For many companies, tailored advertising is the most cost-effective method to enter the market as it helps companies of all sizes reach customers who are most likely to interact with their ads and be interested in their products. Tailored advertising is particularly beneficial for small business advertisers—those without a dedicated ad-sales team, working with limited marketing and ad budgets—in competition with dominant, vertically integrated sellers. Those smaller businesses would be negatively affected if they were unable to use tailored advertising. A study of advertising on Meta found that for a small business, the acquisition cost per customer would rise from $40.17 to $55.23—a 37 percent increase—while larger businesses would only see a 19 percent increase, which indicates that “small advertisers would be hit nearly twice as hard as large ones.”¹ Tailored advertising facilitates competition by optimizing the resources of small businesses to help them scale, leveling the playing field and allowing them to more effectively compete with large companies.²

Direct-to-consumer (D2C) companies, and other small, newly formed businesses serving specific customer bases are particularly dependent on tailored advertising due to the nature of their business models and their dependence on reaching niche audiences via the internet. Using only contextual advertising, these companies would suffer, as they would be unable to reach their target consumer base efficiently. Over 90 small businesses signed a letter to the FTC from Internet for Growth, arguing that the elimination of third-party tailored advertising “could be devastating for many small businesses – and the millions of Americans they employ[…],” and that “[p]olicy changes of [this scale] would fundamentally remake the ad-supported digital economy, which accounts for 12% of GDP.”³ 

Tailored advertising is essential for small businesses to compete with large mainstream sellers with larger, more robust advertising budgets.⁴ A 2022 survey of small businesses found that 70 percent invest in tailored advertising, with 54 percent planning to increase their current spending, citing a wide range of benefits.⁵ Compared to larger-scale advertisers, small business advertisers rely more heavily on tailored ads, and they would be disproportionately hurt by the loss of third-party data used for ad measurement and optimization.⁶ A 2022 study highlights that 69 percent of small and medium advertisers would not have been able to launch or sustain their business without tailored ads. Polled advertisers also stated that a prohibition of tailored advertising would hurt their business.⁷ Small businesses experienced a 22.3% reduction in customer orders and 39.4% less revenue over 18 months when they were not able to use tailored advertising anymore.⁸

Tailored advertising contrasts with the contextual advertising model, where the same businesses would need to spend a higher percentage of their budget on advertising to a broader set of consumers, many of whom are less likely to find the information relevant to them and eventually become customers.⁹ Tailored advertising also allows small businesses to maximize the efficiency of their ad spending on promotions to specific audience segments more interested in their products. Data shows that small businesses utilizing tailored advertising are 16 times more likely to report sales growth as opposed to competitors who do not.¹⁰ The importance of tailored advertising is further highlighted by a 2024 study, which found that firms reliant on big platforms experienced a 37.1% relative revenue decline without tailored advertising, with small businesses being the most affected.¹¹

Direct-to-consumer (D2C) brands—companies that sell products directly to customers online, bypassing storefronts, wholesalers, and third-party retailers—comprise an important and growing segment of the e-commerce marketplace. These businesses help lower costs for consumers by reducing supply chain expenses.¹² The D2C market has been estimated to be worth nearly $200 billion in 2024, doubling in size since 2020.¹³ This business model is revolutionary for its ability to provide high-quality goods and services to niche segments of consumers interested in diverse products and services not otherwise available from mainstream businesses.¹⁴ Due to their business model, these companies depend on reaching their audiences online, and therefore rely on data-driven advertising. Without tailored advertising, they would struggle because they could only reach potential customers through a limited number of sites and services aligned with their niche products. Tailored advertising is essential for D2C brands to compete with large mainstream sellers despite having limited advertising budgets.

For publishers, providers of digital content and services, and other sites that offer ad space for purchase, tailored advertising is extremely important. By using data to provide ad placements that are more likely to reach a business’s target audiences, publishers are able to sell these placements for a premium.¹⁵ This often means publishers can show fewer ads and decrease the need for paywalls to fund their content, thus improving user experience and reducing irrelevant ads. Not only is tailored advertising more relevant, interesting and engaging for consumers, it is also more valuable for funding publishers and digital service providers compared to other types of advertising.¹⁶ Research consistently demonstrates the increased value of tailored advertising over traditional digital ads for publishers and digital content providers. Data suggests that the inability to serve tailored advertising to consumers results in a decrease in publisher revenue of 52 percent in monetizing ad inventory.¹⁷ These economic implications are even more pronounced among news publishers, as one study concluded that news publishers that are serving ads without using browser cookies—often an essential technical component of serving tailored ads—generate 62 percent less revenue.¹⁸ Prior research also indicates that news and general content websites are less likely to earn similar revenue while using only contextual advertising,¹⁹ and that cookies are especially valuable for smaller publishers lacking other user data.²⁰ While this research is based on the use of third-party cookies, it speaks more generally to the value of third-party data to more effectively target ads to their users. 

