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Now we know: behavioral ad targeting doesn’t work

Enrique Dans
Jun 3 · 2 min read

Academic research shows that advertising based on user behavior, for which advertisers usually pay around 2.68 times more, achieves a marginal conversion rate of just 4% per impression. We all know the kind of advertising: those that pursue you with hotel offers in a specific city after you read an article related about the place, bought a ticket to visit it or looked at a hotel there, perhaps even making a reservation.

Considering the extra cost, it’s not worth the while for publications, which earn a paltry $ 0.00008 per ad, while in return, they have to use a complex network of intermediaries that take around 60% of the cost, in return for not generating any appreciably different response among users.

The study only measures conversion rates, rather than the negative psychological reactions that this type of advertising tends to generate in people and that, in fact, have prompted ever stricter regulations that has forced advertising media to make big investments to adapt. All this in exchange for marginal income in the best of cases that does not compensate for the additional costs.

The conclusions of the study could help to establish some regulatory guidelines for a phenomenon that, in addition to being an invasion of our privacy, also offers no additional benefits for any of the parties involved: the media loses money, advertisers don’t see any improvement in conversion rates, while users feel they are being pursued.

The cookies this type of advertising is based on were never designed to be used in this way. The first company to use cookies was Netscape, which saw them as a cheap way to save information between different browsing sessions. Since then they have been used in an abusive way that has made very little for anybody except a few intermediaries. Instead, beginning with more among advanced users, more and more people have installed software to block and regularly delete cookies and caches, while giving rise to the use of adblockers, the biggest boycott experienced by an industry in history. This alone should give food for thought.

Academic and rigorous tests are always a good idea when it comes to rethinking things.


(En español, aquí)

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

Enrique Dans

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Professor of Innovation at IE Business School and blogger at enriquedans.com

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)