Empirical study reveals the massive economic drop in ads without tracking

Important read! Empirical study shows a significant reduction in value of ads without tracking. Anyone promoting tracking-free contextual ads over profile-based advertising (such as the EDPB) really needs to consider the fact that *this doesn’t work for everyone* and it will have massive repercussions for the digital economy.

Let’s look at some of the findings of the study by Klaus Miller, Rene Laub and Bernd Skiera on “The Economic Value of User-Tracking for Publishers”:

– First off, the conclusion on numbers: “Across two large-scale empirical studies that covered 260 million ad impressions displayed at 10,637 publishers, we found that ad prices drop, on average, by 18%-23% in the EU and by 47% in the US when user tracking is unavailable. Considering that some users have already disabled user tracking, this value translates into an average price decrease of all ad impressions in the market by 11%-16%. Multiplying these percentages by projected digital ad spending of US$585 billion worldwide for 2023 (eMarketer 2021), we anticipate an advertising revenue decrease of US$64-94 billion. In short, the online publishing industry likely faces a severe revenue decrease if user tracking is eliminated, assuming the current market equilibrium stays unchanged.

– “Most publishers in the EU (>90%) and all publishers in the US experienced price decreases. Publishers offering sports, cars, lifestyle & shopping, and news & information suffered the most, whereas publishers offering (more privacy-sensitive) dating content realized higher prices without user tracking.

– “Advertisers seem to prefer obtrusive ads when they cannot access user tracking”: so much for the “no adverse consequences at all” argument of the EDPB in its PayOrConsent Opinion – if there is no tracking, will user interfaces get more clogged up by obtrusive ads?
[One comment on a previous post of mine said that “For users, any ad is an adverse effect”, showing that some want a service for free, full stop. They don’t want to pay and don’t want to see ads ????? ]

– “the availability of a user ID generates value for publishers. This finding suggests that while publishers may benefit less from advertisers� ability to target ads to users behaviorally, publishers benefit from the ability to conduct ad measurement (e.g., measure ad frequency, ad recency, and clicks and conversions).

– The study also refers to the widely quoted case of Dutch broadcaster NPO, only to highlight that part of the story of their increase in revenue was due to cost-cutting.

– While the study has limitations that it recognises (see pages 39 & 40), “our findings ultimately supplement previous research about the value of user tracking for publishers on the open web

Link to the study (SSRN): https://lnkd.in/eMUb5tUi

Thoughts on the EDPB’s Opinion: https://lnkd.in/eddQ4yW8

Sign up for our 2h webinar: https://lnkd.in/eWfBq8Tn

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