Most consumers don't know ads pay for online services

Advertisers and online platforms are being urged to better inform consumers about the trade-offs that sustain free digital services, as while most users want control over their data, they only recognise the value of an ad-supported Internet once it has been explained to them.

That is according to a new IAB Europe report, conducted by Kantar, which quizzed Internet users aged 16 and above across 12 European markets to ensure a representative sample of EU consumers; a total of 10,500 interviews were conducted.

It reveals that the average European consumer receives €212 worth of free online services per month, including essential tools such as search engines, email, and news platforms.

However, many consumers are unaware of the economic model that sustains these services.

The research shows that consumers appreciate the benefits of free access, they also recognise the potential downsides if personalised advertising were restricted – such as paywalls, reduced content quality, and limited accessibility.

Moreover, when consumers learned that advertisers pay more for personalised ads – helping to keep these services free – more of them saw consent as a fair value exchange.

In fact, while privacy was the top concern, three-fifths of consumers believe a “consent or pay” model is reasonable when they understand the value exchange involved.

Perhaps less surprising, consumers have clear expectations when it comes to digital advertising: ads should be relevant, non-intrusive, and add value to their online experience.

The study finds that 80% of consumers say online ads can be useful and prefer fewer, more relevant ads; when consumers encounter an ad that is helpful to them, over 70% described this as a positive experience; and over half agree that fewer personalised ads are less intrusive than many irrelevant ones.

However, when personalised ads miss the mark – such as showing ads for products consumers have already purchased – they quickly become a source of frustration.

IAB Europe chief executive Townsend Feehan said: “This study highlights that, seven years after the GDPR went into effect, EU consumers show good levels of awareness that the law gives them rights and choices, places obligations on the companies that process their data, and provides for sanctions in case of non-compliance.

“This said, the survey shows frustration with the daily experience of trying to exercise choice, concern about whether the rules are being effectively enforced, and a gap between consumers’ abstract preference for relevant ads and their recall of ads that actually were. So clearly, there are some important go-dos for both industry and regulators.”