielding him from the ramifications of acknowledging very liberal groups were funding his campaign. With the Honest Ads Act, more disclosure will be required. In the end, it remains to be seen if this will limit or drive down ad buys on social media in the next election cycle.

*Patrick Wilson is a staff member on the Wake Forest University School of Law Journal of Business and Intellectual Property.