What Factors Affect Targeting and Bids in Online Advertising? A Field Measurement Study

Abstract

Targeted online advertising is a well-known but extremely opaque phenomenon. Though the targeting capabilities of the ad tech ecosystem are public knowledge, from an outside perspective, it is difficult to measure and quantify ad targeting at scale. To shed light on the extent of targeted advertising on the web today, we conducted a controlled field measurement study of the ads shown to a representative sample of 286 participants in the U.S. Using a browser extension, we collected data on ads seen by users on 10 popular websites, including the topic of the ad, the value of the bid placed by the advertiser (via header bidding), and participants’ perceptions of targeting. We analyzed how ads were targeted across individuals, websites, and demographic groups, how those factors affected the amount advertisers bid, and how those results correlated with participants’ perceptions of targeting. Among our findings, we observed that the primary factors that affected targeting and bid values were the website the ad appeared on and individual user profiles. Surprisingly, we found few differences in how advertisers target and bid across demographic groups. We also found that high outliers in bid values (10x higher than baseline) may be indicative of retargeting. Our measurements provide a rare in situ view of targeting and bidding across a diversity of users.