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Firms increasingly use consumer information to target and personalize communication with consumers. This paper focuses on explicit targeting, a practice where firms saliently (yet subtly) reveal the information used to target consumers in their advertisement text. How to craft ad messages to convey product benefits without triggering privacy concerns is a nontrivial task. Results from a field experiment reveal that consumers respond negatively to explicit targeting, yet such a negative effect can be partially alleviated by using hedonic instead of utilitarian information framing. In a controlled online experiment, we show that explicit targeting increases consumers’ privacy concerns relative to the perceived benefits of personalization, leading to less positive consumer responses. Interestingly, an extension of the online experiment suggests that providing consumers with a clear description of why they are targeted seems to offset the negative effects of explicit targeting. This study offers important academic implications for the personalization literature and valuable practical insights for firms and policymakers.

With the prevalence of smart devices and wireless Internet, privacy has become a pivotal matter in governmental, academic, and technological fields. Our study aims to understand Taiwanese university students' privacy concerns and protective behaviours in relation to online targeting ads and their habitual smartphone usage. Surveying 810 valid subjects, our results first propose that ad relevance has direct bearing on attention to ads. Second, ad relevance inversely correlates with privacy concerns (i.e. descending personal control and surging corporate power) and protective behaviours (self-filtering and ad evasion). Third and finally, neither privacy concerns nor protective behaviours have a negative bearing on habitual smartphone usage. Opposite to previous research, our study concludes that Taiwanese college students exhibit zero privacy paradox, owing to no signs of privacy concern incited by mobile targeting ads, no evidence of significant protective behaviours, and no decreasing habitual smartphone usage out of privacy concern and protection. Our findings indicate Taiwanese university students' shaky awareness of potential risks and crises from exposure to vulnerable online privacy management. To deal with this, we suggest educating youths' understandings of digital jeopardy by experts is urgently needed more so than just technical tutorials of privacy settings.

With the prevalence of smart devices and wireless Internet, privacy has become a pivotal matter in governmental, academic, and technological fields. Our study aims to understand Taiwanese university students’ privacy concerns and protective behaviours in relation to online targeting ads and their habitual smartphone usage. Surveying 810 valid subjects, our results first propose that ad relevance has direct bearing on attention to ads. Second, ad relevance inversely correlates with privacy concerns (i.e. descending personal control and surging corporate power) and protective behaviours (self-filtering and ad evasion). Third and finally, neither privacy concerns nor protective behaviours have a negative bearing on habitual smartphone usage. Opposite to previous research, our study concludes that Taiwanese college students exhibit zero privacy paradox, owing to no signs of privacy concern incited by mobile targeting ads, no evidence of significant protective behaviours, and no decreasing habitual smartphone usage out of privacy concern and protection. Our findings indicate Taiwanese university students’ shaky awareness of potential risks and crises from exposure to vulnerable online privacy management. To deal with this, we suggest educating youths’ understandings of digital jeopardy by experts is urgently needed more so than just technical tutorials of privacy settings. Con la prevalencia de dispositivos inteligentes e Internet inalámbrico, la privacidad se ha convertido en un tema esencial en materias gubernamentales, académicas y tecnológicas. Nuestro estudio se dedica específicamente a entender las preocupaciones de los estudiantes universitarios taiwaneses en privacidad y comportamientos protectores en relación con la publicidad online y el uso habitual de teléfonos inteligentes. Con 810 muestras válidas encuestadas, nuestros resultados revelan que: 1) La relevancia de la publicidad tiene un efecto directo en su atención; 2) Está asociada inversamente a las preocupaciones de privacidad (por ejemplo, control personal descendiente y poder corporativo ascendiente) y comportamientos protectores (evasión de anuncios y autocensura); 3) La preocupación por la privacidad ni los comportamientos protectores tuvieron efecto negativo en el uso habitual de los smartphones. Nuestro estudio concluye que no hay paradojas de la privacidad halladas en estos jóvenes taiwaneses debido a cambios en su preocupación por la privacidad, generada por la publicidad personalizada en su móvil. Ello evidencia un cambio significativo en los comportamientos protectores. En suma, estos universitarios taiwaneses tienen una débil apreciación de los riesgos potenciales y crisis a los que una vulnerable gestión de la privacidad online les podría exponer. Para abordarlo, una educación que cultive la comprensión de los peligros digitales para los jóvenes es muy recomendable y requiere urgentemente tutoriales técnicos sobre privacidad.

Several textbooks, journal articles, and advertising practitioners indicate that the advertising for many products should be directed toward the heavy users of the product category. Other works suggest that advertising should be directed at current users of a brand to retain them or to users of competitive brands in an effort to attract them. The purpose of this article is to compare these directions for how advertising should be placed with data showing how advertising is being placed. The comparison is made using supermarket scanner panel data and household advertising exposure data. Examples are also provided to indicate the extent to which advertising could be targeted to heavy users of the product category and users of a brand, given the actual viewing and consumption patterns. Several implications for the placement of advertising are discussed.

We use data from a large-scale field experiment to explore what influences the effectiveness of online advertising. We find that matching an ad to website content and increasing an ad's obtrusiveness independently increase purchase intent. However, in combination , these two strategies are ineffective. Ads that match both website content and are obtrusive do worse at increasing purchase intent than ads that do only one or the other. This failure appears to be related to privacy concerns: the negative effect of combining targeting with obtrusiveness is strongest for people who refuse to give their income and for categories where privacy matters most. Our results suggest a possible explanation for the growing bifurcation in Internet advertising between highly targeted plain text ads and more visually striking but less targeted ads.

