Online Advertising, Data Sharing, and Consumer Control

33 Pages Posted: 9 Aug 2021 Last revised: 30 Jan 2023

See all articles by Justin Johnson

Justin Johnson

Cornell University - Samuel Curtis Johnson Graduate School of Management

Thomas Jungbauer

Cornell SC Johnson College of Business

Marcel Preuss

Cornell University - SC Johnson Graduate School of Business

Date Written: November 2, 2022

Abstract

We examine how competition between advertising exchanges influences the targeting options that these exchanges make available to advertisers. When advertisers have strong property rights over data regarding consumers' active purchase interests, competition between ad exchanges leads to too little sharing of data. This may harm consumers, who receive too few pertinent ads, and advertisers themselves can also be harmed due to a situation resembling a prisoner's dilemma. We find that giving consumers the right to opt out of tracking may also benefit consumers who allow tracking, by altering the incentives of ad exchanges to offer improved targeting options. In addition, we show that initiatives by Apple and Google to limit third-party tracking and to introduce alternative tracking systems such as Topics, might benefit consumers by weakening the data property rights of advertisers. Because more data is shared by default under such systems, this can be true even if these systems are less accurate than third-party tracking systems.

JEL Classification: D23, D83, L51, L81, M31

Suggested Citation

Johnson, Justin and Jungbauer, Thomas and Preuss, Marcel, Online Advertising, Data Sharing, and Consumer Control (November 2, 2022). Available at SSRN: https://ssrn.com/abstract=3898798 or http://dx.doi.org/10.2139/ssrn.3898798

Justin Johnson

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

Thomas Jungbauer (Contact Author)

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Marcel Preuss

Cornell University - SC Johnson Graduate School of Business ( email )

Ithaca, NY 14850
United States

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