Home / Others / According to a study, targeted ads offer little additional value to online publishers, according to TechCrunch

According to a study, targeted ads offer little additional value to online publishers, according to TechCrunch

How much do online publishers derive from behavior-driven advertising that uses hostile privacy-monitoring technologies to determine which ad to display on the website user?

New research suggests that publishers earn only 4% more compared to a non-targeted ad.

It is a finding that suggests a light on why the budgets of so many newsrooms are shrinking and journalists are out of work, just as the adtech giants continue to fill their coffers with huge profits.

Visit the average news website with third-party cookies (yes, we know this is also true for TC) and you will be forgiven for thinking that the publisher is also getting great benefits from the data when they connect with a programmatic ad. systems that exchange information about the browsing habits of Internet users to determine the ad that is displayed.

However, while the online ad market is mbadive and growing: $ 88BN in revenue in the US UU In 2017, according to IAB data, an annual increase of 21%: publishers are not entities that are getting rich or their own content.

On the contrary, research in recent years has suggested that a large part of publishers are being pressured by the economy of advertising on digital screens, with 40% reporting stagnant or reduced advertising revenues, based on the 2015 Econsultancy study. . (Therefore, we can affirm positively, the increase in publishers that fork in subscriptions; the TC offer itself can be found here: Extra Crunch).

Most of the value created by digital advertising ends up in the chests of Adtech giants, Google and Facebook. . Drive the duopoly adtech. In the USA UU., The pair represents approximately 60% of the spending in the digital advertising market, by eMarketer, or around $ 76.57BN.

Its annual revenues have reflected the overall growth in digital terms, going from $ 74.9BN to $ 136.8BN, between 2015 and 2018, in the case of Google's Primary Alphabet; and $ 17.9BN to $ 55.8BN for Facebook. (While the US online expenses spend from $ 59.6BN to $ 107.5BN + between 2015 and 2018.)

The eMarketer 2019 projects will mark the first decline in the duopoly's collective participation. But not because the fortunes of the editors are suddenly ready for a change of bonanza. Rather, another technological giant: Amazon has increased its share in the digital advertising market, and is expected to do what eMarketer is launching.A small dent in the duopoly. "

Behavioral advertising: has been directed to dominate the online advertising market, driven by platform dynamics that encourage the proliferation of technologies and tracking techniques in an unregulated context. And, apparently, greater effectiveness from the perspective of online advertisers, as the document points out. ("Despite the challenges of measurement and attribution … many studies seem to agree that targeted advertising is beneficial and effective for advertising companies. ")

This has the effect of squeezing non-targeted graphic ads, such as those based on contextual factors to select the ad, for example. The content that is being viewed, the type of device or the location.

Laughter is now the exception; A fall like when cookies have been blocked. (Although, one that the veteran pro-privacy search engine, DuckDuckGo, has still become a profitable contextual advertising business).

A 2017 study at IHS Markit, suggested that 86% of programmatic advertising in Europe was using behavioral data. While a quarter (24%) or non-programmatic advertising was found to be using behavioral data, according to its model.

"In 2016, 90% of the growth of the digital screen advertising market came from formats and processes that used behavioral data," he observed, projecting a growth of 106% for advertising aimed at behavior between 2016 and 2020, and a decrease of 63.6% for the forms of digital advertising that does not use said data.

The economic incentives to drive behavioral advertising versus non-targeted ads seem clear to dominant platforms that rely on cumulative scale (in all advertisers, other people's eyes, content and behavioral data) to extract value from the audience dispersed and diverse Internet.

But the incentives for content producers to submit themselves, and their communities of committed users, to these economies of scale hostile to privacy, are much more diffuse.

Concern about possible imbalances in the online advertising market is also leading policymakers and regulators on both sides of the Atlantic to question the opacity of the market and call for greater transparency.

A price for the people who follow the head.

The new research, which will be presented at the conference on the economics of information security at the Workshop in Boston next week, aims to contribute to this digital advertising revenue puzzle by quantifying the value for a single publisher of choose ads that are aimed at behavior versus those that are not.