Online consumers have consistently been resistant to subscriptions and content paywalls and show conflicting attitudes when it comes to paying for online services that are currently available for free. In 2024, only 22 percent of Americans paid subscription fees for online (news) content while 56 percent said they are not willing to pay for this kind of content.²¹ This highlights the contradiction between consumers’ sentiments and publishers’ revenue interests.²² Additionally, a paywall-based model restricts access to online content for a large number of consumers, as those willing to pay subscription fees are generally wealthier (also see section IV. Consumers).²³

While contextual advertising has been demonstrated to generate greater revenue than random advertising, it has not demonstrated the capability of generating the same amount of revenue as tailored advertising.²⁴ Most publishers therefore continually rely most heavily on tailored advertising,which directly benefits consumers by making their products and services more cost effective or even free of charge.²⁵

Tailored advertising particularly benefits smaller publishers and app providers who lack the resources to negotiate directly with larger advertisers.²⁶ Small businesses can rely on ad-tech companies to make their ad inventory available to a broad array of advertisers interested in displaying ads based on consumer interests rather than only on the content the ads will appear alongside. This is crucial for sites that specialize in a specific or narrow set of topics without a clear commercial purpose, allowing them to serve their customers with a wide range of relevant ads for products and services that do not relate directly to their niche content. Curtailing the use of tailored advertising would likely have a compound effect on the marketplace, driving many smaller publishers and advertisers out of business while shoring up the market position of the larger and dominant platforms. This would likely also lead to less digital content options for consumers, as well as additional increases in digital ad-pricing on dominant platforms as the only avenue to reach wide and diverse audiences.²⁷

A broad shift away from tailored advertising would deprive publishers, particularly small and medium-sized news organizations, of critical insights and much-needed revenue at a time when monetizing digital content is increasingly difficult due to consumers’ general unwillingness to pay subscription fees for these services.²⁸ This burden falls disproportionately on smaller publishers lacking network effects to entice paid subscribers or alternative revenue strategies.²⁹

In May of 2023, the U.S. Department of Homeland Security (DHS) launched a targeted digital advertising campaign aimed at South and Central American countries to spread awareness of U.S. immigration laws, prevent people from putting their lives at risk by illegally crossing the border, and encourage them to use lawful pathways to immigration.³⁰ In 2022 the U.S. Customs and Border Protection (CBP) also launched a digital advertising campaign in Honduras and Guatemala to warn potential migrants about smugglers who might exploit vulnerable populations.³¹ This campaign demonstrates an important and valuable application of tailoring advertising for public benefit.

Millions of Americans benefit from data-driven health advertising on a daily basis. These range from minor impacts on Americans’ lives, such as educational messaging about medications, to potentially life-saving effects, such as raising awareness of symptoms and treatments. Among those who saw breast cancer ad campaigns, 78 percent  said they were likely or very likely to discuss screening with their doctors.³² Additionally, patients exposed to tailored ads about the risk of breast cancer underwent diagnostic screenings at higher rates and sooner than control groups.³³ People aged 50-80 with a history of smoking were more than twice as likely to get screened for lung cancer after seeing the campaign compared to a control group that did not see it.³⁴ 52 percent of patients who engaged with a public service campaign about Alzheimer’s said they were likely or very likely to talk to doctors about the condition after seeing it.³⁵ 87 percent of patients who saw content about managing high blood pressure said they were somewhat or very likely to talk to their doctor about it.³⁶

Amid the COVID-19 pandemic in April 2021, the Department of Health and Human Services (HHS) launched the “We Can Do This” public education campaign to boost confidence in and uptake of available COVID-19 vaccinations. The digital portion of the campaign conducted tailored advertising based on factors such as age or (general) location.³⁷ At its conclusion, HHS determined that the ads led to increased awareness of COVID-19 vaccines, higher vaccination rates, and fewer COVID-19 cases, hospitalizations and deaths. Prior to the campaign 50 percent of White participants, 40 percent of Latino participants, and 30 percent of Black participants had received their first vaccination. Post-campaign, vaccination rates increased to 75 percent for White participants and 80 percent for both Latino and Black participants.³⁸ A 2022 study on the efficacy of the public education campaign concluded that the campaign “saved more than 50,000 lives and prevented hundreds of thousands of hospitalizations and millions of COVID-19 cases, representing hundreds of billions of dollars in benefits in less than one year. Findings suggest that public education campaigns are a cost-effective approach to reducing COVID-19 morbidity and mortality.”³⁹ Without the use of tailored advertising in the digital campaign, many Americans in these audiences may not have been exposed to the HHS campaign messaging. 

