Home / Technology / Targeted ads offer little value to online publishers, says study – TechCrunch

Targeted ads offer little value to online publishers, says study – TechCrunch



What value do online publishers derive from behavior-targeted advertising that uses hostile privacy-tracking technologies to determine what advertising to show to a website user?

A new study suggests that publishers earn only 4% more than they broadcast an untargeted ad.

It's a discovery that sheds light on why so many newsroom budgets are dwindling and journalists find themselves out of work – even as the giants of the adtech continue to fill their coffers with huge profits.

Visit the ugly medium news website with third-party cookies (yes, we know, that's also true for TC) and you'd be forgiven for thinking that the publisher also gets big profits from the data skimmed by their users when they log on to a programmatic ad. systems that exchange information about the browsing habits of Internet users to determine the advertising to be displayed.

Yet while the online advertising market is massive and growing ($ 88 billion in revenue in the United States in 2017, according to IAB data, 21% increase over the previous year. 39, previous year), publishers are not entities that enrich themselves excessively with their own content.

On the contrary, research conducted in recent years has shown that a large portion of publishers are constrained by the economics of digital signage advertising. About 40% of them report stagnant or declining advertising revenue, according to a 2015 Econsultancy study. (So we can say that the increase in the number of publishers per subscriber – TC's offer is here : Extra Crunch).

The lion's share of the value generated by digital advertising ends up in the coffers of the giants of the adtech, Google and Facebook . Aka the adtech duopoly. In the United States, the pair accounts for about 60% of digital advertising market spending, by eMarketer – or about $ 76.57 billion.

Their annual revenues reflected overall growth in digital advertising spending – from $ 74.9 billion to $ 136.8 billion between 2015 and 2018, in the case of Google's parent company, Alphabet. and $ 17.9 billion to $ 55.8 billion for Facebook. (While online advertising spending in the United States has increased from $ 59.6 billion to $ 107.5 billion between 2015 and 2018.)

The eMarketer 2019 projects will mark the first decline of the collective duopoly. But not because the fortunes of publishers are suddenly ready for a favorable turnaround. Another technology giant, Amazon, has increased its share of the digital advertising market and should make what eMarketer calls the beginning of "a small bump in the duopoly ".

Behavioral advertising – that is, targeted advertising – is dominating the online advertising market, fueled by platform dynamics that encourage a proliferation of technology and tracking techniques across the Internet. an unregulated context. And by, it seems, greater efficiency from the point of view of online advertisers, as noted in the newspaper. ( 'Despite the difficulties of measurement and attribution … many studies seem to agree that targeted advertising is beneficial and effective for advertising agencies. ")

This had the effect of eliminating untargeted display ads, such as those based on contextual factors for selecting the ad, for example. the content viewed, the type of device or the location.

These are now the exception; an alternative, for example when cookies have been blocked. (An engine that DuckDuckGo, a privacy-friendly search engine, has nonetheless turned into a profitable contextual advertising activity).

A 2017 study by IHS Markitsuggests that 86% of programmatic advertising in Europe uses behavioral data. Even though a quarter (24%) of unscheduled advertising used behavioral data, depending on its model.

"In 2016, 90% of the growth in the digital signage advertising market came from formats and processes using behavioral data," he said, predicting a 106% growth in targeted behavioral advertising between 2016 and 2020, and a decrease of 63.6% for forms of advertising. digital advertising that does not use this data.

The economic incentives to promote behavioral advertising over untargeted advertising are clear to dominant platforms that are increasingly important – among advertisers, the eyes of others, content and behavioral data – in order to extract value from the dispersed and diverse public of the Internet.

But the incentives for content producers to submit – and their communities of committed users – to these hostile economies of scale seem far more unclear.

Concerns about potential imbalances in the online advertising market are also causing policymakers and regulators on both sides of the Atlantic to question the opacity of the market and to call for greater transparency.

