Privacy paradox: if state lawmakers ban personalized ads, they’ll hurt consumers and small business owners

by | Mar 26, 2023

  • In a push to protect Floridians from the harms of “Big Tech,” Republican lawmakers will actually hurt small Florida business owners.
  • Senate Bill 262 is a flawed proposal that will cripple small business marketing efforts by making advertising more expensive and less effective.
  • The bill contains an opt-out provision for targeted advertising, but it will result in more annoying ads for consumers that work even harder to gain user attention while offering less value.
  • While trying to target “Big Tech,” those larger companies will simply pass the associated costs to small businesses while offering an inferior product.

In the midst of growing privacy concerns, near-daily personal data breaches, and, more recently, artificial intelligence apps that crawl the internet with minds of their own, Republican lawmakers in Tallahassee, spurred to action by Governor Ron DeSantis, are right to seek legislative solutions that better regulate these ever-more-powerful technologies and protect Floridians.

But the current proposal making its way through the halls of the state capitol complex in Tallahassee, aimed at regulating social media platforms and technology companies that collect and use personal information, is a veritable train wreck that will end up hurting small business owners and consumers alike, while failing to deliver the comprehensive data privacy Republicans are striving to achieve.

Senate Bill 262 includes a provision allowing consumers to opt out of targeted advertising. And to many consumers, that probably sounds like a pretty good deal. After all, nobody likes intrusive commercials or unwanted ads, right?

But that’s exactly the opposite of what SB 262 will get rid of. The opt-out provision is the fatal flaw that operates much like a computer virus, by tempting unsuspecting people to trust that it will do what they expect, and free themselves from ads they don’t want.

It won’t. They’ll still get the same amount of annoying ads as always. The difference is that the ads will be even more annoying than before, because they’ll be advertisements for completely random products and organizations that Florida consumers have little use for.

It’s important to understand that targeted ads are not inherently bad – as long as the underlying technology doesn’t invade personal privacy. In fact, targeting advertising can improve users’ online experience by providing relevant content, products and causes that users might otherwise never learn about. By opting out of targeted ads, consumers will inadvertently limit the customization that makes their online searches more efficient and enjoyable. For example, a person searching online for a local business will be less likely to see ads or search results that would connect them with the perfect result or the exact product they need.

SB 262, as currently written, will effectively remove the bridge between consumer needs and small business offerings. Without that bridge, both sides of the equation get hurt: consumers and businesses.

While lawmakers in Tallahassee have tried to tailor the proposal so that it doesn’t directly impact small business owners, it’s actually small businesses that will be hit hardest by the targeted ad opt-out provision, because small businesses can’t afford blanket advertising campaigns. More than any other business type, small, local businesses have benefited from targeted advertising because it helps them stretch their marketing dollars and spend them more efficiently.

Two decades ago, a small business owner could only dream of running “targeted” ad campaigns on specific radio stations or cable television channels. But back then, radio ad campaigns cost thousands of dollars, and cable television cost even more. Worse, the ads weren’t all that “targeted” beyond a handful of demographic categories. Back in those days, a woman’s hair salon wanting to gain new customers would never waste tens of thousands of dollars running ads on a radio station because many of the listeners might fall outside their target demographics for age, gender or proximity to the salon. The salon owner couldn’t afford to waste ad dollars on people who would never be their customers.

But with modern targeted advertising, the business owner can use Google, Facebook, Twitter, Instagram or any number of digital marketing services to put together an intelligent, targeted ad campaign that only delivers ads to, say, women aged 25-35 who live or work within 20 miles of the salon.

As written, SB 262 will effectively take targeted advertising out of the small business owner’s toolbox, and replace it with the same technology that few small business owners could afford just 20 years ago. Medium and large-sized businesses with bigger ad budgets will still be able to shovel cash into the mysterious black hole of untargeted ads, just like they’ve always done. And the consumers who opted out of targeted ads thanks to SB 262 won’t even be able to tell the difference, except that the ads will be more annoying – they’ll have to be in order to gain the consumer’s attention since the consumer won’t care at all about the product in the ad.

Meanwhile, small business owners will pay the real price. Without the ability to effectively advertise and connect with their natural target audiences, small businesses sales will languish, unable to compete with the brand recognition and market dominance of larger corporations who can pump ads at anyone and everyone.

“Put simply, SB 262 would break the internet,” says Julio Fuentes, founder and president of the Florida Hispanic Chamber of Commerce. “This would change life for us here in Florida. No longer would we be able to causally browse the internet or have an encyclopedia’s worth of knowledge at our fingertips; instead, our access to everything from connecting with family and friends on social media to searching for nearby coffee shops would be hindered.”

Fuentes’ concerns go beyond small business marketing campaigns, too. The potential financial implications of SB 262 on business websites are far reaching, and include costs associated with maintaining and protecting the data of a customer even after he or she opts out of targeting ad programs. If platforms like Amazon, Facebook, or Google decide that the new law is proving too costly ot provide protections for people who opt out, those big tech companies can and will pass the increased costs onto small business owners in the form of higher advertising and subscription fees. Small businesses, already struggling with the marketing limitations imposed by the bill, may be forced to cut advertising altogether, further diminishing their online presence and potential customer base.

“Small businesses are the backbone of Florida’s economy. We must not make things more difficult for these small businesses to reach their customers,” Fuentes says. “Advertising is a critical component of how they reach potential customers, and targeted online advertising is a modern cost effective way for a new small business to get off the ground. Taking that tool away or making it too costly will do serious damage to these small businesses and our economy.”

There are plenty of other flaws with SB 262 apart from the core concern of targeted ads. While the bill aims to improve data privacy and security in Florida, its provisions only applying to the largest private companies – but as we’ve already pointed out, the costs in terms of marketing budgets and diminished effectiveness, will still flow to small business owners and individual entrepreneurs. The narrow thinking in trying to target “Big Tech” fails to provide comprehensive protection for consumers, as businesses of all sizes can violate data privacy and security standards.

Finally, the bill’s enforcement provisions are also overly aggressive, imposing excessive fines that do little to deter violations.

Florida’s pursuit of data privacy and security legislation is commendable, but SB 262 falls short in providing meaningful protection while simultaneously threatening the livelihood of small businesses. To truly safeguard Floridians’ personal information and support the local economy, a more balanced and comprehensive approach is needed. Ultimately, part of the solution lies in Congress. It is crucial that we enact a national data privacy law to ensure consistent and effective protection for consumers across the country, so that Florida business owners aren’t put at a disadvantage against out of state competitors who aren’t handicapped by our own good intentions.

It is essential for lawmakers to reconsider the bill’s implications and strive for a more balanced solution that truly serves the state’s best interests.


  1. maryelens

    Didn’t you miss the front end part regarding the invasion of privacy that allows merchants to target victims of all that advertising in the first place? “Modern targeted advertising” relies on information collected surreptitiously during internet browsing. Thanks, but no. It’s hardly surprising internet speed suffers.

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