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 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 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 

A 2022 survey of small businesses found that 70 percent invest in tailored social media advertising, with 54 percent planning to increase their current spending, citing a wide range of benefits.⁴ Empirical research from 2022 supports the claim that there is fear among small businesses about the loss of tailored advertising; such businesses would see a 37 percent increase in the costs of acquiring new customers without offsite data.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 offsite data at every point in measurable ad distribution.⁶ As such, tailored advertising is essential for these small businesses to compete with large mainstream sellers with larger, more robust advertising budgets.⁷ A 2022 study shows that 69 percent of small and medium advertisers say they would not have been able to launch or sustain their business without digital ads tailored to the interests of consumers. Polled advertisers also stated that a prohibition of tailored advertising would hurt their business.⁸ Accordingly, without tailored advertising, D2C and other small businesses would struggle to compete.

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 become customers.⁹ Tailored advertising also allows both small and large businesses to maximize the efficiency of their ad spending by identifying marketing trends and using their budgets to directly reach audience segments already seeking 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 Meta’s 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 various topics.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 of 52 percent in monetizing ad inventory.¹⁷ Moreover, studies on the value of data for ad pricing show that tailored ads generally increase ad prices by a factor of two to three.¹⁸ 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.¹⁹ Prior research also indicates that news and general content websites are more negatively affected and less able to monetize their ad inventory if forced to use contextual-only advertising,²⁰ and that cookies are especially valuable for smaller publishers lacking other user data.²¹

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.²² In contrast to this, the importance of paid subscriptions has increased and extended its lead over advertising in the last four years and is now the most important revenue stream for 80 percent of commercial publishers.²³ This highlights the contradiction between consumers’ sentiments and publishers’ revenue interests—while consumers place a high value on digital content and services, estimating they would pay $163.50 per month to maintain access if necessary, they overwhelmingly prefer a free, ad-supported model.²⁴ In contrast, a paywall model is likely to lead to a future where consumers have access to less digital content, and potentially one where larger platforms and media sites will be able to demand subscription fees. 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.²⁵ 
While contextual advertising has been demonstrated to generate greater revenue than random advertising, contextual advertising has not demonstrated the capability of generating the same amount of revenue as tailored advertising.²⁶ Most publishers continually rely most heavily on tailored advertising because this is more effective and thus generates more revenue, which directly benefits consumers by making products and services more cost effective or even for free.²⁷ The digital media industry has experienced robust growth over the last two decades, providing transformative benefits, such as free or low-cast access to quality content to consumers.

Tailored advertising particularly benefits smaller publishers and app providers who lack the resources to negotiate directly with larger advertisers.²⁸ By leveraging ad-tech platforms, sites that specialize in a specific or narrow set of topics are able to serve their customers with a wide range of relevant ads for products and services that do not relate directly to their niche content. This is crucial for sites that specialize in a specific or narrow set of topics, 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.²⁹
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.³⁰ This burden falls disproportionately on smaller publishers lacking network effects to entice paid subscribers or alternative revenue strategies.³¹

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.³² In 2022 the U.S. Customs and Border Protection (CBP) also launched a digital advertising campaign in the Northern Triangle countries of Honduras and Guatemala to warn potential migrants about smugglers who might exploit vulnerable populations.³³ 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.³⁴ Additionally, patients exposed to personalized digital messaging about breast cancer underwent diagnostic screenings at higher rates and sooner than control groups.³⁵ 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.³⁶ 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.³⁷ 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.³⁸ 

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 location, age, race and ethnicity.³⁹ 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.⁴⁰ 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.”⁴¹ 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 by Brady United. In partnership with the Ad Council, the campaign focuses on raising awareness about the importance of keeping guns securely stored, especially in homes with children or individuals at risk of self-harm, and to prevent firearm accidents as well as gun suicides by promoting safe firearm storage. The omni-channel campaign used digital ads to reach its core target audience, “gun-owning parents”, and reported high success rates.⁴² Brady United reported that 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.⁴³

In 2023, over 36 million suspected child sexual exploitation cases were reported, more than twice the number reported in 2019.⁴⁴ 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. The campaign partners 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.⁴⁵

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.⁴⁶

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.⁴⁷ 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.⁴⁸ 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.⁴⁹ 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.⁵⁰ 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 a higher value on online content and services, with Millennials willing to pay $176.89, Generation Z, $229.14. In contrast, older generations would pay less, with Generation X willing to pay $139.16 and Boomers, $105.77.⁵¹ 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 a high fee for ad-free websites and apps.⁵² In fact, 78 percent would prefer seeing additional ads rather than being required to pay for access.⁵³ 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.⁵⁴ 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.⁵⁵ 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 helps consumers save at least 3.4% on online shopping, amounting to $176 per person annually.⁵⁶ More broadly, it plays a crucial role in sustaining the free digital content ecosystem. 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.⁵⁷ 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.”⁵⁸ 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.