Advertising generates more than 80% of total revenue at Internet companies such as Google, Yahoo, and Facebook, and covers the cost of many of the free "apps" consumers download to increase the functionality of their smartphones and tablet computers. Smartphones, tablets, and other mobile devices give advertisers greater access to more consumers for more hours of the day. Digital Advertising

The most recent structural changes affecting advertising began around 1995, as consumers started to migrate from traditional media sources to online platforms. In 2012, online ad revenue made up 15% of total newspaper advertising revenues, compared with 7% in 2007. In 2012, the top 10 sellers of advertising space on websites accounted for more than 70% of online ad revenue, and the top 50 for nearly 90%, according to IAB. Some established companies say online advertising networks and exchanges affect prices for all ad-dependent companies because they can buy up blocks of residual or less attractive ads and release them on the market at fire-sale prices, in some cases for as little as 5%-10% of what the publisher might charge for the exact same ad space on a direct buy from an ad agency. Social networks . Two-thirds of online adults in the United States use social networking sites, including networking tools such as Facebook and Twitter; social sites such as Reddit, Digg, and propeller; photo and video sharing sites such as Flickr and You Tube; and social bookmarking sites such as Delicious. Digital Video . Separately, mobile devices use location-based services to track consumers' whereabouts. A 2012 survey by the Pew Research Center found that 68% of Americans did not like having their online behavior tracked and analyzed. Behavioral tracking remains largely unregulated in the United States, although some researchers point to a strong domestic regime of corporate "privacy on the ground." The growing use and power of tracking technology have raised regulatory concerns. Several web browsers have adopted "do not track" features, but some privacy experts question their effectiveness. Policy Issues Affecting Digital Advertising

Congress has been involved in regulating advertising since at least 1914, when the Federal Trade Commission Act made unlawful "the dissemination or the causing to be disseminated of any false advertisement" that might affect commerce." More recently, Congress, regulators, and the courts have turned their attention to digital advertising. The Food and Drug Administration (FDA) enforces the Federal Food Drug and Cosmetic Act (P.L. A patchwork of state regulations also affects online advertising. At least nine states, including California, Maryland, and New York, have introduced legislation on consumer or child online privacy. The IAB also has set guidelines for advertising in social media and on mobile platforms. Concerns About Online Privacy

Even though many U.S. consumers are concerned about online privacy and many actively avoid companies they do not trust, only 38% of consumers claim to know how to limit information collected on them by a website, according to Pew Research. These differences may raise significant compliance challenges for U.S. companies doing business in Europe—including those transacting with European nationals solely through the Internet without a physical presence in Europe. The FTC recommended a Do Not Track framework in 2012 and provided recommendations on privacy protections for mobile services in 2013. Besides privacy, the FTC updated its Dot.com disclosures for online advertising to give businesses examples and direction on how to avoid unfair or deceptive business practices in their online ads.
The United States is the world's largest advertising market. According to one estimate, domestic advertising revenue totaled $219 billion in 2012, accounting for about 1% of U.S. gross domestic product (GDP). Almost every major medium of information, including the press, entertainment, and online services, depends on advertising revenue. Advertising accounts for 60%-80% of total revenue at many newspapers and magazines and for most revenue at search engines and social networking sites.
Television still remains the main choice for advertisers, with ad revenue at almost $76 billion in 2012. However, spurred by the growth of paid search, online video, social networks, and mobile devices, advertising is moving to online platforms. Digital advertising revenue is estimated to have reached $36 billion, or 16% of total ad revenue, in 2012.
Companies can more easily track and measure consumer behavior online, which allows them to develop detailed profiles of their customers. Some Members of Congress have raised concerns about the business practices of online advertisers, particularly since their activities are largely unregulated in the United States. Digital publishers favor targeted consumer tracking because it allows them to provide free or low-cost ad-supported content. Without it, they argue, their ad-supported businesses could be harmed or possibly destroyed. Yet more than two-thirds of Americans do not like having their online behavior tracked and analyzed, according to a recent Pew Research Survey. Privacy and consumer advocates argue for more expansive federal regulations to protect consumers' online privacy.
Because of these concerns, recent Congresses, including the 113th, have focused on issues relating to digital advertising. They have held hearings on data privacy and proposed legislation including "Do Not Track" to give consumers the online equivalent of a "Do Not Call" option. In addition, lawmakers have proposed legislation to protect consumers from unlawful geolocation tracking of mobile devices. Congress is also looking at search advertising (where companies sell ads around consumer-initiated search results on web browsers) and fraudulent marketing over social networks.
The growing use of online and mobile tracking has raised regulatory concerns. The Federal Trade Commission (FTC) has published updated "Dot Com" disclosures for online ads; recommended a voluntary Do Not Track (DNT) function; and released new guidance on mobile advertising. The Food and Drug Administration (FDA) is studying pharmaceutical marketing in social media, with guidance required by June 2014. Since 2012, the Obama Administration and the FTC have introduced new privacy frameworks.
Other countries are debating, and some already have and others might adopt, new privacy laws. In particular, digital advertising in the European market is becoming more challenging as European lawmakers consider much stricter DNT rules, raising ever greater compliance hurdles for U.S. businesses. A patchwork of state regulations, including California's eraser law, also affects online advertising.