5 ms·

Do-Not-Track and the Economics of Online Advertising [pdf]

23 points by cpeterso 11y ago

kevinskii 11y ago
Text of the Abstract: "Retailers regularly target users with online ads based on their web browsing activity, benefiting both the retailers, who can better reach potential customers, and content providers, who can increase ad revenue by displaying more effective ads. The effectiveness of such ads relies on third-party brokers that maintain detailed user information, prompting privacy legislation such as “do-not-track” that would limit or ban the practice. We gauge the economic costs of such privacy policies by analyzing the anonymized web browsing histories of 14 million individuals. We find that 3% of retail sessions are currently initiated by ads capable of incorporating third-party information. Turning to content providers, we find that one-third of traffic is supported by third-party capable advertising, and the rate is particularly high (91%) for online news sites. Finally, we show that for many of the most popular content providers, modest subscription fees of $1-3 per month charged to loyal site users would be sufficient to replace ad revenue. We conclude that do-not-track legislation would impact, but not fundamentally fracture, the Internet economy."
CrazyCatDog 11y ago
I don't buy the pivotal assumption: "Among the top 10,000 sites that show third-party capable advertising, we find that on average 15% of users visit the site at least 10 times per month, with the more popular sites tending to have more loyal visitation. We further estimate that if one-fourth of such loyal users ultimately subscribe to the sites they visit, a monthly fee of $2 would generate revenue comparable to the entire stream from third-party advertising, based on current ad rates" Why? Because the friction associated with paid subscriptions is still prohibitive, especially when the natural tendency is to evaluate the subscription decision (monthly recurring fee) in light of reading a single article. The notion of a fluid, browser-based payment system could easily overcome these frictions by allowing users to trivially pay a nominal fee to access any individual piece of content. While I can see Microsoft backing Do-Not-Track lobbying to weaken the threats coming out of the Bay Area; any browser-based content solution will likely strengthen the same companies who now control internet advertising.

23 points by cpeterso 11y ago

Text of the Abstract: "Retailers regularly target users with online ads based on their web browsing activity, benefiting both the retailers, who can better reach potential customers, and content providers, who can increase ad revenue by displaying more effective ads. The effectiveness of such ads relies on third-party brokers that maintain detailed user information, prompting privacy legislation such as “do-not-track” that would limit or ban the practice. We gauge the economic costs of such privacy policies by analyzing the anonymized web browsing histories of 14 million individuals. We find that 3% of retail sessions are currently initiated by ads capable of incorporating third-party information. Turning to content providers, we find that one-third of traffic is supported by third-party capable advertising, and the rate is particularly high (91%) for online news sites. Finally, we show that for many of the most popular content providers, modest subscription fees of $1-3 per month charged to loyal site users would be sufficient to replace ad revenue. We conclude that do-not-track legislation would impact, but not fundamentally fracture, the Internet economy."

CrazyCatDog 11y ago

I don't buy the pivotal assumption: "Among the top 10,000 sites that show third-party capable advertising, we find that on average 15% of users visit the site at least 10 times per month, with the more popular sites tending to have more loyal visitation. We further estimate that if one-fourth of such loyal users ultimately subscribe to the sites they visit, a monthly fee of $2 would generate revenue comparable to the entire stream from third-party advertising, based on current ad rates" Why? Because the friction associated with paid subscriptions is still prohibitive, especially when the natural tendency is to evaluate the subscription decision (monthly recurring fee) in light of reading a single article. The notion of a fluid, browser-based payment system could easily overcome these frictions by allowing users to trivially pay a nominal fee to access any individual piece of content. While I can see Microsoft backing Do-Not-Track lobbying to weaken the threats coming out of the Bay Area; any browser-based content solution will likely strengthen the same companies who now control internet advertising.