Understanding the Digital Advertising Ecosystem
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UNDERSTANDING THE DIGITAL ADVERTISING ECOSYSTEM HEARING BEFORE THE SUBCOMMITTEE ON DIGITAL COMMERCE AND CONSUMER PROTECTION OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION JUNE 14, 2018 Serial No. 115–139 ( Printed for the use of the Committee on Energy and Commerce energycommerce.house.gov U.S. GOVERNMENT PUBLISHING OFFICE 34–638 PDF WASHINGTON : 2019 VerDate Mar 15 2010 11:42 Feb 01, 2019 Jkt 037690 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 I:\115THCONGRESS\115X139DIGITALADS\115X139DIGITALADSWORKING WAYNE COMMITTEE ON ENERGY AND COMMERCE GREG WALDEN, Oregon Chairman JOE BARTON, Texas FRANK PALLONE, JR., New Jersey Vice Chairman Ranking Member FRED UPTON, Michigan BOBBY L. RUSH, Illinois JOHN SHIMKUS, Illinois ANNA G. ESHOO, California MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York MARSHA BLACKBURN, Tennessee GENE GREEN, Texas STEVE SCALISE, Louisiana DIANA DEGETTE, Colorado ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania CATHY MCMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina LEONARD LANCE, New Jersey DORIS O. MATSUI, California BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida PETE OLSON, Texas JOHN P. SARBANES, Maryland DAVID B. MCKINLEY, West Virginia JERRY MCNERNEY, California ADAM KINZINGER, Illinois PETER WELCH, Vermont H. MORGAN GRIFFITH, Virginia BEN RAY LUJA´ N, New Mexico GUS M. BILIRAKIS, Florida PAUL TONKO, New York BILL JOHNSON, Ohio YVETTE D. CLARKE, New York BILLY LONG, Missouri DAVID LOEBSACK, Iowa LARRY BUCSHON, Indiana KURT SCHRADER, Oregon BILL FLORES, Texas JOSEPH P. KENNEDY, III, Massachusetts SUSAN W. BROOKS, Indiana TONY CA´ RDENAS, California MARKWAYNE MULLIN, Oklahoma RAUL RUIZ, California RICHARD HUDSON, North Carolina SCOTT H. PETERS, California CHRIS COLLINS, New York DEBBIE DINGELL, Michigan KEVIN CRAMER, North Dakota TIM WALBERG, Michigan MIMI WALTERS, California RYAN A. COSTELLO, Pennsylvania EARL L. ‘‘BUDDY’’ CARTER, Georgia JEFF DUNCAN, South Carolina SUBCOMMITTEE ON DIGITAL COMMERCE AND CONSUMER PROTECTION ROBERT E. LATTA, Ohio Chairman ADAM KINZINGER, Illinois JANICE D. SCHAKOWSKY, Illinois Vice Chairman Ranking Member FRED UPTON, Michigan BEN RAY LUJA´ N, New Mexico MICHAEL C. BURGESS, Texas YVETTE D. CLARKE, New York LEONARD LANCE, New Jersey TONY CA´ RDENAS, California BRETT GUTHRIE, Kentucky DEBBIE DINGELL, Michigan DAVID B. MCKINLEY, West Virgina DORIS O. MATSUI, California ADAM KINZINGER, Illinois PETER WELCH, Vermont GUS M. BILIRAKIS, Florida JOSEPH P. KENNEDY, III, Massachusetts LARRY BUCSHON, Indiana GENE GREEN, Texas MARKWAYNE MULLIN, Oklahoma FRANK PALLONE, JR., New Jersey (ex MIMI WALTERS, California officio) RYAN A. COSTELLO, Pennsylvania JEFF DUNCAN, South Carolina GREG WALDEN, Oregon (ex officio) (II) VerDate Mar 15 2010 11:42 Feb 01, 2019 Jkt 037690 PO 00000 Frm 00002 Fmt 0486 Sfmt 5904 I:\115THCONGRESS\115X139DIGITALADS\115X139DIGITALADSWORKING WAYNE CONTENTS Page Hon. Robert E. Latta, a Representative in Congress from the State of Ohio, opening statement ................................................................................................ 1 Prepared statement .......................................................................................... 3 Hon. Janice D. Schakowsky, a Representative in Congress from the State of Illinois, opening statement .............................................................................. 4 Hon. Frank Pallone, Jr., a Representative in Congress from the State of New Jersey, opening statement .......................................................................... 5 Prepared statement .......................................................................................... 7 WITNESSES Rachel Glasser, Chief Privacy Officer, Wunderman ............................................. 8 Prepared statement .......................................................................................... 11 Answers to submitted questions ...................................................................... 104 Mike Zaneis, President and Chief Executive Officer, Trustworthy Account- ability Group ......................................................................................................... 20 Prepared statement .......................................................................................... 22 Answers to submitted questions 1 ................................................................... 113 Justin Brookman, Director, Privacy and Technology Policy, Consumers Union 34 Prepared statement .......................................................................................... 36 Answers to submitted questions ...................................................................... 