That is the stark warning from a new analysis by independent financial research company IHS Markit, co-funded by the European Interactive Digital Advertising Alliance (EDAA) and the
Interactive Advertising Bureau Europe (IAB Europe). The Regulation, which replaces the ePrivacy Directiv
e, is still due to come into force with GDPR in May next year, although given the howls of protest - from regulators, MEPs and businesses alike - over the timescale, this appears unlikely.
Under the proposals, consumers would be forced to give consent for their data to be used at a "device level", which would then apply to all websites and apps used.
The analysis reveals that 66% of current digital ad spend depends on data, and that the use of data drives 90% of annual growth in the digital ad market.
Data-driven advertising is over 500% more effective than advertising without data, the study shows, and is crucial for providing advertisers with transparency on who sees their ads. Because of this, advertisers will slash their investment in digital advertising if data can no longer be used, the report claims.
In a separate study which supports the findings, research firm GfK demonstrated the widespread willingness of web users for their behavioural data to be used to support ads that would ensure free content.
Of 11,000 people surveyed in 11 EU countries, 69% said they were willing for their browsing data to be used in advertising, while 83% preferred ad-funded content to content they had to pay for.
IAB Europe chief executive Townsend Feehan said: “These findings should give MEPs very significant cause for concern as they consider the proposed ePrivacy Regulation.
“The alternative to data-driven advertising isn’t just less targeted advertising – it’s a digital ad industry half the size that it is today. That has huge consequences for Europeans’ experience of the internet, for the EU economy and for the existence of a free and balanced media.
"The latest research shows that the appetite for paying for online content simply doesn’t exist to a viable degree among EU citizens. Ignoring this fact is a recipe for economic, social and political disaster.”