Transparency issues haunt digital ads ahead of midterms

After Big Tech platforms cracked down on political ads in the 2020 election's wake, political advertisers have increasingly flocked to the new Wild West of programmatic ad companies, per a report exclusively shared with Axios.

Why it matters: Programmatic ad companies, which automate the buying and selling of ads on various platforms, have minimal transparency tools and few specific content restrictions.

• The report finds that "programmatic advertising through other platforms accounts for a substantial and increasing share of political advertising."

What's happening: Published by the University of North Carolina's Center on Technology Policy, the report, supported in part by the Knight Foundation, looks at the growing impact of programmatic ad companies to understand how they are shaping political speech ahead of the 2022 midterms.

• The report looks at ad exchanges, supply-side platforms and demand-side platforms, rather than big ad networks like Taboola or publishers like Hulu. Tech for Campaigns estimates that advertisers spent $2.3 billion on Facebook and Google ads and $1.5 billion on other digital ads in 2019-20.
• Consultants quoted in the report say ad money is shifting away from tech platforms as targeting rules get stricter.

Between the lines: Social media platform rules around political advertisements are under close scrutiny, as they serve the majority of digital political ads in the U.S. Yet programmatic political advertising sorely needs clearer policies around content, disclaimers, targeting, transparency and accountability, the report argues.

• The Federal Election Commission is very limited in how it can regulate online political advertisements, and legislative efforts to regulate them have failed.
• The report offers 12 recommendations for improving regulation and transparency of programmatic political advertising.

What they're saying: "Most of these [programmatic] platforms, their political speech policies for paid speech look kind of like how ad platforms looked in 2012," report co-author Matt Perault, a former head of global policy development at Meta who now directs the North Carolina center, told Axios.

• "We’re only two months from another election cycle, and there’s still so much we don’t know about the online political ads ecosystem," said report co-author J. Scott Babwah Brennen, head of online expression policy at the same center. "We found an ad-tech ecosystem that seems to be designed to be opaque and Byzantine."

The intrigue: No programmatic ads companies reviewed by Perault and Babwah Brennen explicitly prohibit lies about election processes or outcomes, and few make their policies around misinformation in the context of political ads clear.

• Only one programmatic ad company, Xandr, keeps an archive of ads, per the authors' review.