How and when does online behavioral advertising work?

Who has not made this experience with online behavioral advertising yet: You just bought a new pair of Nike shoes online and all of a sudden you get to see ads for related Nike sport articles on almost every website you visit afterwards. Online behavioral advertising has become increasingly popular during the last years and it more and more replaces traditional forms of targeting, such as demographic targeting. But how effective is online behavioral advertising actually and what effect does it have on consumers’ self-perception and buying behavior?

Online behavioral targeting, self-perception, and buying behavior. The three American scholars Christopher Summers, Robert Smith, and Rebecca Walker developed an interesting theory regarding the effectiveness of online behavioral advertising. They believe that targeted advertising can influence consumers’ self-perception, which, in turn, might affect their buying behavior. Let’s make this a bit more concrete by means of an example: Imagine you are buying energy-saving light bulbs online. With the help of the behavioral targeting algorithm, marketers could conclude that you are a sustainable person, which is why they mainly offer you ads for sustainable products afterwards. According to the scientists, this form of behavioral targeting may influence your self-perception: As soon as you become aware of the fact that the marketer thinks (based on you browsing behavior) that you are a sustainable person, you also start acting upon this label. In other words, your awareness of the fact that the marketer has identified you as a sustainable person may encourage you to buy more sustainable products online. However, whether you, indeed, change your behavior in the direction of the label depends on how accurately it reflects your browsing behavior. If the label is closely related to a consumer’s prior browsing behavior, (s)he will adapt his/her self-perception and buying behavior according to the label. The sustainable-energy-saving-light-bulb-buyer will, thus, buy more sustainable products in the future. However, if the targeting is inaccurate, consumers will not adapt their self-perception and buying behavior.

Behavioral targeting leads to more buying behavior To test these assumptions, Summers and colleagues conducted four studies among more than 800 respondents. As expected, the results showed that behavioral advertising might influence how consumers think about themselves. Moreover, the researchers found that consumers’ self-perception might, indeed, influence their buying behavior. However, this is only the case if the label really fits to consumers’ browsing behavior.

In practice The study of Summers et al. showed that behavioral targeting could be a promising marketing tool. If the consumer thinks that the label (s)he got from the marketer (e.g., “you are a sustainable person”) indeed reflects his/her browsing behavior, (s)he will consider this label as valid information about him/herself, which is why (s)he will adapt his/her self-perception and buying behavior in the direction of the label (“I’m a sustainable person, I’m buying sustainable products”). Consequently, it is recommendable to invest in technology, such as good algorithms, to guarantee that the consumer is addressed by ads in an accurate way. Moreover, it is important to clearly disclose in the ad that is its based on behavioral targeting, for instance by using the AdChoices logo. There are two reasons for that: First, due to privacy reasons, consumers need to know how and for which purposes their data are being used. Second, consumers need to be aware of the fact that they have been behaviorally targeted so that they can recognize the label they got from the marketer, which is necessary for behavioral change.

The complete article of Summers, Smith en Reczek is entitled ‘An Audience of One: Behaviorally Targeted Ads as Implied Social Labels’ and published in Journal of Consumer Research (2016), volume 43, pp. 156-178. You can download the article here.

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