IAB: Consumers Willing To Pay 12 Times What Advertisers Do For Digital

The Interactive Advertising Bureau (IAB) released findings of a remarkable study during its annual conference this morning, showing that consumers would be willing to pay $163.50 per month to continue receiving digital media they currently receive for free, because it is ad-supported.

While that finding was intended to demonstrate the worth that free, ad-supported digital media has for American consumers, it suggests digital media publishers are leaving a lot of money on the table -- more than 12 times what they are currently deriving from advertising.

If I divide IAB estimates for 2024 U.S. digital ad spending by the U.S. population and then divide that by 12, it reveals that digital publishers currently derive only $13.48 monthly from the average American's advertising value. That's 93% less than what they would yield if they simply charged consumers directly based on what they told the IAB they would be willing to pay to continue receiving currently free websites and apps.



Interestingly, even charging Americans $163.50 per month would seem to be a bargain for them, given a second finding from the just-released study: The dollar value they'd be willing to accept to stop using the internet.

While it's unclear whether that value is just for accessing ad-supported digital media, or for what they also pay directly for access and/or premium services, the IAB found the average American would require $37,619 annually -- or $3,135 monthly -- to stop using the internet.

In other words, the average American would be willing to pay nearly half the value of what they believe digital media is worth to them, which is more than 12 times what advertisers currently pay publishers to defray the cost of consumers accessing their digital media.

Needless to say, these numbers are highly theoretical and are based on a comparison of consumer perceptions to actual industry economic data, but the reality is it kind of proves the opposite of what the IAB was trying to demonstrate, according to the study: "This gap reinforces the need for advertising to keep the Internet free and open."

Oddly, the IAB study was intended to demonstrate the underlying "data value exchange" -- presumably meaning that American consumers understand their identity and behavior data is the proxy the digital ad industry uses to monetize their value -- but the study never actually asks consumers how much they believe their data is worth to digital publishers, advertisers and agencies.

If I take a conservative 50% of digital ad spending going into working media buys, with the balance being eaten up by various data-related targeting, identity resolution, and ad servicing costs (you know, the digital "ad tax"), then the theoretical value of consumer data is something like $6.75 per month, per capita.

Mind you, this is just some gross, back-of-the-envelope analysis, so don't hold me to any of these figures.

But I figured it might be worth your while to put the IAB's consumer value research findings into some real-world terms.

I'd be curious to hear what some of you think the real value exchange actually is.

6 comments about "IAB: Consumers Willing To Pay 12 Times What Advertisers Do For Digital".
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  1. Peter Blau from Customer Growth LLC, January 30, 2024 at 2:19 p.m.

    Figure too good to be true. Access to actual survey questions please!  Tried the link to IAB's site but it's member only.  My guess is that this is a wildly misleading claim: consumers willing to pay $163.50 per month to get what Big Media gives them for free.  I can assure you that Hearst, Gannett, et al get slim pickings when they try to get subscribers at even $8-$10/mo.  Crikes, what % of Americans even HAVE $163.50 extra per month disposable income?

  2. Peter Blau from Customer Growth LLC, January 30, 2024 at 2:21 p.m.

    industry pays many millions to trade associations promotiing stuff like this.  But any real study would show that trust in digital media companieis has gone way down.

  3. Peter Blau from Customer Growth LLC, January 30, 2024 at 2:36 p.m.

    I'd like IAB to survey consumers on the following issues:

    - Have you every gotten a "creepy" ad online based on personal information you believe to be private?

    - Do you trust online media companies to police their advertisers to assure they are operate in  a legitimate and ethical manner?

    - Do you trust online media companies to monitor their content to screen out that's harmful, defamatory and/or promotes violent extremism?


  4. Joe Mandese from MediaPost Inc., January 30, 2024 at 2:43 p.m.

    @Peter Blau: The study does indeed appear to be behind an IAB member wall.

    There's not a whole lot more I can share about its methodology, except that the report says this (below) and has breaks for gender, demo and household income:

    Methodology and Respondent Profile

    As the digital economy becomes more privacy-by-design, IAB surveyed over 1,500 consumers to gain insights into their thoughts, preferences, and concerns regarding their personal data and digital advertising overall.

  5. Peter Blau from Customer Growth LLC, January 30, 2024 at 3:12 p.m.

    Secret is always in the questions and the order in which they're place.  Sorry I'm very cynical about trade association surveys in general, and in the media industry in particular.

  6. Dan Ciccone from STACKED Entertainment replied, February 7, 2024 at 12:16 p.m.

    @Peter - exactly.  And I would add that "digital media" is too vague of a term...what does that mean?  Streaming?  Social media?  News? 

    Almost all forms of news and entertainment are now digital - so this is much too vague.

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