Advanced Search
MyIDEAS: Login

Privacy Regulation and Online Advertising

Contents:

Author Info

  • Avi Goldfarb

    ()
    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

  • Catherine E. Tucker

    ()
    (MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142)

Abstract

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 (EU) 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. This paper was accepted by Pradeep Chintagunta, marketing.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://dx.doi.org/10.1287/mnsc.1100.1246
Download Restriction: no

Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 57 (2011)
Issue (Month): 1 (January)
Pages: 57-71

as in new window
Handle: RePEc:inm:ormnsc:v:57:y:2011:i:1:p:57-71

Contact details of provider:
Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
Phone: +1-443-757-3500
Fax: 443-757-3515
Email:
Web page: http://www.informs.org/
More information through EDIRC

Related research

Keywords: privacy; online advertising; targeting;

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Randall Lewis & Justin M. Rao & David H. Reiley, 2014. "Measuring the Effects of Advertising: The Digital Frontier," NBER Chapters, in: Economics of Digitization National Bureau of Economic Research, Inc.
  2. Florian Hoffmann & Roman Inderst & Marco Ottaviani, 2013. "Hypertargeting, Limited Attention, and Privacy: Implications for Marketing and Campaigning," Working Papers 479, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  3. Cecere, Grazia & Le Guel, Fabrice & Soulié, Nicolas, 2012. "Perceived Internet privacy concerns on social network in Europe," MPRA Paper 41437, University Library of Munich, Germany.
  4. Catherine Tucker, 2011. "Virality, Network Effects and Advertising Effectiveness," Working Papers 11-06, NET Institute.
  5. Jörg Claussen & Tobias Kretschmer & Philip Mayrhofer, 2012. "Incentives for Quality over Time - The Case of Facebook Applications," CEP Discussion Papers dp1133, Centre for Economic Performance, LSE.
  6. ROCHELANDET, Fabrice & TAI, Silvio H.T., 2012. "Do privacy laws affect the location decisions of internet firms? evidence for privacy havens," MPRA Paper 37354, University Library of Munich, Germany.
  7. Alessandro Acquisti, 2014. "Inducing Customers to Try New Goods," Review of Industrial Organization, Springer, vol. 44(2), pages 131-146, March.
  8. Avi Goldfarb & Shane Greenstein & Catherine Tucker, 2014. "Introduction to "Economics of Digitization"," NBER Chapters, in: Economics of Digitization National Bureau of Economic Research, Inc.
  9. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer, vol. 44(2), pages 115-129, March.
  10. Avi Goldfarb & Catherine Tucker, 2012. "Privacy and Innovation," NBER Chapters, in: Innovation Policy and the Economy, Volume 12, pages 65-89 National Bureau of Economic Research, Inc.
  11. Sumitro Banerjee & Alex P. Thevaranjan, 2013. "How to deal with unprofitable customers? A salesforce compensation perspective," ESMT Research Working Papers ESMT-13-05, ESMT European School of Management and Technology.
  12. Anderson, Simon P. & Ciliberto, Federico & Liaukonyte, Jura, 2013. "Information content of advertising: Empirical evidence from the OTC analgesic industry," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 355-367.
  13. Tucker, Catherine E., 2012. "The economics of advertising and privacy," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 326-329.
  14. Archishman Chakraborty & Rick Harbaugh, 2012. "Persuasive Puffery," Working Papers 2012-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  15. George, Lisa M. & Hogendorn, Christiaan, 2012. "Aggregators, search and the economics of new media institutions," Information Economics and Policy, Elsevier, vol. 24(1), pages 40-51.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:57:y:2011:i:1:p:57-71. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.