Uncommon Wisdom

Jul 13 2009   1:43PM GMT

Online advertising tied to privacy concerns

Tom Nolle Tom Nolle Profile: Tom Nolle

Some of the issues in the debate over whether targeted ads are so much more valuable that they might increase net ad spending are coming to a head around the privacy legislation being proposed. Some online advocacy groups are opposed to explicit privacy regulation because they believe the regulation might make it impossible for improved ad targeting to increase online ad value.

Today, online ads are about a fifth as valuable as conventional ads at best, which means that the transition from a legacy ad strategy to an online ad strategy could reduce ad-spend by that proportion.

The goal of the targeting process, say proponents of a regulation-free market, is to push that value up. Besides the obvious question of whether such a push justifies loss of privacy, the position flies in the face of advertiser comments. Better targeting, advertisers say, is a way to spend less overall. Thus, they never expect ad value to grow as fast as number of targeted users would shrink.

It’s becoming increasingly obvious that funding content in a pure online world will be difficult because of the reduction in available ad dollars that online will necessarily create.

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