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Experimental Results on Privacy Regulation and Online Advertising

Great article in May 2011 CACM about actual experimental results on the effects of privacy regulation on online advertising effectiveness.

The authors did a non-trivial before-and-after analysis of online advertising take rates in Europe in the wake of the EU Privacy and Electronics Communications Directive (usually known as “the E-Privacy Directive”) and came to this conclusion:

We found that in Europe, after privacy protection was enacted, the difference in stated purchase intent between those who were exposed to ads and those who were not dropped by approximately 65%.  There was no such change for countries outside Europe.  In other words, online advertising becamse much less effective in Europe relative to elsewhere after the regulation was enacted.

Obviously there’s more to policy than guaranteeing ad effectiveness, but this is a stunning result and certainly adds fuel to the fire of the thoughtless-privacy-regulation-will-kill-the-goose-that-laid-the-golden-egg camp.

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About the author

an Gordon is Research Director for Valhalla Partners, a Northern Virginia venture capital firm. Dan has twenty-eight years experience working with technology, as a computer scientist, software developer, manager, analyst, and entrepreneur. Prior to joining Valhalla Partners, Dan was a Director and senior staff member at the PricewaterhouseCoopers Global Technology Centre, analyzing technology trends and consulting on technology-oriented strategies in the software, e-business, wireless, optical, networking, semiconductor IP, and life sciences arenas. He worked with clients from North America, Europe, the Middle East, and Australia. Dan was a Contributing Writer and Contributing Editor to the Technology Centre’s annual Technology Forecast, and a frequent speaker at industry and general business meetings. Before joining PwC, Dan spent 20 years in Silicon Valley as a software technologist, manager, director, and entrepreneur, including senior technical roles at well-known Silicon Valley firms like Symantec, Intuit, and Oracle. Dan has also been involved in startup companies in the applied Artificial Intelligence and Web applications fields. Dan has a B.A. (cum laude) from Harvard University and an M.S. from New York University in Computer Science. He is a Professional Member of the IEEE and ACM. Dan lives in Washington, D.C. with his wife and two children.