Consumer Privacy Choice in Online Advertising: Who Opts Out and at What Cost to Industry?

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Though consumers express strong privacy concerns in surveys, we find that only 0.23% of American ad impressions arise from users who opted out of online behavioral advertising. We also find that opt-out user ads fetch 52% less revenue on the exchange than comparable ads for users who allow behavioral targeting. These findings are broadly consistent with evidence from the European Union and Canada, where industry subsequently implemented the AdChoices program. We calculate that the inability to behaviorally target opt-out users results in a loss of about $8.58 in ad spending per American opt-out consumer, which is borne by publishers and the exchange. We find that opt-out users tend to be more technologically sophisticated, though opt-out rates are also higher in older and wealthier American cities. These results inform the privacy policy discussion by illuminating the real-world consequences of an opt-out privacy mechanism. 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Johnson, Scott K. Shriver, Shaoyin Du (2020) Consumer Privacy Choice in Online Advertising: Who Opts Out and at What Cost to Industry?. Marketing Science 39(1):33-51. https://doi.org/10.1287/mksc.2019.1198 Keywordsprivacydigital advertisingconsumer protectionself-regulationPDF download