How $1.8 Billion in Unregulated Digital Ads Could Sway Midterms

As the Mueller investigation proceeds, stories about Russian meddling in the 2016 election have often been at the top of the news cycle. It is indeed a scary story. It shows how undisclosed powerful actors, guided entirely by self-interest, can use duplicitous online ads to try and sway an election.

Those making these ads can customize their audiences by using frighteningly specific tools to target certain demographics. This enables them to microtarget users, thanks in large part to Facebook’s mountain of data. Between microtargeting and Facebook’s algorithms (which are proprietary and not well understood), no two people see the same digital ads.

These sophisticated tools give foreign governments an opening to push an agenda, as we have seen. But there is much more to this story. These disclosure gaps can also be exploited by domestic actors, such as industry lobbies, billionaires and political campaigns, to spread misinformation with no disclosure. With a few exceptions, digital ads are exempt from campaign finance laws. This is an urgent problem when you consider that, according to data from the Center for Responsive Politics, digital political ad spending has gone up 2,539 percent in just four years.

Too few pundits and politicians, however, are connecting these dots. An opportunity to have a crucial public debate over fairness in elections in the digital age is being wasted. The risk of foreign meddling is real, but what it teaches us about our elections is a much larger story.

“This singular focus on foreign interference is preventing us from having a national conversation about campaign finance laws and digital ads in particular,” said Ann Ravel, former chair of the Federal Election Committee (FEC), in an interview with Truthout. “And we should have that conversation … our democracy is on fire right now.”
Ravel, who was first appointed to the FEC by President Obama in 2013, co-authored a recent paper (with Hamsini Sridharan) that underscores the scale of the digital ad market: “Russian ad buys on Facebook were just a drop in the bucket relative to total online political spending,” she writes.

According to one estimate, the paper notes, “over $1.4 billion was spent on digital ads in the 2016 elections, a significant increase over previous cycles.” For perspective, when Facebook disclosed that Russian-linked accounts used the site — which have led to congressional hearings and self-regulation from Facebook — they were discussing $100,000 in ad buys.

“It’s definitely not just foreign actors,” said Hamsini Sridharan, program director at MapLight, in an interview with Truthout. Sridharan warned that we should be more concerned about the massive spending on digital ads from domestic campaigns and super PACs. “It’s important to channel the bipartisan attention to this issue … into broader conversations about transparency and making sure that voters know who is trying to influence them online,” Sridharan said.

This unregulated digital ad market, experts warn, benefits the rich and powerful by giving them another mechanism to shape public opinion.

“Though the internet does increase the ability of individuals to freely exchange ideas, it is well-financed campaigns and organizations that benefit the most,” Ravel said.

The Koch-funded Americans for Prosperity and many of its state chapters have been purchasing contact lists from users:

Given the efficacy of Facebook’s ads, it is hard to imagine the things they can accomplish with endless resources at their disposal.

Walter Lippman never experienced social media, but he was prescient in his 1922 book “Public Opinion.” He notes that “the opportunities for manipulation” of public opinion, “[are] open to anyone who understands the process.”

The Growing Digital Ad Industry and Its Impact

There is rapid growth of digital political ads. As noted above, $1.8 billion in digital advertising is expected for the 2018 election cycle. This has been increasing every election cycle with no sign of slowing. As recently as 2014, digital ads accounted for just 1 percent of political ads, whereas in 2018 it is expected to be 22 percent of (disclosed) ad spending. “Political campaigns will run more digital ads this year than ever,” reads a headline from the Los Angeles Times in March.

What sparked the growth, writes Megan Janetsky at the Center for Responsive Politics, was the increase in microtargeting capabilities. “Platforms like Facebook, Twitter and Google can now offer ad buyers something more than traditional platforms: less oversight, decreased transparency and lower prices matched with the heightened ability to pinpoint specific demographics.”

In other words, social media gives its clients nearly limitless variables to take into account when selecting a target audience for an ad. If a company or a campaign wants to tell women over 40 one thing, and women under 40 another, they can. If they want to limit the targeting to those who like to read, or shop or are politically active, they can do that. If the information can be provided to Facebook, it is used to improve the impact of advertisements — whether they are for products, ideas, candidates or even totally fabricated news stories.

This includes location, which has led to some especially galling examples. The Los Angeles Times reported, “anti-abortion groups sent ads to women who visited Planned Parenthood clinics across the country.”

“The highly customized nature of the ads not only make it difficult to monitor which ads are in violation of the law,” Brendan Fischer of the Campaign Legal Center told Truthout. “It also makes it extremely difficult for people to analyze political advertising, to fact-check or to counter falsehoods,” he said.

By the time a falsehood can be countered, it has already been blasted through an echo chamber enough times to serve its function. This is likely one reason why some of the most absurd conspiracy theories gain traction online.

