Paul Donato, CRO at the Advertising Research Foundation, explores the realities of consumer sentiments around data privacy in the face of growing regulation.

Between global legislation and browser changes, there has perhaps been no greater issue for digital advertising of late than privacy.

The impact has included loss of both signal and scale, plus targeting and measurement challenges. It’s all been driven by consumer interest in protecting personal data – or so we’ve been told.

The findings from the Advertising Research Foundation’s fifth annual privacy study of more than 1,000 U.S. consumers  – available on WARC – paint a bit of a different picture, one that highlights increased interest in sharing certain data in exchange for better advertising. As the US considers implementing the American Data Privacy and Protection Act, a national data security and digital privacy framework that would create new rules and regulations for any business that collects consumer data, our study illuminates a path forward for improved consumer understanding of – and participation in – data-driven digital advertising. (The bill is expected to come up for vote in the House of Representatives before moving onto the Senate, although the House may wait to vote until after next month’s midterm elections.)

Privacy concerns decrease

When asked, “Are you concerned about the use of your online behavior to advertise and market to you?” respondents were 6% less concerned than in 2021. 

Overall, a quarter to a third of consumers thought typical targeting scenarios were a misuse of their data, particularly when based on their location. However, they were less likely to think this way when being retargeted after leaving items in a digital cart.

When it comes to the idea of cohort-based advertising, which targets groups based on their similarities (and is one solution to solve for the sunsetting of the third-party cookie), negative consumer reactions went down from 2021. Of the four options in this question, the most statistically significant decrease came in “based on probable age, gender and zip code.” What’s curious is that knowing this information allows you to identify close to 90% of all US individuals.

More relevant ads = more data

Offering more relevant advertising increases the proportion of consumers willing to share data for any reason by about 20 percentage points. In comparison to last year, the number of consumers willing to share data doubled from 14% to 27% when given the prospect of being served relevant ads. (See here for a look at previous ARF privacy studies.)

When we asked, “Do you find it acceptable to receive ads that may be more relevant that are sent to you because of the information that is collected?” approximately three-quarters of respondents answered “acceptable” or “somewhat acceptable” when the type of data is identified. Prior purchases and using targeting data in connection with the media used ranked highest in acceptability in terms of the type of data. 

But there are certain nuances in the type of data consumers are willing to share. For instance, more than 90% are willing to share their gender, both in general and for more relevant advertising. The results are similar for other data like age and marital status. However, consumers were less willing to share Social Security numbers and financial and medical information.

In terms of the type of ads this data fuels, consumers view more targeted media as the most relevant. For every single advertising channel on which we polled consumers, the number who deemed the ads frequently irrelevant – meaning an ad they saw assumed the wrong age or gender – dropped from last year. The biggest decreases were in local television station ads, which 9% fewer respondents said were irrelevant this year over last.

Trust improves data sharing

About half of respondents said they’re willing to have their personal data used if it meant a better experience with interactions, such as recommendation engines. 

Consumers are most likely to let doctors (69%) use their data; retailers rank lowest (47%). Similarly, when asked who they trust, after “people like me,” respondents ranked scientists and technical experts (72%) and local police (69%) highest and advertising (35%) and Congress (33%) lowest. In terms of trusting various institutions according to the possible actions they might take with data, banks/financial institutions, doctors/hospitals and educational institutions increased. While advertising-related institutions remain at the bottom of the list, they’re closer to the average when it comes to controlling and correcting consumer data.

In general, respondents showed a willingness to share data if it led to certain outcomes, such as helping a marketer understand what happened in a campaign (44%). Young and male consumers are more likely to give permission in exchange for a better experience.

Privacy knowledge is up, but confusion remains

Consumers have grown increasingly aware of the meaning of certain digital advertising terms. Most terms scored a few points higher than they did in 2021, with “personalization” showing the most significant growth – 80% say it’s either somewhat or extremely clear. The least understood term is “PII,” (personal identifiable information) at just 31%.

Other data suggests consumers have only a vague understanding of companies’ efforts to support privacy. For instance, there’s little knowledge of Apple’s decision to make targeting opt-in in iOS 14.5. In addition, the number of consumers who find it unacceptable to use their information to deliver more relevant ads roughly equals the number of those who say the ads they receive are frequently irrelevant. 

Both of the above points illustrate that consumers could benefit from ongoing education in data privacy, especially since there is more open-mindedness about using data for the purposes of relevant advertising than one might think. Armed with more knowledge, consumers could be more likely to embrace digital advertising practices aimed at creating these more relevant, respectful experiences, no matter what future legislation might dictate.