IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_11931.html
   My bibliography  Save this paper

Can Privacy Technologies Replace Cookies? Ad Revenue in a Field Experiment

Author

Listed:
  • Zhengrong Gu
  • Garrett A. Johnson
  • Shunto J. Kobayashi

Abstract

As regulators seek to balance user privacy with publisher sustainability, Google's Privacy Sandbox offers a potential replacement for third-party cookies. This paper presents the first independent estimates of the publisher-side economic effects of Privacy Sandbox, a suite of privacy-enhancing technologies for online advertising. Leveraging an open, industry-wide field experiment, we partner with a major ad management firm to evaluate over 200 million ad impressions across more than 5,000 publishers. We find that removing third-party cookies reduces publisher revenue by 29.1%, while Privacy Sandbox preserves just 4.2% of this lost revenue. We further document that Privacy Sandbox increases ad latency and reduces impression delivery by 2.9%. The results underscore the continued economic tension between privacy and the funding of online content.

Suggested Citation

  • Zhengrong Gu & Garrett A. Johnson & Shunto J. Kobayashi, 2025. "Can Privacy Technologies Replace Cookies? Ad Revenue in a Field Experiment," CESifo Working Paper Series 11931, CESifo.
    • Handle: RePEc:ces:ceswps:_11931
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/cesifo1_wp11931.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Garrett A. Johnson & Scott K. Shriver & Shaoyin Du, 2020. "Consumer Privacy Choice in Online Advertising: Who Opts Out and at What Cost to Industry?," Marketing Science, INFORMS, vol. 39(1), pages 33-51, January.
    2. Avi Goldfarb & Catherine E. Tucker, 2011. "Privacy Regulation and Online Advertising," Management Science, INFORMS, vol. 57(1), pages 57-71, January.
    3. Nils Wernerfelt & Anna Tuchman & Bradley T. Shapiro & Robert Moakler, 2025. "Estimating the Value of Offsite Tracking Data to Advertisers: Evidence from Meta," Marketing Science, INFORMS, vol. 44(2), pages 268-286, March.
    4. Alessandro Acquisti & Curtis Taylor & Liad Wagman, 2016. "The Economics of Privacy," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 442-492, June.
    5. Stefanie Warnat-Herresthal & Hartmut Schultze & Krishnaprasad Lingadahalli Shastry & Sathyanarayanan Manamohan & Saikat Mukherjee & Vishesh Garg & Ravi Sarveswara & Kristian Händler & Peter Pickkers &, 2021. "Swarm Learning for decentralized and confidential clinical machine learning," Nature, Nature, vol. 594(7862), pages 265-270, June.
    6. David P. Baron, 2010. "Morally Motivated Self-Regulation," American Economic Review, American Economic Association, vol. 100(4), pages 1299-1329, September.
    7. Tobias Kircher & Jens Foerderer, 2024. "Ban Targeted Advertising? An Empirical Investigation of the Consequences for App Development," Management Science, INFORMS, vol. 70(2), pages 1070-1092, February.
    8. Miller, Klaus M. & Skiera, Bernd, 2024. "Economic consequences of online tracking restrictions: Evidence from cookies," International Journal of Research in Marketing, Elsevier, vol. 41(2), pages 241-264.
    9. Joseph Bak-Coleman & Carl T. Bergstrom & Jennifer Jacquet & James Mickens & Zeynep Tufekci & Timmons Roberts, 2023. "Create an IPCC-like body to harness benefits and combat harms of digital tech," Nature, Nature, vol. 617(7961), pages 462-464, May.
    10. Maxwell, John W & Lyon, Thomas P & Hackett, Steven C, 2000. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 583-617, October.
    11. Peter M. DeMarzo & Michael J. Fishman & Kathleen M. Hagerty, 2005. "Self-Regulation and Government Oversight," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(3), pages 687-706.
    12. Shunto J. Kobayashi & Garrett A. Johnson & Zhengrong Gu, 2024. "Privacy-Enhanced versus Traditional Retargeting: Ad Effectiveness in an Industry-Wide Field Experiment," Working Papers 24-06, NET Institute.
    13. Garrett Johnson & Julian Runge & Eric Seufert, 2022. "Privacy-Centric Digital Advertising: Implications for Research," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 9(1), pages 49-54, June.
