This article has been written by Abhigyat Chaitanya, pursuing the Diploma in Cyber Law, FinTech Regulations and Technology Contracts from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Zigishu Singh (Associate, LawSikho).
Table of Contents
Using the Facebook platform, a team of researchers displayed adverts for a beauty product intended for extroverts using the slogan ‘Dance like no one’s watching’, while introverts received an image of a girl standing in front of the mirror smiling with the phrase ‘Beauty doesn’t have to shout.’
In a parallel experiment, an advert was run which was targeted at individuals who were high in openness-to-experience by showing crossword puzzles using an image with the caption:
‘Aristoteles? Seychelles? Unleash your creativity and challenge your imagination with an unlimited number of puzzles!’
The very same puzzles were advertised to people low in openness, but with a slight play of words:
Settle in with an all-time favourite! The crossword puzzle that has challenged players for generations.’ Later researchers claimed that matching adverts to a person’s character led to 40% more clicks and up to 50% more purchases than using generic non-targeted ads. For an advertiser, that’s pretty impressive but not so much for the targeted users.
Targeted/behavioural advertising in simple terms refers to the matching of ads and potential customers. They are meant to reach a specific audience on the basis of their browsing history, purchase history, online behaviour, geolocation, preferences, etc. These specific traits are collected from various websites and social media platforms in the form of “user data”, saved as cookies. These cookies are shared with ad networks, which then show us personalized advertisements.
This article has been divided into two parts. First dealing with the mechanism of Targeted Advertisement and the latter delves into Indian Data Privacy laws against targeted ads.
Mechanism of targeted advertisement
Pinpointing the actor involved could be a difficult task. So we categorize them under three overlapping categories namely marketers, publishers, and advertising intermediaries.
These are persons or organizations interested in presenting their offers to potential consumers. They include retailers, consumer goods brands, device makers, the travel and hospitality industry, telecom and financial service providers, political parties, etc.
Publishers provide online content in the form of news, games, apps, services, etc. Online platforms involved in the advertising network include:
- E-commerce marketplaces (e.g., Amazon, eBay, Zalando),
- App stores (e.g. the Apple App Store, Google Play, Galaxy Store),
- Search engines (e.g. Google, Yahoo),
- Comparison-shopping and user-review tools (e.g. TripAdvisor, Trivago, Kayak),
- Social media and content-sharing platforms (e.g. Facebook, Instagram, TikTok, YouTube),
- Smartphone providers and application developers.
Advertising networks and exchanges
Ad networks give advertisers access to selective audiences by aggregating specific inventories. They can specialize in connecting marketers with specific publishers.
Advertising exchanges are platforms that sell their aggregated inventory of spaces by means of automated micro-auctions.
Google services are offered under a pay-per-click (PPC) pricing model. Facebook’s Audience Network extends Facebook’s behavioural advertising beyond the Facebook platform to the websites and apps partnering with the network. The recent focus has shifted to real-time bidding (RTB), a method for determining the price for space through a competitive bidding process.
Users play a dual role. On one hand, they are the data subjects whose personal or non-personal data is processed by entities in the advertising industry. On the other hand, users are citizen-consumers whose attention is competed for in the advertising ecosystem. Through targeted advertising, marketers aim to nudge consumers towards taking actions, be it clicking on an ad or buying a product.
Requirements for targeted ads
The whole targeted advertising market is geared towards matching ads with users for which, first the users’ data is required to be collected, processed, and categorized to make the process of matching feasible.
Classification of personal data
- Volunteered Data – Originates via direct actions taken by individuals(e.g. When creating online accounts, entering credit card information, publishing on social media or blogs).
- Observed Data – Acquired by data collectors when individuals’ activities are captured and recorded. Depending on the level of awareness of individuals, such data can be distinguished into (a) engaged ((b) not anticipated, and (c) passive data.
- Derived Data – Originate from other data through deterministic computations, thereby becoming new data elements related to an individual.
