Personalised ads are a key driver of the free and open Internet as well as a consumer expectation around the basic functionality of how the Internet is expected to work. European consumers derive substantial value from ad-funded online services. On average, they receive €2121 worth of free access to sites and services per month. This includes for instance key services such as news websites, communication platforms or search engines.
If personalised ads are restricted, media owners, advertisers, and intermediaries will face revenue shortfalls. For media owners, this could lead to the introduction of subscription models or paywalls, creating a two-tier internet, free for those who can afford to pay and restricted for everyone else. The impact would extend to the wider European economy, as digital advertising, particularly personalised advertising, provides an affordable and effective way for European businesses, especially smaller ones, to reach new customers. This not only supports business growth but also increases consumer choice.
However, the EU debate over personalised advertising should not be framed as a simple choice between privacy and a free ad-funded internet. A new report from IAB Europe and Kantar Media shows that the picture is more complex. Policymakers should take into account other important factors in their approach to personalised ads, such as consumer convenience, consumer trust and consumer agency.
"The conversation around personalised ads often overlooks the complexity of consumer preferences and trade-offs. IAB Europe’s study highlights the need for a more balanced approach—one that respects privacy while recognising the value that relevant advertising brings to consumers and the internet ecosystem." — Bernd Skiera, Chaired Professor of Electronic Commerce Faculty of Economics and Business, Goethe University Frankfurt
Consumer convenience
When consumers encounter an ad that is helpful to them, over 70% described this as a positive experience. Even among consumers who are in general apprehensive towards ad targeting, 7 out of 10 find it a positive experience when they recall an ad that provided helpful information. This illustrates how well-targeted advertising enhances the user experience. Well-targeted advertising can reduce clutter and increase the likelihood of discovering useful products or services at different prices. When personalised ads miss the mark, they can feel intrusive and annoying—but the issue is not personalisation itself, rather repeated impressions of the same ad or other issues. When done correctly, the research shows personalised ads make the internet experience smoother, more relevant, and more efficient.
Consumer trust
While regulations like the General Data Protection Regulation (GDPR) and the Digital Services Act (DSA) provide a strong framework for protecting user data, 52% of EU consumers are unsure how companies comply with existing privacy laws. Consumers want to feel confident that their data is handled responsibly. The issue is not a lack of rules, but rather that the industry has faced challenges in effectively informing consumers, partly due to regulatory constraints. As our study highlights, improving trust is key but does not come from new regulations rather from better and more flexible implementation of existing laws. If consumers feel that rules are being implemented to address all their interests, confidence in personalised ads will increase. Policymakers should consider how to meet the complex expectations of consumers for more relevant information, consistency, and confidence in how data protection rules are implemented.
Consumer agency
Critics argue that personalised ads are detrimental and that consumers have no real control over how their data is used to target ads. However, this new research shows that when consumers understand how the premium that advertisers pay for targeted advertising increases the likelihood of online services being accessible for no fee, they appreciate the value exchange, free access in return for the use of their data, and the majority (60%) see it as reasonable. Transparency and clear consent options empower users, without dismantling the ad-supported model. Furthermore, consumers trust sites and brands they are familiar with more than others, indicating that meaningful transparency and user control, rather than eliminating personalisation, is the right solution.
The Way Forward
This research shows the need to move beyond the common narrative that processing personal data to inform advertising is a negative thing for consumers. Effective protection and control of personal data can coexist with affordability and consumer convenience. The existing legislative framework, comprising the DSA, GDPR and the ePrivacy Directive can provide a mechanism to effectively combine both imperatives. For instance, the GDPR establishes clear principles for personal data processing, requiring transparency, consent, and purpose limitation. The DSA complements this via accountability and transparency measures in the ad supply chain.
Policymakers must reflect on these findings and explore ways to allow for more flexibility so that regulation operates in step with consumer expectations and commercial realities. Prioritising effective and risk-based implementation over additional legislation is the right starting point and will help create a balanced framework that protects privacy while preserving consumer choice and control, and the sustainably funded internet.
You can find our full study under this link.
Footnotes
