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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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