According to a Harvard Business School study, consumers are uneasy with many of the core techniques Facebook, Google and other platforms use in targeting digital ads. These include ads based on information gleaned from third-party websites or inferences about an individual.
The study, “Why Am I Seeing This Ad? The Effect of Ad Transparency on Ad Effectiveness” follows calls for greater transparency in the wake of the Facebook–Cambridge Analytica scandal and surge of data breaches.
The study concluded that actions triggering privacy concerns online are similar to those causing concerns off-line.
For instance, when shown ads “based on the products you clicked on while browsing a third-party website,” respondents were 24 percent less likely to purchase the item versus when they were told the ad was based on information gained from the current website. Tracking users across websites was found to be “akin to talking behind someone’s back.”
Respondents were also 17 percent less interested in purchasing an item seen for ads “based on information that we inferred about you” versus information the respondent provided. Even if accurate, “an overt inference about someone can be taboo,” the study concluded. Data on sexual orientation, health and finances is especially sensitive.
On the positive side, transparency can help with “acceptable information flows” including “first-party” information from websites being browsed and “declared” information openly provided by individuals.
Consumers were found to engage more with ads on platforms they trust. Given more control over information “consciously shared” increased engagement. Providing reasons for the use of browsing data, such as to increasing relevance, can also boost click-throughs.
But actions seen violating the acceptable use of information “will activate privacy concerns that ultimately eclipse the benefits of personalization; even the most personalized, perfectly targeted advertisement will flop if the consumer is more focused on the (un)acceptability of how the targeting was done in the first place,” the study found
Researcher cautioned that much is unknown about how consumers respond to online data collection and ad targeting, and people “don’t always behave logically when it comes to privacy," sometimes perhaps sharing intimate personal details with strangers while keeping them from friends.
- Ads That Don’t Overstep – Harvard Business Review
- Why Am I Seeing This Ad? The Effect of Ad Transparency on Ad Effectiveness – Journal of Consumer Research
- Online Ad Targeting Does Work — As Long As It's Not Creepy – Wired
- You Can’t Handle The Truth About Facebook Ads, New Harvard Study Shows – The Intercept
- Why being more transparent about data may make your ads more effective – Digital Context Next