IAB Europe report finds ban on targeted advertising risks digital divide in Europe

As the European Parliament contemplates possible amendments to the draft Digital Services Act, a new report by Dr. Daniel Knapp, Chief Economist for IAB Europe, outlines that a blanket ban on targeted advertising, as proposed by some MEPs, would hinder Europe’s global position. 

The study highlights advertising’s critical role in sustaining a free and open internet, emphasising that for online content and service providers to grow advertising revenue, targeting is essential. Over two-thirds of digital advertising revenues in Europe depend on behavioural targeting and advertisers pay on average 2.68 times more for ads targeted this way. 

IAB Europe CEO Townsend Feehan commented:

We fully support 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 first and foremost, the European Parliament should look at what can be done to strengthen compliance and enforcement with existing law before laying on new proposals that overlap and have not been subject to any kind of impact assessment and, as this report shows, could have devastating consequences for a range of sectors.

The report finds that small businesses would be negatively impacted by the ban, having grown more reliant on digital marketing strategies due to COVID-19 restrictions and typically lacking the budget necessary for ads to general audiences, as opposed to targeted advertising. Targeted advertising is also increasingly important for European publishers as they transition to digital-first business models. A ban risks a digital divide between European citizens who can afford to pay for quality news and those that cannot, the report warns.

Business Director of Portuguese online content and services provider SAPO, Fernando Parreira said:

The recent digital boom is a strong signal that Europe’s future lies in technology and innovation. But policymakers are at a crossroads. They face a choice between creating a strong framework that allows all businesses to flourish at the forefront of digital competitiveness or seeing Europe fall behind its global competitors.  Europe’s economy needs small, agile companies with access to a range of innovative tools, such as targeted advertising, to allow them to compete and help secure a prosperous digital economy.

You can access Dr. Daniel Knapp’s full report ‘The Wider Socio-Economic and Cultural Value of Targeted Advertising in Europe’  here, and find the full press release from IAB Europe here.