Most Internet Users Willing to Pay for Privacy

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If you hate those Internet ads that appear to know your interests, you aren't alone. Two-thirds of Americans do not want advertisers to be allowed to target ads based on their web browsing history, according to a new poll from Gallup. In fact, most people -- 61% -- care so much about their privacy that they aren't willing to sacrifice it in exchange for more free content paid for by targeted ads. But this isn't quite a death sentence for ads based on users' interest.

This Gallup poll makes quite clear how much most Americans care about their privacy. Companies are often willing to pay up if ads could be aimed at people based on their interests, but most Internet users would rather pay for content instead and withhold something as seemingly innocuous as their web browsing history from advertisers.

But Gallup's poll results reveal an interesting finding: Internet privacy concern varies generationally. Here are the results broken down by age group:

gallup target ads 2010-12 cht1.gif

Focus on the top section first, which provides the age groups polled. As you go from oldest to youngest, privacy concern lessens. Younger Americans are more willing to grant advertisers information about their interests than older Americans. One of two things is going on here. Either younger Americans are more comfortable with less Internet privacy or the desire for secrecy grows as people age. While either theory could hold in theory, the former probably makes more sense. The younger the age group, the more of their formative years were spent in the Internet age, which probably makes younger Americans more comfortable having their privacy compromised by online advertisers.

What's stranger, however, is the second part of the chart above -- the income distribution. Astonishingly, the wealthier the respondent, the less willing they are to pay for their privacy. In other words, there's an inverse relationship between those who are willing to pay for privacy and those who can more easily afford to do so.

Yet, both of these results provide a silver lining for advertisers. Even though most Americans don't want to allow targeted ads, younger and more affluent Internet users are more willing to allow targeted ads than older, less affluent users. Of course, most advertisers prefer the groups that are less adverse to targeted ads anyway, since those demographics are more likely to spend more money.

Some additional somewhat good news for advertisers is that many Internet users would be more willing to accept targeted ads if the user has control over what ads are targeted. In a separate question, Gallup asked under what circumstances targeted ads would be tolerable. While only 14% of Internet users would be in favor of allowing all targeted ads, 47% would allow such ads if they chose which advertisers can invade their privacy. Just 37% of Americans want an all-out ban on targeted ads.

But don't show those advertisers the left two columns on this next chart:

gallup target ads 2010-12 cht2.gif

If you believe these responses, then Internet advertising appears to be nearly useless. Of course, it's important to think about what question was asked here. There aren't many people who go to Internet websites for the commercials -- just like there aren't many people who watch television for the commercials, unless we're talking about the Super Bowl. If the poll had instead asked whether people notice ads at all, far more than 10% of those polled would have responded in the affirmative.

Americans' displeasure for targeted ads is something of an enigma. While the desire for privacy is understandable, targeted ads have two very significant benefits. First, as already mentioned, they can provide free access to online content, because companies are willing to pay up for ads that have a better chance of capturing a users' interest. Second, if ads are annoying to Internet users in general, they're even more annoying when they're for products the users would never buy. At least a targeted ad has a better chance to spark some interest for Web surfers. They may sometimes provide useful or interesting information about products they care about.

But the Gallup poll shows that most Americans just aren't ready for an Internet where targeted ads are the norm. Yet advertisers can cling to the hope that future generations will be more willing to accept advertisements targeted to their interests. That is, if they're paying any attention at all.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
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