Dive Brief:

• Publishers receive just a 4% increase in revenue from ad impressions that are served with cookies enabled versus those that aren't, according to new research jointly conducted between the University of Minnesota, University of California, Irvine and Carnegie Mellon University. The key findings, detailed in a report in The Wall Street Journal, stem from one of the few empirical studies of behavioral ad targeting's relationship to publishers.

• Over the course of a week, the researchers examined millions of ad transactions at a sizable, unnamed U.S. publisher. Their conclusions around the low value behavioral ad targeting provides publishers come despite the high premium advertisers often pay for behaviorally targeted ads. Much of the returns for publishers are likely lost to an ad-tech tax, per the Journal, where digital middlemen get a large cut of the programmatic dollars advertisers spend.

• The study arrives as digital advertising strategies like behavioral ad targeting face mounting regulatory scrutiny. The argument in favor of preserving behavioral targeting practices like cookies has leaned into the alleged "huge" value they create for publishers, Ashkan Soltani, an architect of the California Consumer Privacy Act (CCPA), told the Journal. But a look at the publishing landscape in recent years — often defined by shrinking revenue, fire sales and frequent layoffs — reinforces how many media entities have struggled, while companies like Google and Facebook, which heralded the rise of behavioral ad targeting, have thrived.     

Dive Insight:

It's been clear for awhile now that traditional media publishers have mostly lost out as the digital economy has boomed elsewhere, with advertising sales for digital tech platforms experiencing explosive growth to become some of the largest outlets by media spend. But the new study paints a clearer picture of how much of a short straw publishers have drawn, netting measly revenue gains from widely adopted strategies like cookie-based targeting. The uncovering of such an imbalance in the online ecosystem could affect the direction of major regulations that impact other internet stakeholders, including advertisers, ad-tech firms and expansive platforms like Google and Facebook, are anxiously prepping for.

On the horizon looms the CCPA, which passed last year, but also myriad state-level proposals for data privacy bills that many in the ad industry fear will create a compliance headache. The leading trade bodies, such as the agency group the 4A's, the marketer-focused ANA and the IAB, have in recent months ramped up calls for a single federal data privacy legislation to simplify the situation, including by testifying before Congress. The push is a sign that the era of a largely self-regulated digital ad economy is coming to an end. Soltani suggested to the Journal that revelations like those uncovered by the new study could carry implications on discussions being held in Washington, D.C. around potential digital regulations.  

Regardless of the study's findings, there have been clear signs that behavioral ad targeting is a space set for change as companies try to get out of ahead of data privacy laws and retain trust with consumers. Popular web browsers like Google Chrome have given users more control over how they're tracked online, including through the ability to more easily block cookies, as reported in Digiday. These anti-tracking measures have mostly been related to third-party cookie tracking as opposed to affecting first-party data.

But the changes by Google have still frustrated some advertisers, who need to retool their targeting strategies, and also led to criticism that the Alphabet-owned company — which is the world's largest digital advertising platform — is acting as too big of a gatekeeper for how ads are served online. Apple similarly faced ire from advertising groups for cookie-blocking capabilities added to its Safari browser two years ago, though the discourse around data privacy has evolved considerably since then in the wake of events like Facebook's Cambridge Analytica scandal in 2018.