In Brief
The Change
The widespread sharing and collection of personal data online has given marketers unprecedented insight into individual consumers, enabling them to serve up solutions finely targeted to each person’s needs. But there is also evidence that this practice can lead to a consumer backlash.
The Digital Dilemma
Marketers need to understand when personalized ads will be met with acceptance or annoyance. Social scientists already know a lot about what triggers privacy concerns, and these norms can inform marketers’ actions online.
The Insight
Consumers dislike two techniques: using information obtained on a third-party website rather than the site on which the ad appears; and using inferred information about the consumer (for instance, about a pregnancy). Understanding their objections can help companies create ads that honor consumers’ privacy expectations.
The internet has dramatically expanded the modern marketer’s tool kit, in large part because of one simple but transformative development: digital data. With users regularly sharing personal data online and web cookies tracking every click, marketers have been able to gain unprecedented insight into consumers and serve up solutions tailored to their individual needs. The results have been impressive. Research has shown that digital targeting meaningfully improves the response to advertisements and that ad performance declines when marketers’ access to consumer data is reduced. But there is also evidence that using online “surveillance” to sell products can lead to a consumer backlash. The research supporting ad personalization has tended to study consumers who were largely unaware that their data dictated which ads they saw. Today such naïveté is increasingly rare. Public outcry over company data breaches and the use of targeting to spread fake news and inflame political partisanship have, understandably, put consumers on alert. And personal experiences with highly specific ads (such as one for pet food that begins, “As a dog owner, you might like…”) or ads that follow users across websites have made it clear that marketers often know exactly who is on the receiving end of their digital messages. Now regulators in some countries are starting to mandate that firms disclose how they gather and use consumers’ personal information.
