Effects of Privacy Policy in the Online Advertising Industry

Yu Zhao, PhD Candidate, The Wharton School, and Pinar Yildirim, Marketing, The Wharton School

Abstract: This study is aimed at evaluating the impact of third party cookie elimination on brands and consumers. Our proposed study aims to examine and answer the following questions: What are the effects of the third-party cookie policy ban on consumers and brands? When in-app ads are banned and in-app data collection becomes harder, advertisers face a higher cost to advertise only in the Apple app store rather than in apps and targeting will be worse, since fewer data may be collected. We expect to see a shift in the market concentration in the app market for iOS users but not for Android users. We also plan to study if there is a switch between non-Safari browsers to Safari, the latter being an Apple product and is under the scope of the policy. For privacy-sensitive non-Safari users, we expect to observe a switch to Safari in favor of fewer ads. Understanding the magnitude of the changes in consumer activities is important, especially when no preceding policies have been experienced, so the consequences are unclear. We use these insights to provide solutions to app producers and advertisers. We also inform regulators about possible unintended consequences in the market structure of policy change initiated by dominant players.