A price on people who follow the head

The new study, which will be presented at the conference of the workshop on the economy of information security to be held in Boston next week, aims to make a new contribution to this puzzle of digital advertising revenue by trying to quantify the importance for a publisher to choose Ads Targeted Behavior vs those who are not.

We had already reported the research – when the findings had been cited by one of the academics involved in the study at a hearing of the FTC – but the full document has now been released.

This is called Online tracking and publisher revenue: an empirical analysis, and is co-written by three academics: Veronica Marotta, assistant professor of information science and decision making at the Carlson School of Management at the University of Minnesota; Vibhanshu Abhishek, Associate Professor of Information Systems at the Paul Merage School of Business at California Irvine University; and Alessandro Acquisti, professor of computer science and public policy at The University of Carnegie Mellon.

"The impact of targeted advertising on the effectiveness of advertisers' campaigns is widely documented, but much less is known about the value generated by online tracking and targeting technologies for publishers – websites selling spaces "the researchers write. "In fact, the conventional wisdom that publishers also benefit from a targeted advertising on behavior has rarely been closely scrutinized in academic studies."

"As we mention briefly in the paper, notwithstanding claims about the shared benefits of online tracking and behavioral targeting for multiple stakeholders (marketers, publishers, consumers, intermediaries …), there is a surprising scarcity of benefits." empirical estimates of economic results from independent researchers, " Acquisti tells us too.

"In fact, most estimates focus on advertisers (for example, many studies have estimated the increase in click or conversion rates associated with targeted ads); we know much less about the publisher side of the market. So, at the beginning of the study, we were really curious about what we might find, because there was little data that could anchor our forecasts.

"We had theoretical bases to make predictions possible, but these predictions could be quite antithetical. In one scenario, targeting increases the value of the audience, which increases advertisers' offerings, which increases publisher revenue; from another perspective, targeting decreases the audience pool "interested in an ad, which reduces the competition for ad serving, which reduces advertisers' offerings and, ultimately, revenue." publishers. "

For the study, the researchers received a set of data including "millions" of one-week online display ad transactions across multiple online retail outlets owned by one large (unidentified) publisher who operates websites. in various sectors such as news, entertainment and recreation. and fashion.

The dataset also included whether the site The cookie identifier of the visitor is available, which makes it possible to analyze the price difference between the ads targeted by the behavior and the non-targeted ads. (Researchers used a statistical mechanism to control systematic differences between users preventing cookies.)

As stated above, the end result is only a very small gain for the publisher whose data they analyzed – about 4%. Or an average increase of $ 0.00008 per ad.

This is a conclusion that contrasts sharply with some of the strong but unsupported opinions that can be found being promulgated online, affirming the "vital necessity" of behavioral advertising to support publishers / journalism.

For example, this article, published earlier this month by an independent journalist writing for The American perspective, The assertion is: "A third-party non-cookie online advertisement represents only 2% of the cost of the same advertising with the cookie." However, it does not specify the source of the statistics cited.

(The author told us that it was a 2018 speech by Andrew Casale, from the Index Exchange, when he had suggested to the demands of 39; announcement without buyer ID to receive 99% lower offers compared to the same ad request with the identifier.It added that his conversations with Internet users in the technology sector of information suggested a gap between a 99% and 97% drop in the value of a cookie-free ad, thus choosing a midpoint.)

At the same time, US policymakers now seem aware of how sad they are with regard to privacy regulations – and horrifically denounce their control and verbal horror of the way in which the giants in the ad-hoc advertising sector monitor and profile Internet users.

At a hearing of the Senate Judiciary Committee held earlier this month – convened for the purpose of "understanding the ecosystem of digital advertising and the impact of data privacy and the competition policy "- if to regulate big tech, but how hard they have to fight against the monopolistic advertising giants.

"That's what brings us here today. The lack of choice [for consumers to preserve their privacy online], Said Senator Richard Blumenthal. "The excessive and extraordinary power of Google, Facebook and others who dominate the market is a reality. The protection of privacy is therefore essential in the short term. "

The type of "invasive surveillance" that the adtech industry consistently deploys is "something we would never tolerate from a government, but Facebook and Google have the power of government never envisioned by our founders," continued Blumenthal, before -the types of personal data that have been acquired and exploited by the adtech industrial monitoring complex: "Health, dating, location, finances, extremely personal information – offered to anyone without any constraints.

