DESIGNED TO SERVE MANKIND

Not all targeted advertising is created equal. At the simple end of the scale, advertisers place ads on websites where they think subject interests align. One degree more sophisticated is contextual advertising — where, say, a car ad shows up only alongside articles about cars. And then there are ads that take into account private data, such as location or demographic information. Still, even at the sophisticated end of the scale, nearly everyone knows the feeling of being shown digital ads for car insurance when you don’t even own a car, or banners for a sale on clothing for the opposite sex.

“It’s ineffective as well as annoying,” says Mr. Fader of some targeted advertising, and over time, “a lot of the annoying stuff will collapse under its own weight.”

The smart companies, he says, are ones like Netflix, which has “looked at DVD movie preferences and made that into a broader array of content to the point where they know what they should be producing.” Electronic Arts, the video game company, is another. “They are looking at granular customer data to come up with ads and targeting strategies to figure out what kinds of products they should be producing in the first place. By being smart about it they are even using less data,” says Mr. Fader.

The ability for the data to be more predictive will grow, says Wharton marketing professor Gideon Nave. Key to being predictive is the ability to peer into people’s personalities, and often this data can be extrapolated from sources users might never suspect — such as musical preferences. Reactions to unfamiliar musical excerpts predicted individual differences in personality — most notably openness and extraversion — above and beyond demographic characteristics, showed Mr. Nave and his co-authors in “Musical Preferences Predict Personality: Evidence from Active Listening and Facebook Likes,” published in March in Psychological Science. Another part of the study showed that Facebook “likes” for musical artists also predicted individual differences in personality.

“The effects of one ‘ like’ are not big. But with 300 ‘likes’ you can predict one’s personality as good as his or her spouse,” says Mr. Nave, speaking not about the study, but about “likes’ generally.

Where are we in the arc of potential efficacy of targeted advertising? “I think on the mathematical and computing side, we are in the second half,” says Mr. Bradlow. “On the kind of data we can use for retargeting, I think we are in the first quarter. It’s still an open question of what’s predictive, what kind of data are available in the future of brain science that would be predictive. On the modeling/computing side, we’re pretty far advanced. I think the new data streams is the bigger part of the future that remains unknowable.”

With potential advances on the way, it’s easy to understand the impulse for regulation, and “better and more comprehensive privacy laws are necessary and important,” says Kevin Werbach, Wharton professor of legal studies and business ethics. “The challenge with GDPR is inherently a trade-off between creating something that is strong and comprehensive and something that is sufficiently flexible and workable. The question is what enforcement is going to look like. It’s really impossible for any major enterprise to be confident that it is fully compliant across the board. There are a large number of provisions that leave room for interpretation. There is so much information flowing through organizations these days that while it’s an admirable goal to have consistent policies and to adhere to standards to protect users, it’s just impossible for any company to try to keep track of everything and ensure it is meeting these standards. GDPR is a very tangled, complex law with many overlapping provisions.”

The European law sets out certain rights for individuals: that their personal data collected by firms be stored in certain ways, that it be shared with the individual upon request and that it not be shared without explicit permission. Penalties potentially range from warnings to fines as high as 4% of worldwide sales.

Broadly speaking, the GDPR itself states that its intention is to “contribute to the accomplishment of an area of freedom, security and justice and of an economic union, to economic and social progress, to the strengthening and the convergence of the economies within the internal market, and to the well-being of natural persons.”

Its 99 articles set down on 88 pages are largely prosaic, though it also enshrines ideals in a flourish of poetry that declares it was designed to serve mankind – a striking reminder in an age when many workers feel as if they, the humans, are constantly finding themselves answering to the technology.

“The right to the protection of personal data is not an absolute right; it must be considered in relation to its function in society and be balanced against other fundamental rights, in accordance with the principle of proportionality,” states the GDPR, which goes on to speak about “respect for private and family life, home and communications, the protection of personal data, freedom of thought, conscience and religion, freedom of expression and information, freedom to conduct a business, the right to an effective remedy and to a fair trial, and cultural, religious and linguistic diversity.”