Don’t Take It Personally: The Effect of Explicit Targeting in Advertising Personalization

Abstract

Firms increasingly use consumers’ information to personalize their communication. Personalized advertisements, targeted based on users’ past behavior, offer users relevant product information that fits their preferences. In this study, we investigate the implications of explicit targeting, making the underlying targeting mechanism explicit to consumers, and ad message framing, in terms of utilitarian or hedonic product benefits. In a large-scale field experiment in which we run a campaign for a mobile application, we show that explicit targeting reduces advertising effectiveness pointing towards increased consumer privacy concerns. While utilitarian ad messages reinforce the negative effect of explicit targeting, the use of hedonic ad messages alleviates such a negative effect. Our study contributes to IS literature on advertising personalization and the personalization privacy paradox. We provide practical insights for firms that can be used in the design and implementation of personalized advertising campaigns