In 2018, the “End Family Fire” campaign was launched which focused on raising awareness about the importance of keeping guns securely stored, especially in homes with children or individuals at risk of self-harm to prevent firearm accidents as well as suicides by promoting safe firearm storage. The campaign used digital ads to reach its core target audience and reported high success rates.⁴⁰ Gun owners are “5x more likely to seek information about safe storage, and nearly half begin storing their weapons more safely” after seeing “End Family Fire” ads.⁴¹

In 2023, over 36 million suspected child sexual exploitation cases were reported, more than twice the number reported in 2019.⁴² Multiple campaigns have been launched to prevent child exploitation and educate the public about this issue. In 2024, the DHS launched the “Know2Protect” national public awareness campaign, which aims to educate and empower children, teenagers, their parents/legal guardians, trusted adults, and policymakers to fight against child exploitation, in partnership with public sector organizations such as the U.S. Olympic & Paralympic Committee, Boy Scouts of America, as well as private-sector companies including Google, Meta, Snap and Roblox.⁴³

Research suggests that 88 percent of consumers prefer seeing ads for products or services they are interested in shopping for, rather than unrelated ads. Additionally, 87 percent of consumers report being more likely to engage with ads that align with their interests. These findings highlight the value of ad relevance: consumers generally want to see ads that matter to them.⁴⁴

Tailored advertising helps marketers reduce media waste by improving the likelihood that their paid content will be better aligned with consumers’ preferences, purchasing behavior, and interests. This approach helps consumers discover new products they might not have otherwise found and makes shopping more efficient. More than 80 percent of U.S. consumers recognize that advertising funds a free and open internet and agree that exchanging some personal data for access to free content is a fair trade-off.⁴⁵ Personalization enabled by data sharing allows businesses to meet modern customer expectations. In fact, 84 percent of customers say that being treated like a person, not a number, is very important to winning their business.⁴⁶ Tailored advertising helps deliver personalized experiences across the customer’s journey. 

The benefits of tailored advertising extend beyond just discovering new products—81 percent of consumers prefer seeing personalized ads from brands they are already loyal to.⁴⁷ Millennials and Generation Z, in particular, have grown up in a digitalized environment where personalization is standard, and their expectations reflect an understanding of the value it provides. Studies show that 67 percent of Millennials and Generation Z expect offers from companies to be personalized, and 64 percent are comfortable with companies using relevant data to tailor their experiences.⁴⁸ Ultimately, consumers value the convenience and benefits that tailored ads provide, and limiting their availability could make online experiences less relevant and engaging.

Consumers place a high value on their online content and services, estimating they would pay $163.50 per month to keep using those services if they had to. Younger generations place an even higher value on online content and services, with Millennials willing to pay $176.89, and Generation Z, $229.14.⁴⁹ Yet, despite this perceived value, most consumers reject the idea of directly paying for these services, preferring the existing ad-supported model.

For decades, the internet has operated on a simple, well-established model: consumers receive access to vast amounts of digital content and services at no cost, supported by advertising funding of media owners’ properties. This connection is widely understood: 80 percent of consumers agree that websites are free because of advertising, and 95 percent would rather receive ads than pay for ad-free websites and apps.⁵⁰ In fact, 78 percent would prefer seeing additional ads rather than being required to pay for access.⁵¹ As a result, consumers have come to expect and depend on this arrangement, and they react strongly to any shift away from it. 91 percent of consumers would “react negatively, including being frustrated, disappointed, angry, confused, or sad” if they were required to pay for websites and apps they currently use for free.⁵² Subscription-based models have also largely failed to gain traction for the same reason: 56 percent of consumers are unwilling to pay for ad-free news subscriptions, and 30 percent would pay no more than $5 per month for such subscriptions.⁵³ The reality is clear: while consumers value online content and services, they overwhelmingly prefer the current ad-supported model over pay-to-access alternatives.

Ultimately, consumers have expressed their preference: they value the free and open internet as it exists today and reject the idea of paying directly for content they have always received at no cost. The ad-supported internet, powered by tailored advertising, is not only what consumers are accustomed to—it is what they overwhelmingly prefer. Given strong consumer resistance to paid alternatives, tailored advertising remains the most viable and sustainable solution for maintaining free access to the digital economy.

Tailored advertising delivers significant benefits to consumers on both the demand and supply sides. On the demand side, it reduces shopping and product discovery costs, helping consumers save at least 3.4% on online purchases—about $176 per person per year.⁵⁴ On the supply side, it plays a vital role in sustaining free access to digital content, including news, education, and essential online services. The Federal Trade Commission’s (FTC) Bureau of Economics recognized this conclusion in a 2020 paper, noting that economic data suggests tailored ads create consumer surplus by reducing product search costs for both consumers and sellers.⁵⁵ The report emphasizes that ad-driven revenue enables consumers to access valuable digital goods and services at no direct cost. Without tailored advertising, consumers would likely be forced to pay out of pocket, an outcome that would “disproportionally affect more wealth-constrained users, who may end up losing access to these free services.”⁵⁶ This is particularly significant when considering issues of accessibility. A pay-to-access model would create financial barriers for information, disproportionately affecting lower-income individuals who rely on free digital content for news, education, and essential services. The current ad-supported model ensures that everyone, regardless of economic status, can access digital content and services without financial barriers.