The Impact of Privacy Measures on Online Advertising Market

June 15, 2023

Abstract

Online privacy protection has gained momentum in recent years and spurred both government policies and private initiatives. A hallmark of this movement is the ongoing removal of third-party cookies--a device widely adopted to track online user behavior and implement targeted ads--from web browsers. Using banner ad auction data from Yahoo, we study the effect of a third-party cookie ban on the online advertising market. We first document stylized facts about the value of third-party cookies to advertisers. Motivated by Google's plan to phase out third-party cookies from Chrome, its market-leading browser, we adopt a structural approach to recover advertisers' valuations from their bids. Our counterfactual analysis suggests that an outright ban would reduce publisher revenue by 40% and advertiser surplus by 18%. The introduction of alternative tracking technologies under Google's Privacy Sandbox initiative would recoup part of the loss. In either case, we find that big tech firms can leverage their informational advantage over their competitors and gain a larger surplus from the ban.

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Publication Type

Paper

Conference / Journal Name

ACM Conference on Economics and Computation (EC'23)

Authors

BibTeX


@inproceedings{
    author = {},
    title = {‌The Impact of Privacy Measures on Online Advertising Market‌},
    booktitle = {Proceedings of ACM Conference on Economics and Computation (EC'23)‌},
    year = {‌2023‌}
}