Announced ban proposal on targeted advertising is approaching its final form
In recent weeks, the European Parliament has dealt with fundamental issues in the field of the Digital Services Act (DSA) and within that also the very sensitive topic of the ban on targeted advertising on the Internet.
This topic has come to the attention of several stakeholders, such as entrepreneurs, especially the SME segment, media and platforms operating on targeted advertising revenues and, last but not least, end customers and internet users.
Online advertising is a key tool and driving force of the Internet, helping small businesses as well as technology companies. It is increasingly sophisticated, uses various algorithms and its targeting aims to eliminate the number and unsuitability of advertising targeting.
Proposals to ban or restrict targeted advertising would significantly damage the Internet ecosystem. It is online advertising that is currently a critical part of the EU's digital economy. Two recent studies suggest that publishers and media providers have up to 65 percent of advertiser-paid targeted advertising revenue. When we take providers for example
mobile applications in Europe, earned € 12 billion in in-app advertising revenue in 2019 alone.
According to the EU Innovation Center, a ban on targeted advertising would jeopardize Europeans' revenues of around € 6 billion. At the same time, the application-oriented economy in the EU employs more than 1.5 million people. And it is the industries with higher added value that should be the driving force of the economy.
At SAPIE, we have been monitoring the development of DSA legislation for a long time and we are aware that similar decisions should be preceded by a dialogue between all parties involved. We therefore make statements that reflect the current proposal to ban targeted advertising.
“We understand that the DSA is one of the key issues for the European market. Today, it is literally overwhelmed by a lot of false information, hateful and, last but not least, illegal content.
We support all efforts to combat these harmful phenomena. However, as part of the restriction of targeted advertising, we do not agree that existing digital models should be completely banned, both because they are now regulated by other laws and also because it would be literally liquidating for many, especially small and medium-sized enterprises.”
The proposed community is also adversely affected by the media community, as most media and electronic media revenues come from advertising.
“As an association representing the European media, we strongly reject the arguments justifying the ban or restrictions on targeted advertising, as online advertising funds independent and diverse media in a way that respects privacy.
The ban would have a significant impact on the media environment, as well as distorting competition. We understand the control over data collection and use in online advertising, but we believe that restricting or banning targeted advertising is not the best way to allay concerns, especially if these decisions are to be at the expense of sustainability media.”
The last category is companies that use targeted advertising as part of their communication and sales strategy.
“As an organization, we value the privacy of each person, but we also perceive the importance of business in our lives. The two are in conflict many times, and it is the legislation that should strike a balance between them. There can be no legislative proposals for liquidation companies.”
“The problem with DSA legislation and the ban on targeted advertising is extremely complex and few people really understand it.
There is an idea that we will ban large companies from using our data. However, this is already being addressed by the GDPR, which protects the privacy sector. The DSA and the ban on targeted advertising tend to ban the use of the tool for small and medium-sized businesses and startups. You would thus lose the opportunity to work with a very efficient and affordable form internet promotion.
You need to realize that banning the tool is something you take from people and not give to.”
DSA legislation will also affect users of online services and platforms
Many applications and services are still free for users today. Providers make money by selling space on their websites or in mobile applications to advertisers. This ad-supported business model allows people to access free digital goods and services that are subsidized by advertising revenue. Targeted advertising therefore benefits all parties: it also benefits mobile and user developers from mobile users applications, ad networks and businesses. Restricting targeted advertising would reduce the availability of free applications and services that would be about particularly detrimental to lower-income Europeans, for example. as well as for many internet users in developing countries. There are a lot empirical evidence that most internet users are willing to exchange data for access to social network, digital map or online.
According to a recent study by Boston Consulting Group, customers prefer simple and short targeted ads to help them make purchasing decisions. Less they think about personalizing advertising as such rather than the benefits it can provide them.
Opponents of targeted ads reject or ignore this information and say it will be used "Alternative methods of serving ads, such as contextual ads," but ignoring the fact that Contextual ads are not interchangeable with targeted ads and that non-targeted ads would they have generated significantly lower revenue for many ads.
