The Impact of Privacy Protection on Online Advertising Markets

Abstract

Online privacy protection has gained momentum in recent years and spurred both government policies and private initiatives. A hallmark of this movement is the ongoing removal of third-party cookies - a device widely adopted to track online user behavior and implement targeted ads - from web browsers. Although intended to protect internet users, banning third-party cookies may hamper advertiser's ability to target consumers effectively and impose potentially huge economic costs on online advertisers. As online ads lose their value, web publishers' advertisement revenue - a vital component of their bottom lines - may decrease and threaten their businesses.