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“Privacy-invasive ad click attribution to become a thing of the past”: What happens to publishers’ ad revenues?

dollar bill melting

It seems like tracking user behavior for serving ads is going to become increasingly difficult in the coming years. Browser makers like Apple, Google, Microsoft Edge have been introducing new anti-tracking features. Recently, Apple introduced a new technology called Privacy Preserving Ad Click Attribution which allows attribution of advertising clicks while protecting user privacy.

As more and more browsers acknowledge the problems of cross-site tracking, we should expect privacy-invasive ad click attribution to become a thing of the past.

John Wilander, WebKit Security Engineer at Apple

The technology will give advertisers enough information to know how well their ads are performing without uniquely identifying users, or tracking their behavior across the internet. It will report back ad click and conversion data which will let advertisers see whether a particular ad campaign leads to more completed purchases. Apple will be integrating this feature into its Safari browser soon.

Techcrunch reports that the company has proposed the technology as a standard to the World Wide Web Consortium hoping that other browser makers will adopt it. Other browsers, like Google Chrome and Mozilla Firefox, are also doubling down on privacy features. Chrome recently introduced better cookie controls that limit advertisers from tracking user activities across websites while Firefox made enhanced tracking protection a default feature.

The question now is, how is all this going to affect publishers’ ad revenues?

$0.00008 per ad. Worthwhile?

Going by the findings of a recent study, publishers needn’t fear much. The study, Online Tracking and Publishers’ Revenues: An Empirical Analysis by researchers at Carnegie Mellon, the University of Minnesota and University California, Irvine suggests that the benefits of behavioral targeting for publishers may have been exaggerated.

There is a sort of magical thinking happening when it comes to targeted advertising [that claims] everyone benefits from this. Now at first glance this seems plausible. The problem is that upon further inspection you find there is very little empirical validation of these claims. What I’m saying is that we actually don’t know very well to which these claims are true and false. And this is a pretty big problem because so many of these claims are accepted uncritically.

Alessandro Acquisti, Professor of IT and Public Policy at Carnegie Mellon University

For the study, the researchers tracked millions of ad transactions at a large U.S. media company (unidentified) over a week. The publisher has websites across a range of verticals such as news, entertainment, and fashion. It was found that cookie-enabled ads brought in only 4% more revenue for publishers compared to ads that didn’t use cookies for tracking behavior.

That amounts to $0.00008 per ad, according to the study. The researchers calculated that a website selling an average of 4 million ads per day would lose around $320 a day if it turned off tracking cookies. Even this modest gain would likely end up as middlemen’s fees which can be as high as 60 cents for every dollar.

How is it possible that for merchants the cost of targeting ads is so much higher whereas for publishers the return on increased revenues for targeted ads is just 4%?

Alessandro Acquisti, Professor of IT and Public Policy at Carnegie Mellon University

The study also found that marketers had to pay a lot more to buy targeted ads. Acquisti said at an FTC hearing on the economics of big data and personal information, “Simultaneously we were running a study, as merchants, buying ads with a different degree of targeting. And we found that for the merchants sometimes buying targeted ads over untargeted ads can be 500% times as expensive.”

“Huge finding in terms of the policy debate”

The finding can have a major impact on online privacy laws. It may encourage lawmakers to pass stricter privacy laws, as they would not be constrained by the possibilities of hurting publishers’ advertising revenues.

It is a huge finding in terms of the policy debate. All of these externalities with regard to the ad economy—the harm to privacy, the expansion of government surveillance, the ability to microtarget and drive divisive content—were often justified to industry because of this ‘huge’ value to publishers.

Ashkan Soltani, Co-author, The California Consumer Privacy Act

Another recent survey, by Digiday had 45% of the respondents saying that behavioral ads did not produce significant benefits for them. The poll included responses of 40 executives from the publishing industry responsible for revenue generation at their companies.

Digital ad revenues rise without ad tracking

All of this, along with ongoing demands for regulation and scandals involving data privacy, may signal a turning point in the way ads are deployed online.

It is likely not the end of behavioral ad targeting but the contrarian view is also gaining ground, and it may not be a bad thing for publishers. Earlier this year, Digiday reported that The New York Times, which turned off behavioral targeting for its advertisers following GDPR, actually saw its digital ad revenues rise.

Jean-Christophe Demarta, SVP for Global Advertising at New York Times International told Digiday, “The fact that we are no longer offering behavioral targeting options in Europe does not seem to be in the way of what advertisers want to do with us. The desirability of a brand may be stronger than the targeting capabilities.

“We have not been impacted from a revenue standpoint, and, on the contrary, our digital advertising business continues to grow nicely.”