Measuring Profitability From the Use of Personal Data for Targeted Ads

Abstract

Companies like Facebook and Google track their users’ data to enhance their ads and offer highly targeted ad space. The question is then raised: how much more profitable does collecting data make companies and what is the future of these companies, as rising data privacy concerns are believed to result in the passage of future legislation? In order to isolate the effects of collecting data on profit, the revenue and revenue growth of Google and Facebook were compared to their competitors that do not collect data and revenue was adjusted to find the average per user. Google was compared to another search engine, DuckDuckGo, and Facebook was compared to a social media site, Yubo. Our analysis found that both Google and Facebook earned significantly larger amounts of revenue, per user, than their competitors who do not collect data. However, DuckDuckGo and Yubo both experienced considerably larger revenue growth this past year, highlighting improved success among companies relying on different models for generating revenue. Our research and similar studies will become more important once legislation is passed, as companies may have to pay taxes or fees associated with acquiring users’ data.