Online ad research done by Profs. Goldfarb and Tucker: fails to address how online marketing really works– and also its implications for privacy, consumer protection and civil liberties

Whenever an industry is in political trouble, there is usually research made public that supports its position.  Often, the research is actually funded by the very companies or trade associations involved in the political fight.  The new paper “Privacy Regulation and Online Advertising” just released by Professor Avi Goldfarb [U of Tornoto] and Catherine E. Tucker [MIT], appears designed to discourage Congressional and FTC policymakers from enacting privacy safeguards.  In this case, according to the authors, the paper wasn’t funded by industry.  But in response to my question, Professor Tucker explained that “we have received funding in the past (for other work on internet advertising) from the NET Institute and from a Google/WPP Marketing Research Award. Avi has also received funding Bell Canada.“  The Net Institute’s board, btw, includes employees of Microsoft and Google, among others.

The new report is already being touted as evidence of the cost to online marketers if privacy rules are enacted.  But the study is very problematic–and I believe fails to really analyze how online marketing works.  The authors examined the impact of privacy rules in the EU and claim they have negatively impacted the effectiveness of online ads.  But by only examining banner ads, they miss the point.  Online marketing in both the EU, U.S., and elsewhere is really an integrated system involving an array of applications and techniques [where data is collected and used at all points]–from viral, to online video, social media, neuromarketing, games, mobile, etc.  Indeed, at our CDD we follow the EU market very closely–including collecting data from EU based online marketers, trade associations, case studies, etc.  These reports indicate tremendous success for online ads (and ironically, much of the innovation for online marketing comes out of the UK;  Admap just reported it’s the German marketers in the forefront of neuromarketing).

Given the study’s discussion of the Boucher bill, it’s clear there is a political motivation here.  But the main fault is how the study misses the key questions and ignores how the market really works.  This paper needs to be revised and gets an incomplete!

PS:  Btw, I also told the authors that Leslie Harris of CDT is a woman.  They had her as Mr. Harris.  Perhaps they also need a better fact-checker.

Author: jeff

Jeff Chester is executive director of the Center for Digital Democracy. A former journalist and filmmaker, Jeff's book on U.S. electronic media politics, entitled "Digital Destiny: New Media and the Future of Democracy" was published by The New Press in January 2007. He is now working on a new book about interactive advertising and the public interest.