Monday, 03 June 2019 09:58

Study questions profitability of targeted online ads

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Study questions profitability of targeted online ads Image by William Iven from Pixabay

Behavioural advertising may not be as effective as it has been made out to be, with a study in the US finding that publishers only get 4% more for an ad impression that has a cookie enabled, compared to one that has none.

The University of Minnesota, the University of California, Irvine, and Carnegie Mellon University conducted one of the first empirical studies on how behaviourally target advertising affected the revenue of publishers, The Wall Street Journal reported.

The study was based on millions of advertising transactions at an unnamed large American media company in the space of a week.

The newspaper said the small gain was in sharp contrast to the amounts that publishers were willing to pay for ads that were targeted based on behaviour.

It said a study by Howard Beale, a George Washington University School of Business professor, found advertisers were more than willing to pay 2.68 times more for targeted advertising.

The premium that was charged was probably being taken by what was known as the ad tech tax, fees that are levied by middlemen and consume about 60% of what is spent on such ads, the WSJ quoted marketing intelligence firm Ware as saying.

The study comes as concern grows over the quantity of consumers' data that is sucked up by companies like Google and Facebook and used to target ads specifically at individuals or specific demographics.

Australia's competition regulator, the Australian Competition and Consumer Commission is set to release a report into digital platforms by the end of June, looking at how such platforms have affected the media industry in the country.

A preliminary report was released in December and the ACCC chair Rod Sims has said he is seeking more data from the advertising industry before releasing the final report.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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