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Register a new userAn Economic Analysis of User-Privacy Options in Ad-Supported Services
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Added by
Georgios Zervas
Publication date
2012
fields
Informatics Engineering
and research's language is
English
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We analyze the value to e-commerce website operators of offering privacy options to users, e.g., of allowing users to opt out of ad targeting. In particular, we assume that site operators have some control over the cost that a privacy option imposes on users and ask when it is to their advantage to make such costs low. We consider both the case of a single site and the case of multiple sites that compete both for users who value privacy highly and for users who value it less. One of our main results in the case of a single site is that, under normally distributed utilities, if a privacy-sensitive user is worth at least $sqrt{2} - 1$ times as much to advertisers as a privacy-insensitive user, the site operator should strive to make the cost of a privacy option as low as possible. In the case of multiple sites, we show how a Prisoners-Dilemma situation can arise: In the equilibrium in which both sites are obliged to offer a privacy option at minimal cost, both sites obtain lower revenue than they would if they colluded and neither offered a privacy option.
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Recent work has demonstrated that by monitoring the Real Time Bidding (RTB) protocol, one can estimate the monetary worth of different users for the programmatic advertising ecosystem, even when the so-called winning bids are encrypted. In this paper we describe how to implement the above techniques in a practical and privacy preserving manner. Specifically, we study the privacy consequences of reporting back to a centralized server, features that are necessary for estimating the value of encrypted winning bids. We show that by appropriately modulating the granularity of the necessary information and by scrambling the communication channel to the server, one can increase the privacy performance of the system in terms of K-anonymity. Weve implemented the above ideas on a browser extension and disseminated it to some 200 users. Analyzing the results from 6 months of deployment, we show that the average value of users for the programmatic advertising ecosystem has grown more than 75% in the last 3 years.
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Modern ad auctions allow advertisers to target more specific segments of the user population. Unfortunately, this is not always in the best interest of the ad platform. In this paper, we examine the following basic question in the context of second-price ad auctions: how should an ad platform optimally reveal information about the ad opportunity to the advertisers in order to maximize revenue? We consider a model in which bidders valuations depend on a random state of the ad opportunity. Different from previous work, we focus on a more practical, and challenging, situation where the space of possible realizations of ad opportunities is extremely large. We thus focus on developing algorithms whose running time is independent of the number of ad opportunity realizations. We examine the auctioneers algorithmic question of designing the optimal signaling scheme. When the auctioneer is restricted to send a public signal to all bidders, we focus on a well-motivated Bayesian valuation setting in which the auctioneer and bidders both have private information, and present two main results: 1. we exhibit a characterization result regarding approximately optimal schemes and prove that any constant-approximate public signaling scheme must use exponentially many signals; 2. we present a simple public signaling scheme that serves as a constant approximation under mild assumptions. We then initiate an exploration on the power of being able to send different signals privately to different bidders. Here we examine a basic setting where the auctioneer knows bidders valuations, and exhibit a polynomial-time private scheme that extracts almost full surplus even in the worst Bayes Nash equilibrium. This illustrates the surprising power of private signaling schemes in extracting revenue.
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