How would you feel when you are browsing on the internet, and you suddenly see an advertisement with your name on it? Or, how would you feel when you see an advertisement with information about your previous transactions? You might think, on the one hand, that it is a good advertisement, because it is tailored to your needs. On the other hand, this might enhance feelings of intrusiveness as well. Well, this is the trade-off that is examined in the paper of van Doorn and Hoekstra (2013).
Something about personalization and customized advertising
Personalization is any action that tailors experience to a particular individual (Mobasher et al., 2000). As discussed in class, there are different things that can be personalized, such as products, website features, communication, and recommendations. Also becoming more and more common is the use of customized advertising on the Internet (van Doorn and Hoekstra, 2013). Customized advertising can have benefits for the consumer, such as greater relevance and fit, but it could also have negative effects. As argued in the paper, the use of more personal information may induce feelings of intrusiveness, and this might in turn lead to irritation. This trade-off is also in line with the personalization-privacy paradox, which is the tension between personalization and privacy (Sutanto et al., 2013). As discussed by Sutanto et al. (2013), on the one hand, personalization is valued by users. However, on the other hand, this also involves the utilization of information about these users, which raises privacy concerns.
What is exactly examined by the researchers?
The researchers examined several questions in this paper. I will discuss the most important ones. First of all, do different types of information for personalizing customized ads trigger feelings of intrusiveness, and in what extent? Second, do these feelings of intrusiveness influence purchase intentions? Third, do feelings of intrusiveness lead to less positive reactions to customized ads with high fit? These issues are important to address, because personalized advertising is used more and more, so it is therefore important to know the trade-offs that exist. In addition, the use of transaction information for personalization purposes is becoming more common in marketing practice, according to the authors.
Two scenario-based experiments were conducted to provide answers on these questions. The first study focused on financial services, whereas the second study focused on the telecommunications industry. Both the level of personalization and the level of ad fit were manipulated.
What did the researchers find?
The two conducted studies present some interesting findings. First of all, from both studies it can be concluded that people perceive more feelings of intrusiveness when the personalized message shows their name or when transaction information is used. In addition, purchase intentions are lower when the ad is perceived as more intrusive.
There were also some differences between study 1 and 2, regarding purchase intentions and fit. As can be seen clearly in the figure below, in the financial services context, the purchase intentions were higher when the ad had a high fit, compared to a low fit. This effect weakened when the level of personalization was higher. In the telecommunications services context, it did not matter that much whether the ad had a low or a high fit, because in this industry a high fit is perceived as more intrusive. Therefore, presenting a high fit does not have any advantages.
The most important practical implication is that managers need to think carefully about personalized advertisements. As the authors argue, customized online advertising is a double-edged sword (van Doorn and Hoekstra, 2013). In my opinion, this is a well-chosen designation, because customized online advertising clearly has two sides. On the one hand, it can increase purchase intentions, because of a greater fit and relevance. However, this goes along with feelings of intrusiveness, which negatively influence purchase intentions. The main strength of this paper is its contribution, because as mentioned, personalized advertising is increasingly used in marketing, and transaction information is increasingly used to personalize ads.
Sutanto, J., Palme, E., Tan, C., & Phang, C. W. (2013) ‘Addressing the Personalization-Privacy Paradox: An Empirical Assessment from a Field Experiment on Smartphone Users’, MIS Quarterly, 37(4), 1141–1164.
Mobasher, B., Cooley, R., & Srivastava, J. (2000) ‘Automatic personalization based on web usage mining’, Communication of the ACM, 43(8), 142–151.
Doorn, J., van, and Hoekstra, J.C. (2013) ‘Customization of online advertising: The role of intrusiveness’, Marketing Letters, 24, 339-351.