Don’t Take It Personally: An Empirical Investigation of Consumer Responses to Explicit Targeting

Abstract

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.