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Targeted advertising—using data about consumers to customize the ads they receive—is deeply controversial. It also creates a regulatory quandary. Targeted ads generate more money than untargeted ones for apps and online platforms. Apps and platforms depend on this revenue stream to offer free services to users, if not for their financial viability altogether. However, targeted advertising also generates significant privacy risks and consumer resentment. Despite sustained attention to this issue, neither legal scholars nor policymakers have crafted interventions that address both concerns, and existing regulatory regimes for targeted advertising have critical gaps.

This Article makes three key contributions to the targeted advertising literature. First, it rigorously interrogates the empirical evidence on the effectiveness of the practice, concluding that targeted ads generate important benefits for firms, but mixed effects for society. Next, it evaluates the risks and harms of these ads and maps them to existing regulatory regimes to identify gaps. Finally, it elucidates a co-regulatory reform proposal that combines industry expertise with oversight by the Federal Trade Commission to address invasive data collection techniques, insecure data storage, and problematic transactions in consumer data. The proposal closes regulatory loopholes, reduces information asymmetry for enforcement in a fast-changing industry, and offers a pragmatic path to implementation.