IAB Europe has today published a new reported arguing that a wholesale ban on targeted advertising, a move which has been proposed by a group of MEPs, would have “devastating” consequences for Europe’s press, cultural assets, and SMEs.
The EU’s upcoming Digital Services Act, which is currently being debated in the European Parliament and European Council, is designed to curb the power of the tech giants and prevent anti-competitive practices. But a group of MEPs have proposed amendments to the bill which would completely ban all forms of personalised targeted advertising – regardless of consumer consent.
Today’s report, titled ‘‘The wider socio-economic and cultural value of targeted advertising in Europe’ and authored by IAB Europe’s chief economist Daniel Knapp, argues that such a move would have unintended consequences.
Knapp says that first of all SMEs, which he describes as “the backbone of Europe’s economy”, would be harmed by a ban on personalised ads.
“SMEs often run their business based on the principle of ‘advertise or perish’ as they lack the cash resources to navigate a period without sales,” says Knapp. “But SMEs need to diligently measure advertising return-on-investment. They require targeted advertising strategies to minimise wastage and reach relevant consumers more than any other type of business.”
And given the importance of SMEs for helping drive economic recovery after the impact of the pandemic, Knapp says a ban on targeted ads could stifle the recovery too.
Secondly, the report says that such a move would harm European media businesses, which despite attempts to diversify away from advertising revenues, are still somewhat dependent on them.
“While digital subscriptions have become popular models for growth, most publishers claim they cannot substitute advertising income,” says Knapp. “A 2017 survey by GfK found that 68 percent of European internet users would never pay for news content online.”
And even where subscription strategies are working, it’s still important that news remains accessible for free, supported by ads. “Shifting to a subscription economy without advertising could lead to a decline in free quality information, something the European Parliament’s Culture Committee (CULT) warned about in a May 2021 report on Europe’s media in the Digital Age,” says the report.
And the report warns that the impact could be even more far-reaching, affecting Europe’s ability to showcase its culture on the global stage. “Targeted advertising also plays a vital role in promoting unique cultural goods, travel destinations, food and beverage and other culturally significant sectors across Europe,” says Knapp. “The ability to use targeted advertising is an important tool these industries can use as they have begun to reopen and try to recover from the devastating impact of the COVID-19 pandemic. ”
Unforseen consequences
IAB Europe isn’t pushing against the DSA as a whole, or even any new restrictions around use of personal data. CEO Townsend Feehan said that IAB Europe “supports the elements in the DSA proposal that are genuinely additive and complementary to the EU’s highly restrictive privacy and data protection legal framework. These would include new mandatory information disclosures about the identity of the advertiser, who may not always be a controller for a specific instance of data processing and as a result would not need to be disclosed under the GDPR.”
But she said there are significant dangers to the DSA being used as a vehicle to push through radical measures, without properly weighing up the impact of those measures first.
Others use even stronger words. Karina Stan, director of EU policy and head of Brussels office at Developers Alliance, a developer trade body, described the push to ban targeted ads as “another example of Brussels hobbling European innovation and putting the continent at a disadvantage in the global race to succeed in the digital economy. This is something Europe simply cannot afford and we urge policymakers in Brussels not to implement such a blunt and potentially damaging proposal”.