116 J. Howard Beales III, Ph.D., Professor of Strategic Management and Public Policy, George Washington School of Business .................................................. 50 Prepared statement .......................................................................................... 52 Answers to submitted questions ...................................................................... 132 SUBMITTED MATERIAL Report of Oxford BioChronometrics, ‘‘Quantifying Online Advertising Fraud: Ad-Click Bots vs Humans,’’ January 2015, by Adrian Neal and Sander Kouwenhoven, submitted by Mr. Latta .............................................................. 87 Report of Oxford BioChronometrics, ‘‘Ad Fraud Summary,’’ June 2018, sub- mitted by Mr. Latta ............................................................................................. 95 Report of IAB, ‘‘Economic Value of the Advertising-Supported Internet Eco- system,’’ January 2017, by John Deighton, et al., 2 submitted by Mr. Latta Slide presentation, ‘‘The Rise of the 21st Century Brand Economy,’’ IAB Annual Leadership Meeting, February 12, 2018, 2 submitted by Mr. Latta Blog post of June 14, 2018, ‘‘Voluntary Advertising Initiative May Hold a Key to a Responsible Internet,’’ by Neil Fried, Motion Picture Association of America, submitted by Mr. Latta ................................................................... 101 1 Mr. Zaneis did not answer submitted questions for the record by the time of printing. 2 The information has been retained in committee files and also is available at https://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID= 108413. (III) VerDate Mar 15 2010 11:42 Feb 01, 2019 Jkt 037690 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 I:\115THCONGRESS\115X139DIGITALADS\115X139DIGITALADSWORKING WAYNE VerDate Mar 15 2010 11:42 Feb 01, 2019 Jkt 037690 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 I:\115THCONGRESS\115X139DIGITALADS\115X139DIGITALADSWORKING WAYNE UNDERSTANDING THE DIGITAL ADVERTISING ECOSYSTEM THURSDAY, JUNE 14, 2018 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON DIGITAL COMMERCE AND CONSUMER PROTECTION, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. The subcommittee met, pursuant to call, at 10:16 a.m., in room 2322, Rayburn House Office Building, Hon. Robert Latta (chairman of the subcommittee) presiding. Members present: Representatives Latta, Kinzinger, Burgess, Upton, Lance, Guthrie, Bilirakis, Bucshon, Walters, Costello, Scha- kowsky, Ca´rdenas, Dingell, Matsui, Welch, Kennedy, Green, and Pallone (ex officio). Staff present: Melissa Froelich, Chief Counsel, Digital Commerce and Consumer Protection; Adam Fromm, Director of Outreach and Coalitions; Ali Fulling, Legislative Clerk, Oversight and Investiga- tions, Digital Commerce and Consumer Protection; Elena Her- nandez, Press Secretary; Paul Jackson, Professional Staff Member, Digital Commerce and Consumer Protection; Bijan Koohmaraie, Counsel, Digital Commerce and Consumer Protection; Mark Ratner, Policy Coordinator; Austin Stonebraker, Press Assistant; Greg Zerzan, Counsel, Digital Commerce and Consumer Protection; Michelle Ash, Minority Chief Counsel, Digital Commerce and Con- sumer Protection; Jeff Carroll, Minority Staff Director; Lisa Gold- man, Minority Counsel; Carolyn Hann, Minority FTC Detailee; Caroline Paris-Behr, Minority Policy Analyst; and C.J. Young, Mi- nority Press Secretary. Mr. LATTA. Well, good morning, and welcome to the Sub- committee on Digital Commerce and Consumer Protection. We real- ly appreciate you all being here, and we look forward today to your testimony. And at this time, I’ll recognize myself for 5 minutes for an open- ing statement. And again, good morning and I wanted to again thank our witnesses for being with us today. OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO An advertisement used to mean a quarter-page section in your local newspaper, a billboard along the highway, or as our chairman of the full committee would know in his radio days, a radio spot during the rush-hour commute. (1) VerDate Mar 15 2010 11:42 Feb 01, 2019 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 I:\115THCONGRESS\115X139DIGITALADS\115X139DIGITALADSWORKING WAYNE 2 While those types of advertisements still exist, targeted digital advertising has begun to dominate the advertising and marketing industry. The digital advertising ecosystem is complex and often misunder- stood. Today, we hope to clear up some of this confusion for con- sumers and discuss both the benefits and emerging, often high-pro- file, challenges of online advertising. Our expert panel of witnesses will explain how this technology works and its place in our economy and our lives. According to the Interactive Advertising Bureau, the ad-sup- ported