    14. Evans, Georgina & King, Gary, 2023. "Statistically Valid Inferences from Differentially Private Data Releases, with Application to the Facebook URLs Dataset," Political Analysis, Cambridge University Press, vol. 31(1), pages 1-21, January.
    15. Rene Laub & Klaus M. Miller & Bernd Skiera, 2023. "The Economic Value of User Tracking for Publishers," Papers 2303.10906, arXiv.org, revised Apr 2024.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garrett A. Johnson, 2022. "Economic Research on Privacy Regulation: Lessons from the GDPR and Beyond," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    2. Michał Krawczyk & Krzysztof Szczygielski, 2019. "Do professions curb free-riding? An experiment," European Journal of Law and Economics, Springer, vol. 47(3), pages 361-376, June.
    3. Donati,Dante & Rao,Nandan & Orozco Olvera, Victor Hugo & Munoz Boudet, Ana Maria, 2024. "Can Facebook Ads Prevent Malaria ? Two Field Experiments in India," Policy Research Working Paper Series 10967, The World Bank.
    4. Anna D’Annunzio & Antonio Russo, 2024. "Intermediaries in the Online Advertising Market," Marketing Science, INFORMS, vol. 43(1), pages 33-53, January.
    5. Lorien Sabatino & Geza Sapi, 2023. "Privacy regulation and online concentration during demand peaks: evidence from the E-commerce sector," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(2), pages 265-282, June.
    6. Hana Choi & Carl F. Mela & Santiago R. Balseiro & Adam Leary, 2020. "Online Display Advertising Markets: A Literature Review and Future Directions," Information Systems Research, INFORMS, vol. 31(2), pages 556-575, June.
    7. Congiu, Raffaele & Sabatino, Lorien & Sapi, Geza, 2022. "The Impact of Privacy Regulation on Web Traffic: Evidence From the GDPR," Information Economics and Policy, Elsevier, vol. 61(C).
    8. Szczygielski Krzysztof, 2020. "A note on the optimal scope of professional self-regulation," Central European Economic Journal, Sciendo, vol. 7(54), pages 218-226, January.
    9. Joshua Tasoff, 2014. "Placation and provocation," Rationality and Society, , vol. 26(1), pages 73-104, February.
    10. Mert Demirer & Diego Jimenez-Hernandez & Dean Li & Sida Peng, 2024. "Data, Privacy Laws and Firm Production: Evidence from the GDPR," Working Paper Series WP 2024-02, Federal Reserve Bank of Chicago.
    11. 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.
    12. Florence Lachet-Touya, 2019. "The Assignment of a CSR Level of Action: Rule vs Discretion," Working papers of CATT hal-02141052, HAL.
    13. Xiang He & Li Li & Di Wang & Zonghuo Li, 2025. "Advertising bidding involving consumer information sharing," Electronic Commerce Research, Springer, vol. 25(2), pages 1033-1066, April.
    14. Itay P. Fainmesser & Andrea Galeotti & Ruslan Momot, 2023. "Digital Privacy," Management Science, INFORMS, vol. 69(6), pages 3157-3173, June.
    15. Alexia Gaudeul & Caterina Giannetti, 2015. "Privacy, Trust and Social Network Formation," Jena Economics Research Papers 2015-023, Friedrich-Schiller-University Jena.
    16. Yassine Lefouili & Leonardo Madio & Ying Lei Toh, 2024. "Privacy Regulation and Quality‐Enhancing Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 72(2), pages 662-684, June.
    17. Zhiyuan Song & Jinshi Cheng, 2023. "Omnichannel expansion for traditional retailers: Considering consumers' privacy concerns," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(7), pages 3997-4010, October.
    18. Lampe, Ryan & McRae, Shaun, 2021. "Self-regulation vs state regulation: Evidence from cinema age restrictions," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    19. Helia Marreiros & Mirco Tonin & Michael Vlassopoulos & M.C. Schraefel, 2016. "“Now that you mention it”: A Survey Experiment on Information, Salience and Online Privacy," BEMPS - Bozen Economics & Management Paper Series BEMPS34, Faculty of Economics and Management at the Free University of Bozen.
    20. Bendikov, Mikhail & Kolesnik, Georgiy, 2013. "Конкуренция Саморегулируемых Организаций И Эффективность Рынков [Self-regulatory organizations competition and the market efficiency]," MPRA Paper 47812, University Library of Munich, Germany.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_11931. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.