In Wake of Privacy Laws, Kids' Sites See Ad Revenue Plummet

Smaller Companies Banning Behaviorally-Targeted Ads, Conducting Expensive Audits

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Changes to the children's privacy-protection law are keeping kids' site publishers awake at night. The Children's Online Privacy Protection Act changes went into effect July 1, and since then some mom-and-pop sites providing games and educational resources say their ad revenue has tanked. The rule limits the ability of such sites to track children under age 13, thus preventing them from running behaviorally-targeted ads.

Fantage, a game on
Fantage, a game on

"I'm just like sitting on pins and needles," said Judy Miller, founder of Apples4TheTeacher, a site featuring thousands of pages of educational resources for teachers and kids. Because it caters to teachers but also attracts children, the former elementary school teacher is unsure how the law affects her site.

"The law is so subjective for what is a kids' site and what is a mixed site, it just has thrown me into a tailspin," said Ms. Miller, who recently decided to spend several thousand dollars to have her site audited by privacy-services firm Truste in the hopes of determining how to handle the COPPA changes.

Ad revenue plummets
In the meantime, her ad revenue has plummeted. When ad network Casale removed behavioral ads purchased through real-time bidding from her site, the cost of ads there dropped from $3 per thousand impressions to $0.32. Behavioral ads often cost more than ads targeted based on site-content category.

"Unfortunately, this was all too predictable, as the IAB warned for two years that the impact of the new COPPA rules would mean less revenue for child directed sites and fewer free offerings for families," said Mike Zaneis, senior VP and general counsel of the Interactive Advertising Bureau.

In addition to preventing behavioral ads aimed at kids, the Federal Trade Commission's changes to the 1998 law categorize geo-location information, photos and videos as personal information, requiring parental consent before such data is collected on children under age 13. They also extend COPPA to cover persistent device identifiers such as IP addresses and mobile device IDs that allow companies to track a user across various personal devices.

Ms. Miller severed ties with some ad networks including Valueclick and Tribal Fusion after the changes took effect. Valueclick currently doesn't distinguish between sites that should and should not be served with behavioral ads. She is concerned that she may have to sift through all 10,000 pages of her site to remove ad tags that could surface behavioral ads.

"I'm a one man band," she said, noting she's spent the last 15 years building her site. "It's been my baby; it's been my inspiration," she continued, becoming emotional during a phone interview. If the Truste audit results in a "laundry list" of necessary changes, she said, "I'm pulling the plug."

"I've definitely lost a lot of sleep at night worrying about whether we're in compliance," said Susan Beasly, co-founder of, which features kids' games including "Papa's Cupcakeria," which invites players to "Cook a ridiculous amount of delicious cupcakes for all your wacky customers."

"We've had about a 50% drop in [ad] revenue since the changes on July 1," said Ms. Beasly, who runs and other sites with her husband. Cost-per-click ads dropped from $0.13 to $0.06 per-click after behavioral ads were removed from the site. also has stopped running ads from the Valueclick and Tribal Fusion networks.

Like Ms. Miller, Ms. Beasly has maintained her site's connection with the Burst Media network, which runs a vertical content network in addition to enabling behavioral targeting.

Compliance is a chore for ad networks, too
Many small kids' site publishers are "really cautious of who they're working with," said Liz Hegarty, senior director of client services at Burst. The network notified children's site publishers in May and June about the COPPA law, and altered its system to ensure that behavioral ads would not appear on their sites. "We had a COPPA team at Burst," she said, noting the company's compliance officer, general counsel and others were involved in implementing changes.

Behavioral advertising is served through ad networks and exchanges, with ad impressions generated by users fitting a particular audience segment (in-market athletic-shoe buyer, for instance). Sometimes selling one ad impression involves several ad-tech entities, making it difficult for the network with the direct relationship to a children's site to control whether or not a behavioral ad ends up there.

Essentially Burst has labeled all kids' sites in its network as off-limits to behavioral ads. Other ad networks would "rather wipe their hands clean and not invest money [to make necessary changes] because it does cost money," said Ms. Hegarty.

One large ad network which asked to remain anonymous has yet to make changes to accommodate kids' site publishers, in part because of the technical work required and in part because the company is unsure about its liability and what would constitute a safe harbor. The network also suggested that it's rare for advertisers to target children with behavioral ads.

Small businesses burdened
"It just doesn't seem like anyone was really invited from the small business side of this," during the FTC's consideration of the rule changes, said Ms. Beasly.

"We're trying to be consistent with what Congress intended, and tried to do so in a way that would minimize the burdens on small businesses," said Maneesha Mithal, associate director of the FTC's Division of Privacy and Identity Protection. In regards to complaints that free content from small publishers could be stifled as a result of the rule changes, she added, "When we passed the original rule …we heard the same arguments."

Ms. Mithal suggested that in addition to running contextual ads on their sites, kids' site publishers can obtain parental consent for running behaviorally-targeted ads. However, getting consent from parents would most feasibly involve putting up an initial site blockade similar to the age barriers on alcohol brand sites.

"If I put an age gate or something like that on my site that kills all organic ranking," said Ms. Miller. "It blocks the search engine bots."

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