Forms of advertising
This is the delivery format for adverts. Display ads are more or less disruptive to users’ online experience through Pop-up windows, Info-bars, Banner Ads, and Video ads. Keyword advertising is another well-known mechanism wherein Google matches the keywords typed by the user in the search box with the keywords selected by advertisers to characterize their products, sold via real-time auctions.
Further, social media advertisers have a broad range of methods up their sleeves where they can directly sell space to third parties or their social media influencers (persons with a large follower base) to create content.
Mobile and in-app advertising offer an enhanced ad experience through video and other media content by placing ads within apps to the targeted public.
Matching of advertisements with customers
Data analytics and market research companies
Data analytics and market research companies collect and analyze personal data and then share their results with marketers and other interested parties on the online market. They help marketers analyze, sort, and categorize individuals; add or remove them from lists of people sharing certain characteristics (“audiences” and “segments”); select them for specific advertising treatment. Thus, they enable advertisers to address certain people in certain ways with certain messages on certain channels or devices; for example, through Facebook, a mobile app, or a website banner, they can make offers or discounts sent to people who are most likely to respond to them.
HeyStacks – provides companies with consumer intent profiling (PREDICTING CONSUMERS’ INTENTIONS) based on users’ browsing activities and contextual data(e.g., time, location).
Findify – offers search engine and navigation optimization for e-commerce websites.
Konodrac– offers various services, such as customer segmentation, personalized recommendations, digital marketing, and e-commerce.
Indian laws against targeted advertisements
The public at large has a right to receive commercial speech. Article 19(1)(a) of the constitution not only guarantees freedom of speech and expression but also protects the rights of an individual to listen, read and receive.
Supreme Court in the landmark case of Tata Press Ltd. vs. Mahanagar Telephone Nigam Ltd. of 1995, emphatically held in favour of advertisers, by deciding that the rights under Article 19(1)(a) of the Indian Constitution could not be denied by creating a monopoly in favour of the Government. It could only be restricted on grounds mentioned in Article 19(2) of the Constitution.
This indirectly put restrictions against government intervention. Thus, advertisers who wish to exercise their freedom of speech and expression, to exploit the right of an individual to listen, read and receive can do it more freely.
Online commercial advertisements are thriving in this period with new means of publications. Today we have real-time means. Earlier every house received a newspaper, which had 60-70% news, and the rest were occupied by advertisements of products, notice by govt., vacancies for jobs, etc.
With the shift to real-time means, everybody has a smartphone in their hand, a desktop at their workplace, an ott-television at home, which constantly keeps them connected to the world via service providers such as Facebook, Whatsapp, youtube, newspapers, websites, e-commerce platforms, etc. giving them all these facilities for free, so it seems on the face of it.
The legislation in India for advertisements has been written for Indian Standards. But now we receive advertisements from across the globe. Being a part of the global market comes with the responsibility of being aware. There cannot be honest and economic marketing unless the public at large is being educated by the information disseminated through advertisements.
We know how intricately the democracy and economy of a country are associated. Democracy would be handicapped without the freedom of “commercial speech”. Marketers require advertisement as a medium to involve the public.
The public at large has a right to receive the “Commercial speech“. Thus advertisement benefits the sovereign economy in return.
Lack of universal legislation
There is an absence of any uniform advertising regulation or agency. Among the legislations we have, some can be considered weaker compared to similar of their kind. For instance, provisions mentioned in chapter 3 of the IT Act specifically states that whoever publishes any material which is lascivious or which tends to degrade persons who are likely to read in the electronic form, shall be punishable with imprisonment and fine.
Certain legislation as mentioned under, though are in place but violations under those laws can be found on every single website you visit.
- Online platforms are filled with adverts that are harmful to young people, violating the Young Person (Harmful Publication) Act. Online education leads to an influx of children on the internet.