Weve marked the research before, when the findings were cited by one of the academics involved in the study at an FTC hearing, but the full article has already been published.

Is called Online tracking and publisher earnings: an empirical badysis, duck He is coauthor of three academics: Veronica Marotta, badistant professor in information science and decision at the Carlson School of Management, University of Minnesota; Vibhanshu Abhishek, badociate professor of information systems at the Paul Merage Business School of the University of California at Irvine; and Alessandro Acquisti, professor of informatics and public policies in Carnegie Mellon University.

"While the impact of targeted advertising on advertisers" has been documented the effectiveness of the campaign, much less is known about the value generated by online tracking and guidance technologies for publishers, websites that sell spaces ", the researchers write." In fact, the conventional wisdom that publishers also benefit from behavioral advertising has been badyzed in academic studies. "

"As we mentioned briefly in the document, despite the shared benefits of online tracking and behavioral guidance for multiple stakeholders (merchants, publishers, consumers, intermediaries …), there is a surprising shortage of empirical estimates of economic results of independent researchers. " Acquisti also tells us.

"In fact, most estimates focus on the advertiser's market side (for example, there have been quite a few studies estimating the increase in click or conversion rates badociated with targeted ads); much less is known about the publishers side of the market. Then, upon entering the study, we had a genuine curiosity about what we could find, since there was little information in terms of data that could anchor our predictions.

"We made theoretical bases to make predictions possible, but those predictions could be quite antithetical. In a story, targeting increases the audience's value, which increases advertiser bids, which increases publishers' revenue; during a different story, targeting reduces the "group" of audiences interested in an ad, which decreases the competition to show ads, which reduces advertiser bids and, ultimately, reduces publishers' revenue.

For the study, the researchers provided a data set comprising "millions" or exhibitions of completed ad transactions in a week at multiple online points of sale owned by a single (unidentified) large publisher that operates websites in a variety of verticals such as news, entertainment and fashion.

The data set also includes whether the site The cookie ID of the visitor is available, which allows badyzing the price difference between behavioral and non-targeted ads. (The researchers used a statistical mechanism to control the systematic differences between users that prevent cookies).

As noted above, the finding of the top line is only a very small gain for the editor whose data they were badyzing, around 4%. or an average increase of $ 0.00008 per ad.

It is a finding that contrasts sharply with some of the noisier but unfounded opinions that can be found promulgated online, affirming the vital need or favorite announcements to support editors / journalists.

For example, this article, published this month by an independent journalist who writes for The American prospect, It includes the statement that: "An online ad without a third-party cookie sells for only 2 percent of the cost of the same ad as the cookie."

(The author's reference to us is to the 2018 speech by Andrew Casale of Index Exchange, when he suggested that the ad buyer ID received 99% less bids than the same ad request with the identifier. suggested a margin between 99% and 97% decrease in the value of an ad without a cookie, therefore, choose a midpoint.

At the same time, those responsible for policy making in the USA. UU Now they seem very aware of the difference with respect to the regulation of privacy, and are constantly updating their scrutiny and verbal horror about how the giant adtech track Internet users and profile them.

At a hearing of the Senate Judiciary Committee earlier this month, convened with the goal of "understanding the digital ad ecosystem and the impact of data privacy and competition policy," the talk was not yes to regulate the great technology, but how hard they must end with the monopoly advertising giants.

"That's what brings us here today. The lack of choice. [for consumers to preserve their privacy online], "Senator Richard Blumenthal said." The excessive and extraordinary power of Google, Facebook and others that dominate the market is a fact of life, and thus, the protection of privacy is absolutely vital in the short term. "

The child of the "invasive surveillance" that systematically implements the adtech industry is "something that we would never tolerate on the part of a government, but Facebook and Google have the power of government that our founders had never foreseen," Blumenthal continued, before some of The types of personal data are in operation and are in charge of the adtech industrial surveillance complex: "Health, appointments, location, finances, extremely personal data, offered to anyone with almost no restrictions".

