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It’s one thing to serve up targeted ads to adults, but it’s another thing entirely to serve up targeted ads to kids. It’s pretty creepy to think about grown-ups following kids around the web wherever they go, building sophisticated profiles about them, and trafficking in their personal data. So it’s perhaps no surprise that YouTube is coming under a lot of fire for serving up targeted ads to young kids.
Behavioral ad tracking and COPPA
According to the Children’s Online Privacy Protection Act (COPPA), companies cannot serve up behavioral or targeted ads to kids younger than age 13 without parental permission. And that, apparently, is exactly what YouTube was doing. Any time a young kid watched a cartoon, a funny viral video, or a popular kid’s show on the platform, YouTube was trying to serve them up a targeted ad that was customized for their age, demographic group or geographic location (or perhaps all three). The more that YouTube could do this, the more money the company made from selling highly customized, targeted ads to advertisers.
But as soon as the Federal Trade Commission (FTC) caught wind of what YouTube was doing, it was time to step in and act. The FTC is now mulling over a multi-million-dollar fine for YouTube, and as a result of the investigation, the social media giant has said that it would be stopping ads targeted to kids.
YouTube’s advertising model at risk
Good for YouTube, right? Well, there’s a bigger story here. YouTube is not actually stopping advertising shown on kids’ videos. Instead of serving up behavioral, targeted ads (which are illegal under COPPA), YouTube will be serving up regular ol’ contextual ads. Thus, if a video happens to feature someone playing basketball, you can bet there will be an ad for a sports clothing or sneaker company as part of the pre-roll or post-roll. You see, showing contextual ads is not illegal under COPPA, and they do not require YouTube to obtain any sort of parental permission. So YouTube is still free to blast away ads at kids, but just a different type of less profitable ad.
As part of its pledge to stop targeted ads to kids, YouTube also says that it will be encouraging young users to check out YouTube Kids, the kid-friendly companion site. This makes a lot of sense in terms of protecting kids from unwanted ads – but it also raises questions about how exactly YouTube is going to stop kids from watching content on the main YouTube site, and how YouTube is going to know if an adult or kid is watching certain types of videos. Ad targeting is notoriously difficult to monitor, track and enforce.
Ultimately, what is at stake here is YouTube’s entire advertising model. By some estimates, YouTube makes as much as $500 million to $750 million each year by selling ads based on video content for kids. So the video giant is going to be taking a huge hit if it can no longer serve up targeted ads, not to mention the impact of a huge fine from the FTC. Hopefully, that will teach YouTube a lesson that it can no longer monetize user data from young kids.