- Indecent Representation of women, adverts for Drugs, and magic remedies are among a few recurrent violations shown by online publishers. The internet is filled with erotic content clearly in violation of the Indecent Representation of Women (Prohibition) Act, 1986 and The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954. This clearly portrays the lack of implementation of these legislations.
- Further, The Representation of the People (Amendment) Act, 1996, puts limitations on advertising by political parties. The case of the Cambridge Analytics scandal during the 2016 US Elections, is a key exam of how targeted advertising can sabotage the general election and how lack of invigilation can lead to such things.
Other legislation such as The Cigarettes and other Tobacco Products Act, The Prenatal Diagnostic Techniques (Regulation & Prevention) Act, Transplantation of Human Organs Act, The Civil Defence Act, have such presence that their violations can hardly be found on the normal web.
The Electronic Media Monitoring Centre under the Ministry of Information and Broadcasting has made self-regulatory guidelines applicable to the broadcasting service providers.
This is alarming because the Constitution stands to protect the privacy of an individual i.e. it is stipulated that no program (including advertisement) should invade an individual’s personal or private affairs or privacy unless there is an identifiable larger public interest.
Online report and complaint
This is complicated. The advertisements received are based on real-time bidding (RTB). RTB is done by marketers to present ads by publishers on their platform.
If a person receives an advert he doesn’t like and wishes for it to be removed, he cannot just go to the police to report a crime. This advertisement can be broadcast from any part of the world through RTB. So pinpointing a single advert is difficult.
For this purpose, publishers give the option to report something, accompanied by reason. Herein, after the report, the said inventory will not be shown to you, and if it crosses a certain report threshold, then action will be taken. This is known as a self-regulatory mechanism.
Data protection legislation
Europeans adopted the Data Protection Directive in 1995 and in 2018 passed the General Data Protection Regulation (GDPR). India currently does not have a separate data protection law. As seen in the provisions discussed above, clear lack provisions for the protection and procedure to be followed to ensure the safety and security of sensitive personal information.
The 2020 Ban of mobile applications on the ground of data protection raised eyebrows to the imminent dangers. Data is the new oil. In this era, data is so important that a country can wage war against another for the same.
Among the existing laws. Section 43A in the Information Technology, 2000 refers to compensation for failure to protect data.
The Personal Data Protection Bill was introduced in Lok Sabha in 2019. It seeks to protect the personal data of individuals and establishes a Data Protection Authority. The bill further imposes accountability and limitations on data fiduciaries. For instance, personal data can be processed only for specific, clear, and lawful purposes subject to certain purposes, collection, and storage limitations. The bill governs the processing of data by the government, companies incorporated in India, and foreign companies with a consumer base (actual/ potential) in India. It categorizes certain personal data as sensitive personal data.
Would you want someone to know so much about you, that they know you more than your spouse, they know the mood you are in at the moment, they know your character, temperament, psyche and judgement, everything? Processing the data they collect on you, all this just to send you personalized advertisements.
As discussed earlier, it is known how intricately the democracy and the economy of a country are associated. Marketers require advertisement as a medium to involve the public. The public at large has a right to receive the “Commercial speech”. Thus advertisement benefits the sovereign economy in return.
The Constitution stands to protect the privacy of an individual. It is stipulated that no program (including advertisement) should invade an individual’s personal or private affairs or privacy unless there is an identifiable larger public interest.
There are evident pros and cons but the lack of legislation leaves us with no safety net.
- https://www.exchangewire.com/blog/2016/03/22/inferred-vs-observed-data-do-you-really-know-the-difference/#:~:text=Data%20that%20has%20been%20 gathered,from%20a%20 known%2C%20relevant%20source.
- https://wcd.nic.in/act/indecent-representation-women#:~:text=THE%20 INDECENT%20 REPRESENTATION%20OF%20WOMEN,connected%20therewith%20or%20incidental%20thereto.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.
LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join: