Privacy Regulation and Online Advertising

By Avi Goldfarb, Catherine E. Tucker. Management Sciences, 2010

645 citations recorded by the source corpus.

Advertisers use online customer data to target their marketing appeals. This has heightened consumers' privacy concerns, leading governments to pass laws designed to protect consumer privacy by restricting the use of data and by restricting online tracking techniques used by websites. We use the responses of 3.3 million survey-takers who had been randomly exposed to 9,596 online display (banner) advertising campaigns to explore how privacy regulation in the European Union has influenced advertising effectiveness. This privacy regulation restricted advertisers' ability to collect data on web users in order to target ad campaigns. We find that on average, display advertising became far less effective at changing stated purchase intent after the EU laws were enacted, relative to display advertising in other countries. The loss in effectiveness was more pronounced for websites that had general content (such as news sites), where non-data-driven targeting is particularly hard to do. The loss of effectiveness was also more pronounced for ads with a smaller presence on the webpage and for ads that did not have additional interactive, video, or audio features.

Subfields: Marketing, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/844c9eabe9a6f3002125c683e70fa90b93ad5693

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Marketing

In Sociology and Political Science

Citations in the corpus

Alcohol's Getting a Bit More Social: When Alcohol Marketing Messages on Facebook Increase Young Adults’ Intentions to Imbibe (2015, background): “Past research has explored the effectiveness of online display advertising primarily in relation to behavioral intentions and behaviors related to the advertised product, object, or issue (Berthon, Pitt, & Watson, 1996; Burns & Lutz, 2006; Ducoffe, 1996; Goldfarb & Tucker, 2011; Ha, 2008).”
Digital marketing: A framework, review and research agenda (2017, positive): “Using a large scale survey of customers exposed to display ads, Goldfarb and Tucker (2011a) found that, on average, “display advertising became far less effective at changing stated purchase intent after the EU laws were enacted, relative to display advertising in other countries”.”
Marketing Analytics for Data-Rich Environments (2016, positive): “Goldfarb and Tucker (2010) show that privacy regulation that restricts the use of personal data may make online display ads less effective and imposes a cost especially on younger and smaller online ﬁ rms that rely on ad revenues (Campbell, Goldfarb, and Tucker 2015).”
Persuasion in crowdfunding: An elaboration likelihood model of crowdfunding performance (2017, background): “Most notably, the prevalence of the internet, social media, online commerce (e.g., Li et al., 2009), and advertising (Goldfarb and Tucker, 2011), has facilitated increased consumer comfort and confidence in transacting online.”
The consumer production journey: marketing to consumers as co-producers in the sharing economy (2018, background): “Goldfarb and Tucker (2011) Share data Survey with field data Display advertising became less effective in changing consumers’ stated purchase intent after EU privacy laws were enacted compared to other countries without these laws.”
Privacy Regulation and Market Structure (2015, background): “The debate about privacy regulation has focused on the trade-off between protection of consumer privacy and continued innovation in a vibrant industry (Miller and Tucker, 2009; Department of Commerce, 2010; FTC, 2010; Goldfarb and Tucker, 2011; Tucker, 2014).”
The Economics of Personal Data and the Economics of Privacy (2010, background): “Similarly, in a recent paper, Goldfarb and Tucker (2010) find that while the enactment of privacy regulation limiting behavioral targeting did reduce the effectiveness of (and therefore welfare gains from) ads on websites with general content, it had no such impact on ads on sites with specific…”
Crowdfunding Creative Ideas: The Dynamics of Project Backers in Kickstarter (2015, positive): “Though our primary dependent measure is binary, we follow the existing literature and estimate equation (1) as a linear probability model (Wooldridge 2010; Goldfarb and Tucker 2011; Simcoe and Waguespack 2011 ).”
Social Networks, Personalized Advertising, and Privacy Controls (2013, background): “This has important consequences for the current policy debate, which views the introduction of privacy controls as being harmful to advertising outcomes (Goldfarb and Tucker, 2011b).”
Detecting and Defending Against Third-Party Tracking on the Web (2012, background): “A recent study [6] claims that the negative economic impact of preventing targeted advertising — or the underlying tracking mechanisms that enable it — is signiﬁcant.”