The Early Impact of GDPR Compliance on Display Advertising: The Case of an Ad Publisher

Abstract

The European Union (EU)’s General Data Protection Regulation (GDPR), with its explicit consent requirement, may restrict the use of personal data and shake the foundations of online advertising. The ad industry predicted drastic loss of revenue from GDPR compliance and has been seeking alternative ways of targeting. Taking advantage of an event created by an ad publisher’s request for explicit consent from users with EU IP addresses, the authors find that for a publisher that uses a pay-per-click model, has the capacity to leverage both user behavior and webpage content information for advertising, and observes high consent rates, GDPR compliance leads to modest negative effects on ad performance, bid prices, and ad revenue. The changes in ad metrics can be explained by temporal variations in consent rates. The impact is most pronounced for travel and financial services advertisers and least pronounced for retail and consumer packaged goods advertisers. The authors further find that webpage context can compensate for the loss of access to users’ personal data, as the GDPR’s negative impact is less pronounced when ads are posted on webpages presenting relevant content. The results suggest that publishers and advertisers should leverage webpage-content-based targeting in a post-GDPR world.