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Surveillance advertising isn’t just problematic, it eats publisher profits

November 16, 2021 | By Rande Price, Research VP – DCN @Randeloo

Tracking and profiling remain standard practices and big business for ad-tech firms in digital advertising, though publishers don’t see much of the money. A new report, Sustainable without surveillance, from the Irish Council for Civil Liberties (ICCL), reviews the practices of tracking-based advertising and its impact on the digital ecosystem.

The report, written by Dr. Johnny Ryan, highlights how tracking-based advertising diverts data and revenue from publishers to ad tech intermediaries, notably Facebook and Google. In addition, Dr. Ryan shares results from European publishers when they turn off tracking-based advertising.

Tracking-based advertising devalues publishers’ audiences

The report outlines how real-time bidding (RTB) and auction-based environments allow thousands of companies to receive profile data about a person from a single ad. Tracking-based advertising diverts data and revenue from publishers to ad tech and, as a result, turns publishers’ audiences into commodities. Advertisers can now buy a premium publisher’s audience cheaply on low-value sites.

The research also recounts how tracking-based ads make ad fraud easier and how they trick advertisers and ad networks into paying them. Early estimates of ad fraud by HUMAN (formally White Ops) found Russian cybercriminals used Methbot to extract $3 to $5 million in video ad revenue from premium publishers. Methbots created fake pages on which they run real ads from actual advertisers. The bots simulated human activity (i.e., cursor movements and clicks) to mimic human action to make it appear as if a human impression occurred. HUMAN identified over 250,000 URLs that Methbots generated across more than 6,000 publishers.

Dr. Ryan also cites the 2016 Guardian study that used tracking-based ads to buy sales inventory in their newspaper. A detailed analysis of this media transaction found that for every ad dollar spent programmatically on the Guardian, they received only 30 cents. Intermediary technology firms executing tracking-based advertising received the remaining 70 cents. Each ad tech firm taking part in the transaction collects a fee, often hidden.

Publishers profitable without tracking-based advertising

The report presents evidence from European publishers that have profitable advertising businesses that do not rely on tracking-based advertising.

  • When Dutch publishers NPO Group replaced tracking-based ads with contextual-based ads, their advertising revenue increased 149%. Revenue continued to grow even with Covid-19’s significant impact on advertising spending.
  • The Norwegian news publishing group earned an average of 391% more over 12 months for contextual ads than tracking-based ads for websites it operates.
  • Further, TV2, a primary Norwegian news website, earned a 210% higher average price for contextual targeting than competing tracking-based ad targeting.

Time for change

It’s time for publishers to rethink their involvement in tracking-based advertising. With little potential for substantive yield, publishers must calculate the risk of data leakage and fraud. Supporting Dr. Ryan’s analysis is the U.S. based report, Online Tracking and Publishers’ Revenues: An Empirical, from lead researcher Alessandro Acquisti. It found that tracking-based advertising earns publishers only 4% more revenue than context-based advertising. It is clear that data tracking underpins the digital media economy and there are far more profitable, and less problematic, solutions.

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