European Commission: Towards a more transparent, balanced, and sustainable digital advertising ecosystem
The European Commission is the executive body who help to shape and implement new laws and policies for the EU, as well as overseeing existing ones.
The current digital advertising market relies heavily on the collection and processing of personal data and large-scale behavioural profiling. These practices can have an unintended, detrimental impact on privacy, security, democracy, and the environment. Furthermore, there is little evidence to suggest that the current model of digital advertising achieves better results than other advertising models that do not relying on tracking and profiling.
AWO won a tender to produce a study for the European Commission on the online advertising industry, to inform future policy options around enhancing individual privacy protections and reforming the market.
AWO deep-dived into the digital advertising market in order to understand advertisers and publishers’ experience of the market, and the market’s impact on users’ fundamental rights. The evidence gathered suggests that there is a strong case for reform; the current state of the market is unsustainable for individuals, publishers, advertisers, as well as the environment:
- The online ad market is incredibly complex, with 40-60% of ad spending going into a dense network of intermediaries. This makes it challenging to track the efficiency of that ad spend, to know whether ads are funding harmful content, or for users to exercise their rights.
- There are also very few independent studies on the effectiveness of the current model of digital advertising, and the ones that do exist are contradictory: Google estimate that using personal data can increase revenues for publishers by 70%, whereas Acquisti found that it was just 4%.
- Digital advertising is energy intensive because of the large amounts of data processing involved, a problem compounded by significant amounts of waste and fraud. It’s estimated that one ad impression leads to one gram of carbon, that 10% of ad spend goes to ‘made for advertising’ clickbait sites, and that 8-15% of top 350 news website network costs are ad-related.
- Both advertisers and publishers feel locked-in to large platforms, because they control a significant portion of the data used in digital advertising; large ad platforms are inherently opaque, and so advertisers and publishers have little insight into the performance of the tools they rely on.
- This lack of transparency extends to users, who have very little control over how their personal data is used in advertising.
Based on these findings, AWO made a series of recommendations, which include banning large gatekeeper platforms from tracking for digital advertising, and restrict adtech intermediaries to the role of data processors (on behalf of advertisers and publishers), rather than data controllers.