A baseline belief of mine: Many fervent privacy activists who criticize “surveillance capitalism” are at least as concerned about the capitalism part as the surveillance aspect. These folks seem to oppose online advertising on principle, even when it aims to show users more relevant and potentially useful ads for products or services they might want.

The now hoary phrase, “If you’re not paying for the product, you are the product” is frequently used to attack targeted online advertising. But it’s actually an argument against advertising in general, not just online ads.

The concept of “free with advertising” is hardly new. Anyone who has watched free broadcast television and endured commercial breaks or subscribed to a magazine with ads understands this uncontroversial model (at least in the offline world). The digital era didn’t spawn it, only made it more visible and efficient. Online platforms have adapted and refined at scale a long-standing practice of exchanging user attention or data for services, whether those services are explicitly paid for or not. It doesn’t bother me much.

Not that many other users really seem to mind, either. In the new NBER working paper “The Consumer Welfare Effects of Online Ads: Evidence from a 9-Year Experiment,” a group of researchers presents new results from a big field experiment using Facebook data that has been running since 2013. In this experiment, a small group of users (0.5 percent of all Facebook users) never see ads, while everyone else sees ads as usual. The researchers asked 53,166 people from both groups—those who saw ads and those who didn’t—to take a survey in 2022 about how much they value Facebook.

Turns out that there wasn’t a big difference between the two groups based on the concept of “willingness to accept” (WTA), or the amount of money users would be willing to accept in exchange for giving up access to Facebook for one month.

From the paper:

We find that users’ valuations of Facebook are not statistically different from each other in the treatment and control groups, both in the overall sample and in individual geographies, indicating that users do not experience a significant disutility from current levels of advertising. Our analyses further indicate that the minimum detectable effect is $3.18/month: i.e. if the true valuation difference across the groups were to differ by more than $3.18/month, we would be able to detect a statistically significant difference with a probability higher than 80%. … Our findings suggest that either the disutility of ads for consumers is relatively small, or that there are offsetting benefits, such as helping consumers find products and services of interest.

Since they didn’t detect a statistically significant difference, it means that if ads do cause any “disutility”—reduction in value—to users, that disutility is likely less than $3.18 per month. This study isn’t the last word on the subject, but it should be a data point that legislators and regulators should think hard about before making new laws and rules to crack down on this supposed problem.

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