Cookies Are Crumbling. Targeted Marketing is Not. What Does It Mean for Digital Privacy?
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A Leeds professor’s research looks at the challenges of online regulation in balancing consumer rights and market fairness.
On the internet, cookies are crumbling as mainstream web browsers look to phase out the third-party tracking codes that have given rise to targeted digital advertising. But consumers shouldn’t feel like firms are simply giving up on personalized marketing.
“On the contrary, different strategies will be taken in order to achieve the same ends—and whether that is an improvement, in terms of privacy, remains to be seen,” Prof. Scott Shriver said.
Shriver, an assistant professor of marketing at the University of Colorado Boulder’s Leeds School of Business, knows what he’s talking about: As a researcher on the front lines in the battle over digital privacy, one of his major challenges is tracking consumers who’ve opted out of tracking.
“You have to get a little bit creative, in terms of adopting some of the techniques that industry uses to get around privacy constraints,” Prof. Shriver said. “We look at unique combinations of metadata that we can observe through your browser, your IP address, your rough geographic location and other techniques.”
The economic tradeoff to data privacy
The sophistication involved in tracking unwilling users is on Prof. Shriver’s mind as he goes from researching privacy from a self-regulation standpoint—the AdChoices program adopted by the U.S. advertising industry—to a federally regulated one. He’s now exploring the European GDPR regulation, which gives consumers much more control of their data and has inspired spinoffs, most notably in California.
But there are economic tradeoffs to such regulation that aren’t fully understood.
“Giving consumers more choice and more control over their data is a good thing, but you’ve also got this unintended consequence in that the bigger firms—Google and Facebook—will be the ones more capable of navigating the landscape,” he said. “So the bigger companies get bigger, and we don't want one or two firms controlling the entire digital advertising ecosystem—that’s perhaps worse than not having enough consumer control over data.”
Prof. Shriver’s work on the economic consequences of GDPR is still in development, but a similar paper published in Marketing Science looked at the cost of opting out under AdChoices. That research, conducted alongside Prof. Garrett Johnson, of Boston University, and Ph.D. candidate Shaoyin Du, won the John D.C. Little Award at the 2021 INFORMS Marketing Science Virtual Conference, presented to the best marketing paper published in an INFORMS journal.
The paper concluded that, as maligned as cookies may be, they’re incredibly effective. Only about one-quarter of 1 percent of online ads are served to users who opt out of tracking. As a result of those opt outs, publishers lost a little more than $8.50 per person in 2015—equivalent to $5.7 million in lost revenue.
For regulators, that should illustrate the perils of careless legislation. Falling ad values will squeeze third-party players, allowing sophisticated giants like Google to vacuum up more business. It also means publishers may be forced to charge for content that consumers are used to getting for free.
Prof. Shriver acknowledged there’s no silver bullet, but he hopes his work help illustrate the complexity of the challenge lawmakers face.
“It highlights this cat-and-mouse kind of nature of privacy regulation,” he said. “These are welcome changes, but we do have to be careful of unintended consequences.”
Part of the challenge, he said, is that in the United States, there isn’t as much conversation around digital privacy as in other parts of the world.
“The more data I gather, the more anecdotal conversations I have with people about the topic, the more I’ve realized that I’m an outlier, in terms of having an innate concern about this,” he said. “In fact, I’m shocked by how how few people actually give this serious consideration.”
A second act in academia
His perspective may be related to how he came to this research thread. Marketing wasn’t Prof. Shriver’s original calling; he originally studied physics and astronomy with an eye to an academic career, but got caught up in the boom years of the internet and got involved with startups. He got an MBA from UCLA with the intent of pursuing venture capital, but some of his professors talked him back into academia.
“The more I thought about it and did some due diligence about quantitative marketing and the kind of things that could be done in the field, I thought it might be a good fit, given my math and science training,” Prof. Shriver said.
Now, he’s hoping that perspective helps him be an advocate for digital privacy that doesn’t create monopolies or have other consequences.
“This has always been of interest to me, so I feel fortunate that I’ve been able to get a toehold in this area and hopefully continue to ask the right questions about privacy and consumer behavior,” he said.