Estimating the Value of Offsite Data to Advertisers on Meta

28 Pages Posted: 24 Aug 2022

Multiple version iconThere are 2 versions of this paper

Date Written: August 22, 2022

Abstract

We study the extent to which advertisers benefit from data that are shared across applications. These types of data are viewed as highly valuable for digital advertisers today. Meanwhile, product changes and privacy regulation threaten the ability of advertisers to use such data. We focus on one of the most common ways advertisers use offsite data and run a large-scale study with hundreds of thousands of advertisers on Meta. Within campaigns, we experimentally estimate both the effectiveness of advertising under business as usual, which uses offsite data, as well as how that would change under a loss of offsite data. Using recently developed deconvolution techniques, we flexibly estimate the underlying distribution of treatment effects across our sample. We find a median cost per incremental customer using business as usual targeting techniques of $43.88 that under the median loss in effectiveness would rise to $60.19, a 37% increase. Similarly, analyzing purchasing behavior six months after our experiment, ads delivered with offsite data generate substantially more long-term customers per dollar, with a comparable delta in costs. Further, there is evidence that small scale advertisers and those in CPG, Retail, and E-commerce are especially affected. Taken together, our results suggest a substantial benefit of offsite data across a wide range of advertisers, an important input into policy in this space.

Suggested Citation

Wernerfelt, Nils and Tuchman, Anna and Shapiro, Bradley and Moakler, Robert, Estimating the Value of Offsite Data to Advertisers on Meta (August 22, 2022). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 114, 2022, Available at SSRN: https://ssrn.com/abstract=4198438 or http://dx.doi.org/10.2139/ssrn.4198438

Nils Wernerfelt

Meta ( email )

1 Hacker Way
Menlo Park, CA 94025
United States

HOME PAGE: http://nwernerfelt.github.io/

Anna Tuchman

Northwestern - Kellogg ( email )

Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208
United States

Bradley Shapiro (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://faculty.chicagobooth.edu/bradley.shapiro/

Robert Moakler

Meta ( email )

Menlo Park, CA 94025
United States

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