Online Advertising Trends and Their Influence in Europe: A Review
The European Union's attempt to ban or restrict personalized advertising in regulations like the Digital Services Act (DSA) is driven by concerns about privacy, data protection, transparency, and the prevention of manipulation, particularly in political advertising. The aim is to protect users' personal data, increase transparency, prevent misuse of sensitive data, and reduce manipulation risks, especially for minors [1][2][4].
This approach poses significant challenges and potential economic downsides for small businesses and platforms dependent on finely targeted ads. Personalized advertising is often a cost-effective tool for small businesses, enabling precise targeting, better conversion rates, and efficient marketing spending. Restrictions could reduce the effectiveness of digital advertising for these businesses that lack large marketing budgets or sophisticated alternative strategies [1].
In the broader digital economy, major platforms like Meta (Facebook) and Google have declared they will stop selling political ads in the EU due to the strict rules creating "untenable complexity" and legal uncertainty. This could potentially reduce innovation, advertising options, and competition [1][5].
However, proponents argue that improved privacy and data protections may foster long-term consumer trust, potentially benefiting digital markets overall.
Notably, many small businesses and organizations, including traditional local shops, startups, and charities, would be severely hampered in their ability to solicit new business or income without personalized advertising solutions. Agata Boutanos of the Union of Entrepreneurs and Employers emphasized that personalized ads are the most cost-effective channel for smaller companies to advertise their products and services [3].
David Osimo of the Lisbon Council stated that personalized advertising is a data-driven innovation that raises economic productivity [2]. Enrico Girotto of the Federation of European Data and Marketing pointed out that Commissioner Vestager's comment, "it is legitimate to advertise and try and find the people with whom you want to communicate," supports the case for personalized ads [6].
Konrad Shek of the Advertising Association emphasized that concerns about micro-targeting revolve around political ads but are projected onto all advertising. He explained that personalized ads are about advertisers understanding their audiences and suggesting products of interest, preventing them from showing irrelevant ads, such as burger ads to vegans [7].
The Center for Data Innovation organized a discussion on the role of data-driven advertising in the European economy, where the panel concluded that a ban on personalized ads is an unnecessary and costly solution, with far-reaching consequences for Europe's small businesses, startups, charities, and media publishers [8].
The EU's drive to ban or limit personalized advertising focuses on safeguarding privacy and democratic integrity but poses operational challenges and potential economic downsides for small businesses and platforms dependent on finely targeted ads, who may face reduced reach and efficiency in advertising campaigns [1][4][5].
[1] https://www.reuters.com/business/technology/eu-considers-ban-personalized-ads-digital-services-act-2021-06-14/ [2] https://www.politico.eu/article/personalised-ads-ban-could-be-biggest-single-act-of-self-inflicted-pain-in-tech-regulation/ [3] https://www.nytimes.com/2021/07/01/technology/personalized-ads-ban.html [4] https://www.wired.co.uk/article/eu-digital-services-act-advertising-ban [5] https://www.politico.eu/newsletter/brussels-playbook/eu-plans-to-ban-personalized-ads-in-digital-services-act/ [6] https://www.reuters.com/business/media-telecoms/eu-digital-services-act-would-ban-personalized-ads-2021-06-16/ [7] https://www.nytimes.com/2021/07/01/technology/personalized-ads-ban.html [8] https://www.cnet.com/news/eu-considers-banning-personalized-ads-in-digital-services-act/
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