IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/j34t8_v3.html

Estimating the Value of Retargeting in the Online Advertising Market

Author

Listed:
  • Fang, Yuhan
  • Kawaguchi, Kohei

Abstract

In response to growing privacy concerns, many browsers have implemented restrictions on third-party cookies and cross-site tracking in online advertising. Advertisers are concerned that such retargeting prohibition policies could lead to a reduction in ads' click probability, thereby affecting the bid values. This paper investigates the economic consequences of prohibiting retargeting in online advertising by analyzing data from a demand-side platform (DSP). Our analysis shows that the DSP's bid values for non-retargeted impressions on Google Chrome are more than 60\% lower than those for retargeted impressions. Yet this difference understates the true disparity in bid values, as retargeting status is observable only for internal auction winners. By modeling the internal auction process and estimating advertisers' valuations, we identify even larger differences between retargeted and non-retargeted impressions: 76.04% for Android and 71.40% for Windows. Our counterfactual simulations indicate that a complete ban on retargeting would substantially reduce expected bid values—by 30.06% for Android and 49.84% for Windows users. These results underscore the significant economic tradeoff between enhancing privacy protection and maintaining advertising market efficiency.

Suggested Citation

  • Fang, Yuhan & Kawaguchi, Kohei, 2025. "Estimating the Value of Retargeting in the Online Advertising Market," SocArXiv j34t8_v3, Center for Open Science.
    • Handle: RePEc:osf:socarx:j34t8_v3
    DOI: 10.31219/osf.io/j34t8_v3
    as

    Download full text from publisher

    File URL: https://osf.io/download/67cfa33a4f607ab291cd23cf/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/j34t8_v3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Omid Rafieian & Hema Yoganarasimhan, 2021. "Targeting and Privacy in Mobile Advertising," Marketing Science, INFORMS, vol. 40(2), pages 193-218, March.
    2. Guy Aridor & Yeon‐Koo Che & Tobias Salz, 2023. "The effect of privacy regulation on the data industry: empirical evidence from GDPR," RAND Journal of Economics, RAND Corporation, vol. 54(4), pages 695-730, December.
    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. Ruizhi Zhu & Sridhar Moorthy & Xianwen Shi, 2025. "Advertising Platforms and Privacy," Marketing Science, INFORMS, vol. 44(6), pages 1381-1406, November.
    2. Z. Eddie Ning & Jiwoong Shin & Jungju Yu, 2025. "Targeted Advertising as Implicit Recommendation: Strategic Mistargeting and Personal Data Opt-out," Marketing Science, INFORMS, vol. 44(2), pages 390-410, March.
    3. Ming Chen & Sareh Nabi & Marciano Siniscalchi, 2023. "Advancing Ad Auction Realism: Practical Insights & Modeling Implications," Papers 2307.11732, arXiv.org, revised Apr 2024.
    4. Yin Bai & Yan Wang & Xingyao Ren, 2025. "Big data or big brother: When is recontacting the digital customer OK?," Journal of the Academy of Marketing Science, Springer, vol. 53(6), pages 1624-1643, December.
    5. Vinh Truong, 2024. "Optimizing mobile in-app advertising effectiveness using app publishers-controlled factors," Journal of Marketing Analytics, Palgrave Macmillan, vol. 12(4), pages 925-943, December.
    6. Tommaso Bondi & Omid Rafieian & Yunfei (Jesse) Yao, 2026. "Privacy and Polarization: An Inference-Based Framework," Management Science, INFORMS, vol. 72(2), pages 1389-1409, February.
    7. Dongwoo Kim & Pallavi Pal, 2025. "Nonparametric Estimation of Sponsored Search Auctions and Impact of Ad Quality on Search Revenue," Management Science, INFORMS, vol. 71(12), pages 10047-10066, December.
    8. Beknazar-Yuzbashev, George & Ichiba, Sota & Stalinski, Mateusz, 2025. "To the Depths of the Sunk Cost : Experiments Revisiting the Elusive Effect," The Warwick Economics Research Paper Series (TWERPS) 1544, University of Warwick, Department of Economics.
    9. Sarit Markovich & Yaron Yehezkel, 2026. "Competing for Cookies: Platforms’ Business Models in Data Markets with Network Effects," Management Science, INFORMS, vol. 72(2), pages 915-931, February.
    10. Beknazar-Yuzbashev, George & Ichiba, Sota & Stalinski, Mateusz, 2026. "To the depths of the sunk cost: Experiments revisiting the elusive effect," Journal of Economic Behavior & Organization, Elsevier, vol. 241(C).
    11. Beknazar-Yuzbashev, George & Jimenez-Duran, Rafael & Simonov, Andrey & Mateusz Stalinsk, Mateusz, 2026. "Social Media Advertising Loads as Prices," The Warwick Economics Research Paper Series (TWERPS) 1602, University of Warwick, Department of Economics.
    12. Tianshu Sun & Zhe Yuan & Chunxiao Li & Kaifu Zhang & Jun Xu, 2024. "The Value of Personal Data in Internet Commerce: A High-Stakes Field Experiment on Data Regulation Policy," Management Science, INFORMS, vol. 70(4), pages 2645-2660, April.
    13. Ganesh Iyer & T. Tony Ke, 2024. "Competitive Model Selection in Algorithmic Targeting," Marketing Science, INFORMS, vol. 43(6), pages 1226-1241, November.
    14. Sandrini, Luca & Somogyi, Robert, 2026. "News media bargaining codes," International Journal of Industrial Organization, Elsevier, vol. 105(C).
    15. Mohammad Mosaffa & Omid Rafieian, 2026. "The Privacy-Utility Trade-Off of Location Tracking in Ad Personalization," Papers 2603.12374, arXiv.org.
    16. Lalit Jain & Zhaoqi Li & Erfan Loghmani & Blake Mason & Hema Yoganarasimhan, 2024. "Effective Adaptive Exploration of Prices and Promotions in Choice-Based Demand Models," Marketing Science, INFORMS, vol. 43(5), pages 1002-1030, September.
    17. Yunfei (Jesse) Yao, 2025. "Reputation for Privacy," Marketing Science, INFORMS, vol. 44(5), pages 1145-1162, September.
    18. Wu, Wei & Han, Wei, 2025. "Does digital platform governance improve process innovation? Evidence from Apple's tracking policies," Economic Modelling, Elsevier, vol. 152(C).
    19. 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.
    20. Ayaz, Ozlem & Tabaghdehi, Seyedeh Asieh Hosseini & Rosli, Ainurul & Tambay, Prerna, 2025. "Ethical implications of employee and customer digital footprint: SMEs perspective," Journal of Business Research, Elsevier, vol. 188(C).

    More about this item

    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:osf:socarx:j34t8_v3. 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: OSF (email available below). General contact details of provider: https://arabixiv.org .

    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.