Report: Targeted Ads Not As Effective As Thought

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Edward Pollitt
By Edward Pollitt
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Behaviourally targeted advertising is perhaps not what it’s cracked up to be, with one study revealing publishers make just four per cent more from targeted ads versus non-targeted.

The study tracked millions of ad transactions at an unnamed US media company for one week.

And, the report finds it’s publishers who are benefitting the least from these targeted ads.

“We find that when a user’s cookie is available publisher’s revenue increases by only about four per cent,” the report stated.

“This corresponds to an average increase of $0.00008 [USD] per advertisement.”

This is in comparison to ads that are simply contextually served, meaning they don’t require tracking of web users.

Although small, the “economic significance” of these targeted ads can add up.

A site that gathers 500,000 sessions per day could hypothetically generate almost $US10,000 ($AU14,351) per month, finds the report.

But the research also points out the cost of complying with privacy regulations for these publishers.

“If setting tracking cookies on visitors was cost-free, the website would definitely be losing money,” the research says.

“However, the 27 widespread use of tracking cookies – and, more broadly, the practice of tracking users online – has been raising privacy concerns that have led to the adoption of stringent regulations, in particular in the European Union.

“Privacy regulations put into place specific requirements and provisions pertaining to the processing of personally identifiable information (personal data) of individuals; as such, they require websites and, more generally, companies that collect, store, and manage consumers’ information, to put in place appropriate technical and organizational measures that ensure the compliance with such requirements.”

The pressure placed on publishers is in contrast to the continually growing online ad market, which reached $US88bn (approx $AU117.92) in 2017 according to the report.

And while the benefits of targeted advertising for advertisers “has been documented”, little has been made of the ramifications for publishers.

“The conventional wisdom that publishers benefit too from behaviorally targeted advertising has rarely been scrutinized in academic studies,” says the report.

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