Digital Advertising and Market Structure: Implications for Privacy Regulation

Daniel Deisenroth, Utsav Manjeer, Zarak Sohail, Steven Tadelis and Nils Wernerfelt

No 32726, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study how changes in the effectiveness of targeted digital advertising shape firm behavior and product-market outcomes. We leverage the introduction of Apple's App Tracking Transparency (ATT) framework, which limited online advertisers' access to user data and thus substantially reduced their advertising effectiveness. Using proprietary advertiser-level data from Meta and industry-level outcomes from the Bureau of Labor Statistics, we show that greater exposure to the ATT shock led to lower ad spend, fewer establishments, and higher product prices. The findings suggest that digital advertising primarily expands markets and that privacy policies can have unintended consequences on product market competition.

JEL-codes: D22 D40 L10 L59 M38 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-com, nep-ind, nep-pay and nep-reg
Note: IO PR
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