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BizReport : Advertising archives : May 21, 2010

Small changes to privacy regs could have big impact

Two marketing professors in North America have completed a new study which indicates that even a small changes to privacy regulations could have a big impact on advertising effectiveness. They compared ad targeting in Europe, where online privacy is much more strict, to targeting in the US and other parts of the world to reach their conclusions.

by Kristina Knight

In Europe advertisers are banned from using tracking cookies or 'bugs' unless the consumer is first notified that their online movements will be tracked. According to their research consumers outside the European Union were 65% more likely to be effected by ads as those in European Union countries, according to their purchase intent. The professors surveyed more than 3 million consumers exposed to nearly 10,000 online campaigns between 2001 and 2008.

The study also find that generalized news/content websites are even less effective than websites which are more focused on specific content - such as travel, parenting or lifestyle website. This is most likely because consumers going to travel hubs, for example, are already inclined to be part of the travel market whether that is for an upcoming vacation, luggage or other travel paraphernalia.

In the US, consumers are increasingly aware of how they are targeted by advertisers and many are unhappy with how far the targeted can go. Lawmakers are considering options for reducing the risks to consumer privacy, including a proposal from US Representative Rick Boucher (D-VA) which would require advertisers to notify consumers about targeting practices so that they could opt-in or opt-out of the program.

The study is authored by Avi Goldfarb of the University of Toronto and Catherine E. Tucker from MIT.

Tags: behavioral targeting, online advertising, targeted advertising

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