“We asked the Commission to consider the gradual elimination of targeted advertising, if not a total ban across the European Union”. These were the words of Alex Agius Saliba , Maltese MEP, back at the beginning of October. The same request is found in a report supported by the major political powers and written by German MEP Tiemo Wölken. What is Europe’s problem with online advertising, and why should we care?
What it is, how it works, and why it’s a problem
What people are talking about above is targeted advertising — where internet users and the data linked to their profile become the centre of focus for advertisers. Up to the early 2000s online advertising was based on context . Algorithms analysed the content of visited pages, then decided which ads should be shown in specific spaces. Ad content was based on the nature of the web space, not those who visit. For example: reading an article on skiing season, you see ads for mountain resorts or winter clothing brands.
Targeted advertising, on the other hand, is a more complex system, and aims to display the ads most pertinent to the user profile currently viewing the page. Currently the most sophisticated and widespread system is automated bidding. While the page is loading, an identifier linking the user to their online (and sometimes even offline) activity is sent to a series of agencies which compete for the user’s attention in an automated market. This is all accomplished in fractions of a second, without the user noticing anything. The breakthrough that led to this system’s widespread adoption can be traced back to 2007, when Google acquired DoubleClick , a company whose success was built on just such a system, and on a large network of advertisers, publishers and ad agencies.
According to a report published in 2018 by Johnny Ryan, working for Brave browser at the time, real-time bidding (RTB) allows the following, among other things, to be shared: what the user is looking at or reading, their geographical position, IP address, description of the application. Depending on the RTB system being used, other identifying data can be retrieved, such as income bracket, age, gender, sexual orientation, ethnicity, religion, political views, social media influence, etc.
From the perspective of companies using RTBs, Google included, it’s a service that guarantees maximum efficiency for both advertiser and user: the former rests assured that their ad will be seen by interested users; and the latter will see ads that are more relevant to their needs and spending habits. The promise to editors is a major enhancement of their ad space. Targeted ads should increase clicks and even some “conversions”, namely installing an app. The more relevant an ad, the more users will click, which increases the value of the ad space.
Source: IAB Europe
Excessive market concentration
Targeted ads are founded on two elements: the development of platforms with ever more sophisticated profiling and bidding management abilities, and the collection of user data. The former favours market concentration because, as happens all too often in the high-tech sector, it’s the more powerful companies with the resources to develop the platforms. And when they’re not the first, they can easily acquire any companies that happen to be especially innovative.
According to a report by the independent PLUM agency concerning the UK , “Google and Facebook and, to a lesser extent, Amazon (GFA) have a unique scale and breadth of activity in the online advertising market, complemented by businesses in adjacent markets. In particular, GFA are distinguished by a large scale of owned advertising inventory, well-developed advertising technolog