Considering that "invasive surveillance", a 4% "premium" publication for hostile privacy advertisements versus ads that are published merely in a contextual manner (and therefore do not require a generalized tracking of web users) begins to look like a mbadive scam. both the publisher's brand and the value of the audience, as well as the rights and privacy of Internet users.

Yes, targeted ads will appear to generate a small increase in revenue, according to the study. But as the researchers also point out that it is necessary to compensate the cost for publishers to comply with privacy regulations.

"If the configuration of the cookies is free, the website would definitely be losing money. However, the wThe widespread use of tracking cookies (and, more broadly, the practice of tracking users online) has been raising privacy issues that have led to the adoption of strict regulations, particularly in the European Union, "they wrote to quote an estimate. . for him The International Association of Privacy Professionals that Fortune Global 500 companies will spend around $ 7.8 billion in compliance costs to comply with the requirements of the General Data Protection Regulation of Europe (GDPR).

The broader costs to systematically erode privacy online are more difficult to put a value on for publishers. But you should also consider, whether it's the cost for a brand's reputation and user loyalty as a result of an editor cramming your sites with unwanted crawlers; at broader social costs, linked to the risks of manipulation and exploitation fueled by data from vulnerable groups. In a nutshell, it's not a good look.

Publishers may seem complicit in the dispossession of badets from their own content and audiences so they perceive only margin gain, but the opaqueness of the adtech industry implies that it is most likely not exactly known what type of & # 39; deal & # 39; they & # 39; We reach the hands of the advertising giants that grab them.

What makes this research work very compelling for the online publishing industry … and, well, a pretty uncomfortable news flash for anyone working in adtech.

Behavioral advertising is not paying publishers. It is not what makes you free things on the Internet. This is how Google and the rest of adtech sell their data. The value that it has, for advertisers, can be delivered without surveillance.

So let's go. https://t.co/UigdwKBghB

– Robin Berjon (@robinberjon) May 30, 2019

The study only provides a snapshot of the economy of the advertising market, as experienced by a single publisher, the vision presented is clearly different from the image that the adtech lobby has tried to paint, since it has invested money to argue against the privacy legislation. He argued that "killing behavioral advertising would kill free online content."

Clearly, saying no more than reducing publishers' income could not have the same charged tone of condemnation.

"In a nutshell, this study provides an initial data point on the advertising ecosystem on which the claims were made, but little empirical verification was completed. The results highlight the need for greater transparency about how the value generated by the data flows is badigned to different stakeholders, "he says. Acquisti, summarizing how the study should be read in relation to the advertising market as a whole.

Randall Rothenberg, executive director of the commercial business organization, the IAB, contacted to answer the research, and acknowledged that the digital supply chain is "too complex and too opaque", and also expressed concern about the relatively small value that generate targeted ads. up to the editors.

"The value of a week of data from an unidentified editor does not allow for a projected investigation (sic). Still, the study shows that targeted advertising generates immense value for brands: more than 90% of ads auctioned by unnamed publishers were sold with guidance, and advertisers were willing to pay 60% premium for those advertisements. However, very little of that value flowed to the publisher, "he told TechCrunch." If IAB has been said for a decade, the digital supply chain is too complex and too opaque, and this detour is another piece of evidence. that transparency is required so that publishers can benefit from the value they create. "

The research document includes a discussion of the limitations of the approach, as well as ideas for additional research work, such as observing how the value of cookies changes according to the amount of information they contain (in which they write their initial findings: "Information seems be very valuable (from the perspective of the editor) when we compare cookies with very little information to cookies with some information, after a certain point, adding more information to a cookie does not seem to create additional value for the publisher "; how "the (de) availability of a cookie changes the competition in the auction" – to understand the dynamics of the competition of the auction of ads and the possible mechanisms at stake.

"This is a new and hopefully useful data point, to which others must be added" Acquisti also told us in his concluding remarks. "The key to the research work is the gradual progress, with more studies that progressively add a clearer understanding of a problem, and we expect more research in this area."

This report was updated with additional comments.

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