The Competition and Transparency in Digital Advertising (CTDA) Act was recently introduced by a handful of bipartisan United States senators. It has not yet been passed into law. However, marketers must be aware of the act and what it could mean for the future of digital marketing.
The bill aims to protect smaller businesses and keep large tech companies who own multiple aspects of the digital advertising industry from wielding too much power. However, there will likely be unintended consequences for smaller marketing firms that rely on these larger digital advertising giants (i.e., Meta and Google) to deliver ads to their target audience.
Everything about the CTDA act and its consequences is speculative since it has not yet been signed into law. So, here is our best guess at how the CTDA act will impact marketers and larger tech companies like Meta, Amazon, and Google.
The Fundamentals of the CTDA Act
At its root, the CTDA Act aims to limit big tech companies’ control over advertising by increasing competition in the online digital ad space.
The Act prohibits large digital advertising firms, defined as firms that earn over $20 billion in ad revenue, from owning multiple pieces of the digital ad ecosystem.
In other words, big tech giants would no longer be able to offer digital advertising space to companies while also buying and selling ads for their own profit and gain.
Another key component of the CTDA Act is transparency. The bill intends to increase transparency between companies and their customers. The companies that sell ad space would need to provide their ad-buying customers with updated information about their ads’ performance.
How the CTDA Act Could Impact Tech Giants
Large tech companies, especially Meta and Google, have dominated the online ad space since the beginning of online advertising.
If the bill gets signed into law, we should expect tech giants who meet the criteria for “large digital advertising firms” to be forced to sell off portions of their advertising businesses, so they no longer control the ad space where they buy and sell ads.
In addition, by adding more transparency to the ad buying and selling process, Google and Meta would no longer be able to prefer their products over a competitor’s for the sake of pure profit.
The bill brings to question the ethics of Meta and Google regarding awarding ad space. This layer of transparency would answer the question for good by providing ad customers with information about how their ads perform against their competitors, including the big tech giants.
What the CTDA Act Could Mean for Marketers
While certain good things come out of the CTDA for marketers, including increased transparency when it comes to ad bids, there will likely also be some negative consequences.
Again, this is all speculative. However, based on the bill presented, we can expect the granular specificity marketers have become accustomed to getting from digital advertising to diminish once Google, Meta, and others are forced to sell off parts of their digital advertising businesses.
As a result, we can expect to see an increase in ad costs and a decrease in ad performance, at least in the short term, as digital marketers and digital advertising companies figure out how to navigate this new era of digital advertising.
We’ll stay on top of the latest developments on the CTDA Act as it progresses through the legislative process.
In the meantime, now may be a great time to consider amping up other aspects of marketing, including email and programmatic marketing, so you can be ready when and if the CTDA Act goes into effect.
Contact us to learn more about how HealthLink Dimensions can help you reach your target audience using email, programmatic, and mobile.