Economic benefits vs Privacy concerns: the challenge with regulating online advertising

What is it about?

We investigate whether and to what extent small and medium companies (less than 200 employees) are using the Facebook ad platform to promote their services and whether banning micro-targeting would impact their economic potential. For this, we analysed data from a large-scale experiment where we recruited 890 users and asked them to install our browser extension to donate data about what they receive on Facebook.

Featured Image

Photo by Glen Carrie on Unsplash

Photo by Glen Carrie on Unsplash

Why is it important?

The European Commission and other governments are working on regulating online advertising to avoid misusages of ad platforms, and most of the discussions are about banning or restricting the micro-targeting strategies provided to advertisers. Such measures could have a negative impact on small companies since they seem to be the ones taking the most benefit from online advertising, according to the economic literature. With this work, we contribute to the debate by analyzing whether small and medium companies are actually using online advertising and what are their targeting strategies. Furthermore, this work emphasizes a new form of micro-targeting (the algorithmic-driven micro-targeting) performed by ad platforms, and we argue that lawmakers should take it seriously into consideration when discussing regulating micro-targeting.