Online advertisements have become more important than ever and data have helped to make ads tailored to every single individual. Many research has been done about the differences of traditional ads and personal ads. Often, prior work examined the inferences consumers make about firms when confronted with advertisements. However, this paper researches what the inferences firms make about consumers have as consequence for consumer awareness. People recognizing tailored ads will adapt their behavior through social-labeling. Hence, behaviorally targeted ads can influence consumers’ self-perception, and finally their purchase behavior.
In the past, firms targeted people based on customer segments. Variables used to determine to which segment an individual belonged where for example demographics (e.g. gender and ethnicity) or psychographics (e.g. personality and lifestyle). Nowadays, every website collects data about its visitors to track their behavior and to determine specific user profiles. Hence, marketers make inferences about every visitor, based on past behavior. Using behavioral targeting, personal ads can be displayed to consumers to influence their behavior. By doing so, marketers place a certain social label to an individual. This paper examines whether consumers adapt their behavior when they perceive an ad as behaviorally targeted and recognize the implied social label.
How do we measure this?
The paper used different methods to test the proposed hypotheses. In total, four different studies were conducted, using mostly lab experiments. Also surveys and posttests were used to measure the relationships. Testing the hypotheses using multiple studies and different research methods is one of the major strengths of the paper. Every hypothesis is researched individually to examine the impacts in-depth and controlling for influences for every specific case. Another strength is that the effects are measured over time.
What do we find?
The studies result in some interesting findings. Behaviorally targeted ads can act as implied social labels. If consumers identify an ad as personalized, they will adjust their self-perception. According to the self-perception theory (Bem, 1972), people perceive themselves to have certain qualities and will act according these believes. External sources, such as personalized ads, can influence these self-perceptions. As a result, people will adapt their purchase behavior to meet these implied social labels the ads communicate. The studies also show that this not only contains for purchase behavior, but also for other label-consistent behavior (e.g. people labeled as environmental friendly are not only more willing to purchase eco-friendly products, but will also donate sooner to an environmental friendly charity). However, this behavior will only occur if the displayed ads are at least moderately aligned with a person’s past behavior.
What are our limitations?
Even though the study is well designed and executed, there are some weaknesses, limiting the applicability of the findings. The paper mostly tested the hypotheses using lab experiments. People were informed in different manners that ads were personalized or based on earlier completed tasks. This is of course not representative for real-life cases, reducing the applicability. Additionally, the effectiveness of personalized ads depends on the trustworthiness of a firms (Aguirre et al., 2015). The lower a consumer’s trust in a firm, the more suspicious he will be and the more privacy concerns will play a role. Hence, the findings may have limited impact for less trusted firms.
Still, our findings matter
There are some limitations to the applicability of the results. However, managers should still take into account how to target a consumer, since consumer responses to behaviorally targeted ads are sensitive to several variables under managerial control. Managers should disclose that an ad is personalized (e.g. using the AdChoices icon), to influence people’s self-perception. Additionally, the ads should be at least moderately match with a person’s personality.
Influencing someone’s self-perception will not only result in greater sales of the featured product, but also for future sales, and relating product categories. Conclusion, behaviorally targeted ads may be more beneficial for a company’s profits than previously believed.
Aguirre, E., Mahr, D., Grewal, D., de Ruyter, K., & Wetzels, M. (2015). Unraveling the personalization paradox: The effect of information collection and trust-building strategies on online advertisement effectiveness. Journal of Retailing, 91(1), 34-49.
Bem, Daryl J. (1972), “Self-Perception: An Alternative Interpretation of Cognitive Dissonance Phenomena,” Psychological Review, 74 (May), 183–200.
Summers, C. A., Smith, R. W., & Reczek, R. W. (2016). An Audience of One: Behaviorally Targeted Ads as Implied Social Labels. Journal of Consumer Research, 43, 156-178.