New IAB Report Highlights the Risks of a Proposed Ban on Targeted Advertising

A new report has found that a proposed blanket ban on targeted advertising could have a disproportionate impact on small and medium enterprises (SMEs) in the EU and hurt Europe’s digital recovery from the COVID-19 crisis.

The report, ‘The Wider Socio-economic and Cultural Value of Targeted Advertising in Europe’, was authored by IAB Europe’s Chief Economist Dr. Daniel Knapp.

Quoted by IAB Europe on the release of the report, EACA’s Director General Tamara Daltroff said:

“The current debate too often disregards the positive social and economic impact of targeted advertising. It is a valuable technique that is not only used by big advertisers, but also by small companies, start-ups, NGOs – and not least the free media. Personalisation that respects privacy is the key building block of any successful campaign – and the GDPR remains our guiding compass here.”

For more information, you can read EACA’s feedback to the Commission on the proposed ban here.

What are the key findings of the report?

Supporting SMEs

The report finds that SMEs rely heavily on targeted advertising in order to reach their customers, while minimising costs. The COVID-19 pandemic has led to 6% increase in EU internet users buying goods or services online – with that figure reaching double digits in several EU Member States. This shift towards e-commerce has made SMEs even more reliant on digital advertising to compete.

Protecting European cultural assets

Culturally significant sectors such as tourism, food and beverages and cultural goods were also found to be under threat by the proposed ban, especially as these sectors have been some of the hardest hit by the pandemic. It identifies the tourism industry as being particularly reliant on targeted advertising in order to reach relevant consumers.

Promoting free and open media.

The report also highlights the importance of targeted advertising for publishers as outlets move increasingly to digital-first business models. While subscription models are on the rise, the report finds that 68% of internet users in Europe would never pay for online news content, demonstrating the importance of advertising revenue in keeping trustworthy media outlets financially viable. A blanket ban could go against the EU’s own priorities in strengthening the European media ecosystem.

What are the next steps for the proposed ban?

The ban is being discussed as a potential addition to the Digital Services Act (DSA), which is currently being considered by the Internal Market committee of the European Parliament. The committee will consider the proposed amendments on 27 September, ahead of the consideration of compromise amendments one month later. It will then vote on the DSA on 8 November, followed by a Plenary vote in December.