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1 1 (January 26, 2023)

handle is hein.crs/govekjt0001 and id is 1 raw text is: Congressional Research Service Updated January 26, 2023 How Consumer Data Affects Competition Through Digital Advertising Digital advertising allows advertisers to send targeted ads, meaning different users viewing the same website or app at the same moment might see different ads. By using targeted ads, websites and apps may have an advantage over other forms of media, such as magazines, radio, and television. The collection of consumer data may affect competition in digital advertising and raise privacy concerns (see CRS Report R47298, Online Consumer Data Collection and Data Privacy, by Clare Y. Cho and Kristen E. Busch). This In Focus discusses how the collection of consumer data might affect competition among advertisers and among websites and apps that obtain revenue from digital ads. Consumer Data in Digital Advertising To determine which ad each user receives, advertisers and operators of websites and apps can use software and tools known as ad tech. Advertisers use ad tech to place automated bids in a marketplace that runs an instantaneous auction. Advertisers identify their target audience based on demographics, past customers, and other factors that might suggest the user would be interested in the ad. They also indicate the level of exposure they want to achieve and the amount they are willing to bid. Websites and apps use ad tech to offer ad spaces-places where ads are displayed- in the marketplace, with information about the user currently viewing the page. The user sees the ad chosen by the marketplace, selected based on the advertiser's bid and the relevance of the ad to the user. Ads receive higher relevance scores when they receive positive feedback, such as users clicking on the ad, whereas ads that trigger fewer responses receive lower scores. Advertisers, as well as website and app operators, have incentives to improve their ad targeting by collecting detailed information about each user. Advertisers might expect more precise targeting to increase sales. Websites' revenue may depend on how frequently users click on the ad or how much time users spend viewing the ad. In the United States, digital ad spending made up 55.6% of total media ad spending in 2019 and 71.8% in 2022, according to an eMarketer article (November 7, 2022). Revenue from digital ads has increased substantially over the last two decades (Figure 1). Much of the growth in recent years has come from advertising on mobile devices. Figure 1. U.S. Digital Advertising Revenue ($ in billions) $189.3 $124.6 $07-. $72. m Cm 3. 2011 2012 2013 2014 201s 2015 2017 2018 2019 2020 2U21 Source: Interactive Advertising Bureau, Internet Advertising Revenue Report, April 2022, prepared by PwC. Note: Includes advertising on desktop and laptop computers, mobile phones, tablets, and other internet-connected devices and includes all formats of advertising. Competition Among Websites and Apps Google, Amazon, and Meta Platforms (the owner of Facebook and Instagram) collect most of the digital advertising revenue in the United States. eMarketer estimated that these three companies accounted for 63% of the digital ad revenue in 2019 and would account for 65.1% in 2023 (Figure 2). Figure 2. Digital Ad Revenue Share by Company (% of total U.S. digital ad spending) -.0% X5.9/ 3,.O 34S S4 37. % 28z9%28.67% 26%46% 23.6% 24.9% 23.8% 24.2% 24.1% 13.3 146% 10.3% 11.6% 7.8% 2019 2020 2021 2022 2023 -e-Google* -4-Meta Platforms** A--Others Source: eMarketer, October 2021. Note: Includes advertising on desktop and laptop computers, mobile phones, tablets, and other internet-connected devices; net ad revenues after companies pay traffic acquisitions costs to partner sites; *includes YouTube ad revenue; ** includes Facebook and Instagram ad revenue. https://crsur un Suunnulm

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