Moreover, ads don’t need to go viral to be effective. Brett Pascale, digital director of the Trump campaign, claims Facebook ads were the primary reason Trump won in 2016. He claimed some ads were marketed to as few as 15 people.

“I started making ads that showed the bridge crumbling,” he said. “I can find the 1,500 people in one town that care about infrastructure. Now, that might be a voter that normally votes Democrat.”

Facebook ads and digital media in general is really the only medium where Trump’s campaign outspent Hillary Clinton. “They spent a higher percentage of their spending on digital than we did,” conceded Andrew Bleeker, who advised the Clinton campaign on digital strategy.

Inaction and Deregulation

Ravel warned of the dangers of dark digital ads as an FEC commissioner in 2014.

“Some of my colleagues seem to believe that the same political message that would require disclosure if run on television should be categorically exempt from the same requirements when placed on the Internet alone. As a matter of policy, this simply does not make sense,” she wrote. “The Commission [has] failed to take into account clear indicators that the Internet would become a major source of political advertising — dominated by the same political organizations that dominate traditional media.”

Her argument was met with harsh condemnation from the right, who portrayed her letter as deeply partisan and aimed at right-leaning sites. She would end “the last vestige of truly free political expression in American politics,” as the Daily Caller said.

One of the biggest obstacles to reform is rooted in ideological opposition to regulations. The growth of an unregulated political ad market is great for the cause of deregulation. Simply by doing nothing, an increasingly large chunk of the entire advertising market is virtually unregulated.

“This is really about deregulation” Ravel said. “They don’t have to pass a law or file a lawsuit. They can just do nothing.”

Republican FEC Commissioner Lee Goodman has led this battle for the right. He argues regulations of digital ads would have a chilling effect on free speech and infringe on a “virtual free market of ideas and political causes.”

Undermining Democracy in the Digital Age

There has long been hope and optimism that the internet (and social media in particular) can serve as a democratizing tool. It surely can empower the grassroots, as was witnessed with Occupy Wall Street and the Arab Spring. It also provides many new ways, however, for elite interests to further maximize their influence and profits.

A March 2018 Hewlett Foundation study on political polarization and social media makes this important point: “Social media itself is neither inherently democratic nor undemocratic, but simply an arena in which political actors — some which may be democratic and some which may be antidemocratic — can contest for power and influence.”

A contest for power and influence, however, is typically going to be won by those with the resources to do so. As we have seen in Washington, DC, spending money is the most surefire way to win influence.

Wall Street, Big Media, Big Oil and a host of other industries devote massive resources in the influence industry. Pharma has spent almost $3.9 billion in the last 20 years. If lobbying and donations enable centers of power to keep politicians on their side, digital ads are a way for them to try and control the voting public.

Lobbying and donations go to both parties. The Democratic Party, a powerful, neoliberal entity, is complicit in the woeful state of campaign finance. Alternative media and grassroots organizations with modest resources will be fighting a battle against moneyed interests with one hand tied behind their backs. The repeal of net neutrality could worsen this problem, but it is too soon to know how that will shake out.

The Need for Major Campaign Finance Reform

This will be the case until the US has significant campaign finance reform that makes the government accountable and responsive to the people. There are a few fleeting efforts to address the issue of digital ads — namely, the Honest Ads Act, which would add more transparency to ads. But prospects are murky at best. Of 26 co-sponsors in the Senate, only one Republican, John McCain, is listed. Due to his illness, they cannot count on his vote.

The FEC has started talks about reform but has not reached any agreements. Even if the commission does make changes, it would not likely impact the coming elections. Republican-appointed Chairwoman Caroline Hunter told VICE News, “the commission has been reluctant to change the rules of the game midway through an election season.”

Even if modest accommodations are made, it will be extremely difficult to enforce and there will be many ways to avoid disclosure, Fischer said.

House and Senate Democrats have released a campaign finance plan called “A Better Deal for our Democracy,” which gives lofty goals, including ending partisan gerrymandering, safeguarding democracy from “hostile actors” and ending the scourge of dark money. “It’s an ambitious and promising set of reforms, and it will be interesting to see what the follow-through is like,” Sridharan said.

But for now, it is a political document, something for Democrats to run on as they emphasize Trump’s undemocratic tendencies. “Achieving federal reform is definitely going to be tough. It will take bipartisan support to get anywhere,” Sridharan told Truthout. “That said, we know that most Americans across party lines want to see reform — so if lawmakers actually listen to their constituents, we could see some change.”

There are many problems with US democracy right now. The dominant media outlets, Congress and the internet are all increasingly dominated by titans of private capital — what Bernie Sanders has called the “Billionaire Class.” Our own information is being used to sell us products, politicians and sometimes even lies.

Some experts say the best way to counter all of this is to invest in education and media literacy. One recent literature review showed the public was largely uninformed about money in politics, but still supportive of campaign finance reform.

How telling that the public’s default status is to assume the worst of our politicians.