Personalized advertising: unloved or simply unknown?

In the last years, online advertising has gone through a major transformation. Instead of seeing random banners on websites and getting annoying pop-up ads, Internet users are now mostly exposed to ads that have been pre-selected especially for them. With the rise of big data, companies have gained access to a vast amount of information on their current and potential customers, with which they hope to reach the right people and fulfill their needs better. However, while seen as the Holy Grail by the advertising industry, so-called personalized advertising has been described in research as paradoxical. While it indeed presents benefits for Internet users, for example, more relevant ads, it is also seen as a potential threat to privacy and many users do not like it.

On top of that, while law requires Internet users to make choices regarding sharing data for personalized ads, not many of them seem to know what such ads actually are. In the first study of my PhD project, we aimed to find out what Dutch consumers think about personalized advertising and if they actually know what it is all about.

Knowledge about personalized advertising

To find out what Dutch consumers know about personalization, we gave them a number of statements about practical, technical and legal aspects of it. Respondents had to assess that statement as right or wrong. For example: “Is true that government policy restricts how long websites can keep the information they gather?”

Surprisingly, it turned out that respondents knew quite well how their online behavior can be used for personalizing ads. However, only few respondents knew that advertisers have access to more than just behavioral data and that e.g., information on your social media profile can be used to personalize ads. Similarly, on average less than half of respondents knew about regulations concerning personalization. This is worrying as consumers are expected to make informed choices about access to their data and which personalized ads they see.

Unloved or simply unknown?

The low levels of knowledge are definitely a challenge for lawmakers. Especially in light of the recently introduced GDPR, how do you make sure that consumers can make informed choices while not having the necessary knowledge? At the same time, this lack of knowledge is also important for advertisers. So we also asked respondents: Is personalization unloved or is it simply unknown?

It turns out that there is no direct relation between how much someone knows and how much he or she likes personalization. Feelings matter more than knowledge. Consumers who feel more concerned about their privacy and who feel that they are helpless in confrontation with big companies that apply personalization, are more negative and do not want to be targeted.

Thus, the question arises: Which consumers are more concerned? Those who know about their rights and technical details of personalization are also less concerned about their privacy and less helpless. In any case, making sure consumers are knowledgeable about how their data can be used is in the interest of both the lawmakers as well as commercial companies.

Joanna Strycharz is a PhD researcher in Persuasive Communication at the University of Amsterdam School of Communication Research (UvA ASCoR). Her research project is embedded in the Personalized Communication Research Group and concerns personalized marketing.

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