The Economics of Digital & Interest-Based Ads Prove Value to Advertisers & Consumers

August 23, 2013

Interest-based ads – which largely rely on Web-browsing data to establish their relevance with an individual computer or mobile device user – have been “proving” themselves to advertisers and consumers in study after study in recent years.

Going back to 2010, in a McKinsey study conducted for the Interactive Advertising Bureau (IAB) Europe – which incorporated a review of digital services financed by all types of online advertising in France, Germany, Russia, Spain, the United Kingdom and the United States – a “consumer surplus” is well documented.   Such a surplus shows that households garner close to 40 Euros a month (US$55) in value from ad-financed Internet services. (This is value that would not be achieved were advertising not present to enable it.)

Since this study was published, more recent research also has confirmed the consumer surplus – and our own Digital Advertising Alliance-commissioned Zogby poll from April also shows consumer pragmatism and understanding of how digital advertising finances content that most Internet users value.

Additional research also shows:

  • Based on proprietary data provided by twelve major advertising networks, behaviorally-targeted advertising (interest-based ads) secured an average of 2.68 times as much revenue per ad as non-targeted “run of network” advertising (Network Advertising Initiative, 2010)
  • The NAI study also found that behaviorally-targeted advertising is more than twice as effective at converting users who click on the ads into buyers (6.8% conversion vs. 2.8% for run-of-network ads), and that behavioral advertising accounted for approximately 18% of advertising revenue

In summary, digital ads – among them interest-based ads – are delivering now numerous benefits to consumers and the economy that should not be dismissed, underestimated or assumed not to be present. DAA is committed to ensuring policymakers – and technologists, academicians and consumer advocates – understand these positive contributions.

 

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