Small businesses concerned about digital privacy regulations

J. Landress Brass sells, restores, repairs and manufactures brass instruments in Manhattan.

Owner Josh Landress said it is the last such store in New York.

“New York being a very big city, it remains a small market for specialty brass instruments and brass players,” he said.

In particular, as concert venues and Broadway closed during the COVID-19 pandemic, Landress said he realized he needed to find new clients across the state, country and world. That’s when he turned to targeted digital advertising online.

“I need to be able to find these people, and without having access to these ads and this marketplace, it would be detrimental to my business and other businesses like mine,” Landress said.

A new report from advocacy organization Connected Commerce Council suggests that targeted digital ads are critical for the majority of small and medium-sized businesses. Of the 1,200 respondents, 69% said they use ads to find new customers, and 59% said they were more effective than ads on other traditional media platforms.

“If I have to advertise to people who may or may not be interested in my product, it costs me more and that cost will just be passed on to the consumer,” said Beth Egan, an associate professor of advertising at Syracuse University.

Congress is considering a bill called the American Privacy Rights Act, which would regulate the data collected by websites. Connected Commerce said a national privacy law is needed to replace the current patchwork of state laws, but it worries that if companies are prohibited from collecting certain information, targeted advertising would become much less effective.

“The challenge we face as an industry is that the people who are drafting the legislation don’t really understand how the digital advertising ecosystem works, so they don’t consider the real ramifications of small businesses having to adhere to the structure that they have put in place under the current guidelines,” Egan said.

About 20% of small and medium-sized businesses expect to close if they can no longer use targeted digital advertising, the survey found, and about the same share anticipate layoffs. Landress said he is a firm believer in privacy and won’t even collect credit card information over the phone, but he needs to be able to reach his customers.

“Print ads, magazine ads, TV ads, billboard ads don’t work for my type of business anymore, so everything is online,” Landress said.

Publishers also rely on digital ads for a significant portion of their annual revenue, according to the survey. Landers said restrictions on personalized marketing could lead to more subscription models, paywalls and fewer options for readers.