The Changing Nature of Sponsored Search
The online advertising industry is currently going through a monumental shift as corporations move to reflect the priorities of their customers. The first example of this is with Apple, which has become more stringent about allowing websites to track the browsing habits of iPhone users. Apple does this via a pop-up window in iPhone apps allowing users the choice to not be tracked- some 80% click on it. Another example of this shift is with Google, which has vowed to remove cookies from Chrome in 2023, and is testing less invasive methods of characterizing their users to be advertised towards.
This relates to our lectures about sponsored-search and the algorithms by which Google determines prices-per-click for advertisers. Without tracking consumers, Google will be less likely to show ads to interested consumers. This will decrease the click-through rate for ads across the system, as consumers will have a smaller probability of clicking on them. A decreasing click-through rate will, of course, decrease the total price that advertisers pay. What I wonder about is this- will advertisers still pay the same per-click? Or will they pay more per-click, as they know that less clicks are forthcoming? Will they pay less per-click, as they have less confidence in Google’s algorithms due to the lack of tracking? It remains to be seen.