This is the summary of a behavioral targeting thesis by Maximilian Gruber. You can get the pdf of the behavioral targeting article here: To Confess or not to Confess: Should consumers be told the truth about targeted online advertising?.
Marketers are aware that personalized online advertising is beneficial to users because the ads delivered are personal and will make their lives more convenient. However, many users don’t want to be targeted. Marketers should find a way to collect personal information for efforts toward personalization, at the same time acknowledge the fact that there are privacy issues that need to be addressed.
One way to do this is to accurately tell consumers that their personal data is currently being gathered and used by online advertisements that are marked with clickable icons. Clicking on these icons will inform the user about how to opt-out and who is tracking them.
However, a study conducted during 2011 shows that giving users such information may backfire, because consumers may be suspicious about this gesture which seems to downplay their online privacy. This study goes further by actually investigating how users react to information in these marked advertisements.
Why Share Information that Users are Tracked
Advertisers want to share information about how users are being tracked because they want to reduce privacy concerns. But by doing so, other privacy concerns may suddenly pop out. Users may feel more manipulated once they found out their data is being collected visibly. Thus, the study hypothesizes that telling users they are being tracked will negatively affect their attitude towards how they perceive a banner advertisement.
In addition, studies show that trust perceptions increase when user data collection is revealed, but not when the revelation is done after collection. That way, users may even see this revelation as a warning and fear, rather than trust, is instilled. Therefore, the study also hypothesizes that this will cause users to be negatively influenced in terms of their trust perceptions.
The paradox is that users who want to receive personalized ads the most are the ones who are least likely to want online profiles. The study further hypothesizes that users who give high importance to their information being transparent are the ones who show low attitude and trust towards banner advertisements.
Finally, another hypothesis states that hedonic and utilitarian products have various evaluations toward the trust and attitude in the banner advertisement.
Four experimental scenarios are considered in this study: overt-hedonic, overt-utilitarian, covert-hedonic, and covert-utilitarian. Overt means that the studies’ respondents receive ads that reveal how they were delivered to them, and covert means respondents receive ads that only contain information about the product.
One hundred twenty three students from Maastricht University participated in this study. A 5-point 8-item Likert scale was used to evaluate a participant’s attitude toward the banner advertisement. Consistency of the scale was tested and found to be reliable in terms of internal consistency. In addition, trust toward the banner advertisement was measured using a 7-point 5-item semantic differential scale. Furthermore, importance of information transparency is measured using a 5-point 4-item Likert scale.
Participants performed in individual computers. They were provided with neutral information regarding online behavioral advertising, made to do filler tasks, ask to perform online shopping tasks, received banner ads on an unrelated website, and answered the questionnaires.
Results support Hypothesis number 1, which states that overt tracking has a negative influence on the attitude towards banner advertisement. The second hypothesis is also supported, i.e. overt tracking of consumers has a negative influence on the trust towards banner advertisements. However, hypothesis 3 and 4 are not supported.
In addition, the Dutch respondents show that their attitude towards banner advertisements do not differ whether overt or covert information is added. One reason for this is that people from the Netherlands are generally very open to new technologies.
Some Managerial Implications
From the results of this study, online advertising companies should question whether marks in their online ads that reveal how users are tracked are really effective in thwarting privacy concerns. It can even hurt the banner ad by lowering the trust and attitude towards it.
However, online advertising firms should also consider the ethics, as it is definitely the right of consumers to know how their personal information is being used.