Keeping in mind this "invasive surveillance", a 4% publisher premium for privacy-annoying ads versus ads that are simply contextually served (and therefore do not require ubiquitous tracking of web users ) is starting to look like a massive scam – the value of the publisher's brand and public, as well as the rights and privacy of Internet users.

Yes, targeted ads seem to generate a slight increase in revenue, according to the study. But as the researchers also point out, the cost to publishers of complying with privacy regulations must be offset.

"If the installation of cookies tracking visitors was free, the website would certainly lose money. However, the wThe widespread use of tracking cookies – and more generally the practice of online user tracking – has sparked privacy concerns that have led to the adoption of strict regulations, particularly in the area of ​​privacy. European Union, "they write, citing an estimate by the According to the International Association of Privacy Professionals, Fortune Group Global 500 companies will spend approximately $ 7.8 billion to comply with the requirements of the General Data Protection Regulation in Europe (GDPR) .

The systematic erosion of privacy protection online is more expensive for publishers. But it is also worth asking whether the cost of brand reputation and user loyalty lies with a publisher unleashing its sites with unwanted followers. to broader societal costs – related to the risk of manipulation and exploitation of vulnerable groups fed by data. In simple terms, it's not a good idea.

Publishers may seem complicit in deleting the assets of their own content and audiences for what – according to this study – only seems to be a marginal gain, but the opacity of the company is not the same. Information technology industry implies that most probably does not realize exactly what kind of "contract" they "We are in the hands of the advertising giants who grab them.

This makes this research paper a very compelling read for the online publishing industry … and, finally, a rather clumsy new for those working in the computer technology industry.

Although the study only provides a snapshot of the advertising market economy, as experienced by a single publisher, its appearance differs markedly from that which the adtech lobby has attempted to brush, because he has invested money to argue against privacy legislation – claims that "killing behavioral advertising would kill free online content".

Avoiding scary ads would only marginally reduce publishers' revenues, but not quite the same sarcasm.

"In summary, this study provides a first data point on a portion of the advertising ecosystem on which statements were made, but few empirical checks have been made. The results highlight the need for greater transparency on how the value generated by data flows is allocated to different stakeholders, "he said. Acquisti, summarizing how the study should be read in relation to the advertising market as a whole.

Contacted to get a response to the search, Randall Rothenberg, CEO of the Advertising Organization, IAB, agreed that the digital supply chain is "too complex and too opaque" – and s & # 39, is also concerned about the low value generated by targeted advertising. to publishers.

"A week of data from an unidentified publisher does not constitute projectible research (sic). Nevertheless, the study shows that targeted advertising creates immense value for brands: over 90% of the unnamed publisher's auction listings were sold with targeting, and advertisers were willing to pay 60% of more for these ads. Still, very little of this value went to the publisher, "he told TechCrunch. "As the IAB has been saying for a decade, the digital supply chain is too complex and opaque, and this misuse is further evidence of the transparency required for publishers to benefit from the value they create.

The research paper includes a discussion of the limitations of the approach, as well as ideas for additional research work, such as analyzing the evolution of the value of cookies based on the amount of information they contain (on which they write their initial results: seems to be very useful (from the point of view of the publisher) when we compare cookies with very little information to cookies with certain information; after a certain point , adding information to a cookie does not appear to create additional value for the editor "); and investigate how "the (non) availability of a cookie changes the competition in the auction" – to try to understand the dynamics of competition in the auction and the potential mechanisms involved.

"This is a new useful data point, to which we must add others," Acquisti also told us in conclusion. "The key to research lies in incremental progress, with more and more studies gradually adding a clearer understanding of a problem, and we hope more research will be conducted in this area." . "

This report has been updated with an additional comment


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