Smart TVs a ‘Vast System of Digital Surveillance’ That Targets Everyone, Especially Kids

The streaming television industry has morphed into a vast data-driven viewer surveillance apparatus, transforming people’s TVs into tools for monitoring, tracking and targeting, according to a new report from the nonprofit Center for Digital Democracy.

The 48-page report, “How TV Watches Us: Commercial Surveillance in the Streaming Era,” charts the evolution from broadcast, cable and satellite television to connected TV (CTV), a term that encompasses the wide range of content delivered through the internet to smart TVs.

CTV includes popular apps like YouTube TV, Free Advertiser-Supported TV (FAST) channels, and streaming services like Disney +, Netflix and Amazon Prime. It also includes Roku, smart TVs and smart TV devices themselves.

The report documents how CTV, whose surge in viewership is largely driven by young audiences, harvests user data through a “sophisticated and expansive commercial surveillance system” that privacy advocates argue undermines existing consumer protections.

“CTV has become a privacy nightmare for viewers,” said Jeff Chester, report co-author and executive director of the Center for Digital Democracy, in a press release. “It is now a core asset for the vast system of digital surveillance that shapes most of our online experiences … as it gathers and uses sensitive data about health, children, race and political interests.”

Over the past five years, CTV corporations have teamed up with data brokers like Experian and TransUnion to create new data-mining tools that capture and aggregate everything an individual user does on their smart TV. This information can be integrated with data captured from other devices and real-world activities.

Existing privacy policies don’t explain or protect people from these new forms of data capture, the Center for Digital Democracy said — so viewers should disregard any promises companies make about not collecting or sharing user information.

These new data-capture practices form the foundation for a system with “unprecedented capabilities for surveillance and manipulation,” the report warns. “As a consequence, buying a smart TV set in today’s connected television marketplace is akin to bringing a digital Trojan Horse into one’s home.”

The Center for Digital Democracy submitted the report, along with letters to the Federal Trade Commission, the Federal Communications Commission, the California attorney general and the California Privacy Protection Agency, calling for an investigation into the industry.

How does CTV capture data?

According to the report, CTV saw a dramatic rise in viewership during the COVID-19 lockdowns “when hundreds of millions of Americans who were forced to stay in their homes found comfort and diversion in the vast number of channels offering a steady supply of movies, television series, sports, and other programming.”

The trend has continued, with streaming services expanding their audiences by offering lower-cost versions of their platforms that include advertising. These versions with ads are more profitable and provide more opportunities for data collection and ad targeting.

Through CTV partnerships, data brokers create extensive digital dossiers on each of hundreds of millions of individual viewers and TV owners, based on their identity information, viewing habits, and both online and offline shopping and other behaviors.

One new data-mining tool is a “cookieless ID” that tracks a person’s digital activity without third-party cookie providers, capturing user data directly and without the viewer’s knowledge or the ability to opt out.

Another method, ID graphs, aggregates user data from across all of a person’s devices logins and even real-world activity, enabling targeted advertising both on and offline.

Automatic content recognition (ACR) software, an artificial intelligence (AI) tool, captures every frame of content displayed on a TV and creates a digital fingerprint. That content, matched to individual households, accounting for their location, subscription histories, gaming, type of content, etc., is then used by advertisers to control everything from the TV home screen to the ads viewers see.

In this new landscape, even TV manufacturers are collecting first-party data — data that comes directly from users. In many cases, users must consent to that data collection during TV setup. Software installed on the TV tracks and analyzes the content and advertising that appear on the screen.

While manufacturers say the data is anonymized, the report says the thousands of categories used for “precise audience targeting” reveal an extensive, highly granular, and intimate amount of information that, when combined with contemporary identity technologies, enables individual viewer tracking and ad targeting.

That targeting extends beyond product advertising — it is also used to manipulate people’s financial, political and health decision-making, the report said.

How CTV manipulates and harvests consumer health data

The U.S. is one of two countries globally that allows pharmaceutical companies to market directly to consumers. Research shows the ads significantly increase drug sales, although they tend to be biased, use misleading language and leave out key health information.

According to the Center for Digital Democracy report, pharmaceutical marketers are leveraging extensive data on people, including diagnostic and procedure codes, medical claims and prescribing behaviors.

CTV has opened avenues for the industry to become “even more powerful and intrusive,” combining existing health data with targeted pharmaceutical ads and then tracking its effectiveness to refine targeting methods even further.

Despite claims that health data for ad targeting is anonymized, the report said the industry can use other identity-tracking tools to target pharmaceutical ads to specific people on their smart TVs.

For example, a company called DeepIntent partners with LG for exclusive access to its automated content recognition data. The company can combine that data with other data points to target people for pharmaceutical ads relevant to their health concerns.

DeepIntent also partners with Roku to target “Silver Streamers,” people 55 and older who are more likely to have a diagnosed condition.

The companies target patients, caregivers and providers with sustained and repeated ads across multiple platforms.

Processed food companies use AI to target, collect data from kids

Food and beverage companies use CTV to target children and teens, who are part of what they call “Generation Stream.”

Companies like General Mills work with Netflix, Disney+ and Prime Video to integrate their products in shows that resonate with the target audience. Big Food’s interest in this type of integration has spawned companies like BenLabs, whose sole purpose is integrating brands into TV, film, music and influencer content.

CTV also uses generative AI to show different ads to different audience segments watching the same show. Startup companies are developing technology to place different products in the same show for different audiences.

“Where one customer sees a Coca-Cola on the table,” the report said, quoting a marketing executive, “the other sees green tea. Where one customer sees a bag of chips, another sees a muesli bar … in the exact same scene.”

Companies like Amazon share their search and purchase data with the food and beverage industry, which makes it possible for brands to further refine their targeting.

For example, Hershey, an Amazon partner, has used the data to ensure its products always “win” in Amazon searches and has placed its products in Amazon shows.

Roku has partnered with Kroger to integrate data collected in the stores and through viewing habits, allowing brands to target supermarket shoppers while they watch CTV. The platform also provides advertisers with data to measure how exposure to streaming ads affects real-world purchases.

Kids, teens represent $28 billion market 

According to the report, kids and teens represent a market worth over $28 billion for purchases of food, toys, entertainment and technology. They also play an important role in determining what families stream and which streaming services they subscribe to.

While Disney claims not to advertise to kids, it collects data about them that it shares with marketers. For example, the company coordinated a project where children shared their “video ethnographies” about their favorite pastimes that it shared in a report.

Streaming channels also recycle popular content, like “SpongeBob,” “Dora the Explorer” and “Peppa Pig” on channels with streaming ads.

CTV programming aimed at young people is poised for a transformation through generative AI, which will be used to easily create animation and personalized ads and to churn out kid-targeted content faster and cheaper than ever before.

As this new media landscape unfolds, the Center for Digital Democracy argues there must be a comprehensive policy agenda to protect consumers and enhance democracy. That agenda should include privacy protections and digital marketing safeguards for health, children and politics.

“Instituting policies for connected television will not be easy,” the report concluded, “especially after the online industry has been allowed to operate and grow unfettered and unchecked for decades. The systems and relationships that enable ongoing data collection and its use are deeply embedded.”