Privacy and Consumer Empowerment in Online Advertising

Privacy and Consumer Empowerment in Online Advertising provides an overview of the different issues that are in play in consumer privacy and in empowering consumers with rights to manage the privacy of their data. The authors review the existing knowledge on this topic and discuss implications for consumers, for advertisers, and for ad serving platforms that enable advertisers to reach consumers.

The introductory section provides an outline and briefly reviews the key ideas. Section 2 discusses the key aspects of the GDPR, the CCPA and the CPRA. Since the implementation of the GDPR in May 2018, some early empirical evidence has emerged of its impact and this is examined in Section 3. The authors review the privacy and economic frameworks in Section 4. Section 5 discusses the theoretical work in this area enhances our understanding of the impact of privacy regulation on consumers and on online advertising. Section 6 examines how consumers are presented with privacy notices and their (in)ability to make privacy choices due to a variety of factors. Section 7 reviews how firms attach value to consumers' data. In light of the passing of privacy regulation, firms have been attempting to develop methods for privacy-preserving targeted advertising. In Section 8, we discuss some of these attempts such as FLoC and TURTLEDOVE, which aim to target consumers based on their interests and/or their website visit history, but without compromising their privacy. Finally, Section 9 concludes with a discussion.

An overall summary is that privacy concerns have been heightened in the past two decades and this has led to the passing of privacy regulations addressing data security and privacy rights. After these regulations, a significant minority of consumers have chosen to not provide consent for their data to be collected, used and shared. However, most consumers still do not properly understand the key implications of privacy policies of firms, and more efforts are needed in that regard. Also, technologies are being developed for privacy-preserving user targeting. Finally, regarding firms, data frictions caused by privacy regulations have, in turn, caused negative consequences for small advertisers, publishers and service providers. The authors provide some directions for future work that may be valuable to move thinking forward on this increasingly important topic.