As consumers spend more time on their mobile devices, a focal retailer's natural approach is to target potential customers in close proximity to its own location. Yet focal (own) location targeting may cannibalize profits on inframarginal sales. This study demonstrates the effectiveness of competitive locational targeting, the practice of promoting to consumers near a competitor's location. The analysis is based on a randomized field experiment in which mobile promotions were sent to customers at three similar shopping areas (competitive, focal, and benchmark locations). The results show that competitive locational targeting can take advantage of heightened demand that a focal retailer would not otherwise capture. Competitive locational targeting produced increasing returns to promotional discount depth, whereas targeting the focal location produced decreasing returns to deep discounts, indicating saturation effects and profit cannibalization. These findings are important for marketers, who can use competitive locational targeting to generate incremental sales without cannibalizing profits. Although the experiment focuses on the effects of unilateral promotions, it represents an initial step in understanding the competitive implications of mobile marketing technologies.

Advertisers use online customer data to target their marketing appeals. This has heightened consumers' privacy concerns, leading governments to pass laws designed to protect consumer privacy by restricting the use of data and by restricting online tracking techniques used by websites. We use the responses of 3.3 million survey takers who had been randomly exposed to 9,596 online display (banner) advertising campaigns to explore how privacy regulation in the European Union (EU) has influenced advertising effectiveness. This privacy regulation restricted advertisers' ability to collect data on Web users in order to target ad campaigns. We find that, on average, display advertising became far less effective at changing stated purchase intent after the EU laws were enacted, relative to display advertising in other countries. The loss in effectiveness was more pronounced for websites that had general content (such as news sites), where non-data-driven targeting is particularly hard to do. The loss of effectiveness was also more pronounced for ads with a smaller presence on the webpage and for ads that did not have additional interactive, video, or audio features. This paper was accepted by Pradeep Chintagunta, marketing.

This research examines the effects of hyper-contextual targeting with physical crowdedness on consumer responses to mobile ads. It relies on rich field data from one of the world’s largest telecom providers who can gauge physical crowdedness in real-time in terms of the number of active mobile users in subway trains. The telecom provider randomly sent targeted mobile ads to individual users, measured purchase rates, and surveyed purchasers and nonpurchasers. Based on a sample of 14,972 mobile phone users, the results suggest that, counterintuitively, commuters in crowded subway trains are about twice as likely to respond to a mobile offer by making a purchase vis-à-vis those in noncrowded trains. On average, the purchase rates measured 2.1% with fewer than two people per square meter, and increased to 4.3% with five people per square meter, after controlling for peak and off-peak times, weekdays and weekends, mobile use behaviors, and randomly sending mobile ads to users. The effects are robust to exploiting sudden variations in crowdedness induced by unanticipated train delays underground and street closures aboveground. Follow-up surveys provide insights into the causal mechanism driving this result. A plausible explanation is mobile immersion: As increased crowding invades one’s physical space, people adaptively turn inwards and become more susceptible to mobile ads. Because crowding is often associated with negative emotions such as anxiety and risk-avoidance, the findings reveal an intriguing, positive aspect of crowding: Mobile ads can be a welcome relief in a crowded subway environment. The findings have economic significance because people living in cities commute 48 minutes each way on average, and global mobile ad spending is projected to exceed $100 billion. Marketers may consider the crowdedness of a consumer’s environment as a new way to boost the effectiveness of hyper-contextual mobile advertising. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2015.0905 .

Researchers and practitioners devote substantial effort to targeting banner advertisements to consumers, but they focus less effort on how to communicate with consumers once targeted. Morphing enables a website to learn, automatically and near optimally, which banner advertisements to serve to consumers to maximize click-through rates, brand consideration, and purchase likelihood. Banners are matched to consumers based on posterior probabilities of latent segment membership, which are identified from consumers' clickstreams. This paper describes the first large-sample random-assignment field test of banner morphing-more than 100,000 consumers viewed more than 450,000 banners on CNET.com. On relevant Web pages, CNET's click-through rates almost doubled relative to control banners. We supplement the CNET field test with an experiment on an automotive information-and-recommendation website. The automotive experiment replaces automated learning with a longitudinal design that implements morph-to-segment matching. Banners matched to cognitive styles, as well as the stage of the consumer's buying process and body-type preference, significantly increase click-through rates, brand consideration, and purchase likelihood relative to a control. The CNET field test and automotive experiment demonstrate that matching banners to cognitive-style segments is feasible and provides significant benefits above and beyond traditional targeting. Improved banner effectiveness has strategic implications for allocations of budgets among media.

A theory of two-sided markets where media platforms can price discriminate among both advertisers and consumers. An increasingly common practice among media platforms is to provide premium content versions with fewer or even no ads. This practice leads to an intriguing question: how should ad-financed media price discriminate through versioning? I develop a two-sided media model and illustrate that price discrimination on one side can strengthen the incentive to discriminate on the other. Under this self-reinforcing mechanism, the ad allocations across different consumer types depend crucially on how much nuisance of an ad “costs” consumers relative to the value it brings to them. Interestingly, higher-type consumers, who value content and advertising quality highly, may see more ads than lower-type consumers if the nuisance cost is relatively low. Furthermore, the standard downward quality distortion generally fails to materialize in a two-sided market and may even be reversed: higher-type consumers may be exposed to too few ads that result in a lower total quality than the socially efficient level, whereas lower-type consumers may receive a socially excessive quality. The circumstances under which the self-reinforcing mechanism may be weakened and the implications for media platform design are explored.