17.3 Privacy Paradox
disconnect between consumers’ declared privacy desires and their actual privacy policies (even though people say that they are concerned about privacy, they still hare their sensitive personal information freely). (Kelly D. Martin and Murphy 2016)
Privacy concerns can stem from firm leveraging collected customer data to provide personalized communication.
Heighten customer risk perception and decrease trust (Van Slyke et al. 2006)
increase skepticism toward and avoidance of ad (Baek and Morimoto 2012)
negative consumer actions (Son and Kim 2008)
Privacy can be consider a commodity where consumers can make risk-benefit tradeoff (Sultan, Rohm, and Gao 2009)
(Norberg, Horne, and Horne 2007) the privacy paradox
(G. A. Johnson, Shriver, and Du 2020)
- Even though consumers express strong privacy concerns in survey, only 0.23% of American ad impressions arise from users who opted out of online behavioral advertising.
- Opt-out users ads get 52% less revenue than that of users with behavioral targeting.
- Without target ads, per American opt-out consumers, publishers and the exchange lose about $8.58
- Opt-out users tend to be more tech savvy.
- Opt-out rates are higher in older and wealthier American cities.
17.3.1 Tradeoff
This study examines the usage of online personalization after the tradeoff between personalization value and privacy concerns. More specifically, they found that value for personalization will increase the likelihood of using personalized services, but concern for privacy will decrease the likelihood of using personalized services.
- Trust in vendor positively moderates the use of personalization. Hence, online vendors can leverage trust building activities to acquire and use customer info.
This study provides support for orthogonality of personalization and privacy, vendors can independently develop personalized products and strategies to alleviate consumers’ privacy concerns.
Personalization is defined as “the ability to proactively tailor products and purchase experience to the tastes of individual consumers based upon their personal and preference information.” (p. 181), which depends on
Vendors’ ability to acquire and process consumer info
Consumers’ willingness to share info and use personalized services.
Personalization can increase switching cost (filling out more information if one switches to another competitor) and loyalty (Alba et al. 1997). In the offline it is used to extract implicit price premiums, but in the online context, vendors are expected to do so (p. 183).
- Online personalization’s main benefits are product or service fit and proactive delivery.
Privacy concerns:
“consumer is willing to share her preference information in exchange for apparent benefits, such as convenience, from using personalized products and services” (p. 186). This is a type of social exchange where consumers expect that their expected (personalization) gain is greater than their (privacy) loss
Privacy is defined as “an individual’s ability to control the terms by which their personal information is acquired and used.” (p. 186)
Although individuals with somewhat deep connection views were more likely to reveal “privacy-related” material, they were less likely to reveal humiliating information.
Although loyal customers found the exchange of privacy-related personal information for customized benefit offerings (relative to noncustomized offerings) attractive, the opposite was true for embarrassing information; these participants appeared to find the exchange of customized offerings for this type of information unattractive.
Consumers respond favorably when businesses employ product-based personalisation (where the usage of information is not explicitly mentioned).
Consumers, on the other side, react unfavorably when businesses are explicit about how they use personally identifiable information (i.e., a personalized greeting).
consumer familiarity with businesses moderates consumers’ unfavorable reactions to personalized greetings.
17.3.2 No tradeoff
(Tucker 2013) personalized ad and privacy controls in social networks
found that personalized ad was ineffective before Facebook’s introduction of privacy controls, but was twice as effective at attracting users after the shift in Facebook’s policy (because they have more control over their personal info)
when sites can assure consumers that they are in control of their privacy, personalization can generate higher click-through rates.
DiD from Facebook introduction of more privacy controls for users.
(Walrave et al. 2016) personalization and privacy in social network ad
Contributions:
- Even though this study hypothesize that a moderate level of personalization is optimal in ad effectiveness, they found the highest personalisation condition yielded the most positive response, and privacy concerns did not mitigate its impacts (authors justify that maybe persoanlization is not high enough to trigger the persuasion knowledge). In short, there is no tradeoff between personalization and privacy on brand engagement.
Definitions:
Personalization in the marketing communication context is defined as “creating persuasive messages that refer to aspects of a person’s self” (Maslowska, Putte, and Smit 2011b)
Evidence of positive impact of personalization on performance
on brand responses (Bauer and Lasinger 2014)
on campaign responses (N. Y. Kim and Sundar 2012)
traditional banner ad context, more positive persuasive effects (Tam and Ho 2005)
email newsletters, more positive persuasive effects (Maslowska, Putte, and Smit 2011a)
personalized mobile coupons are evaluated positively and more likely to be redeemed (D. J. Xu, Liao, and Li 2008)
Positive relationship with brand engagement (S.-C. Chu 2011)
U-shaped impact of personalization on ad performance:
Positive: Personalization can evoke central information processing due to its high self-relevant (Cho and as- 2004). According to information processing theory, consumers are driven to elaborate on relevant messages, which increases attention, elaboration, and strong attitudes (Petty and Cacioppo 1986). Hence, more personalization, more positive ad response.
Negative: personalization increases skepticism toward ad due to the persuasion knowledge model (Friestad and Wright 1994). Knowing that a brand tries to persuade, one triggers persuasion knowledge which diminish persuasion effects. For example, people resist personalized emails when personal info is highly distintive (White et al. 2008)
- Consumers privacy concerns can enhance this negative relationship (i.e., reactance).
Privacy is defined as a “selective control of access to the self or to one’s group” (Altman 1976)
- People want to strive a balance between openness and closeness (p. 604). When people feel their privacy concerns is threatened by personalization, they have coping strategies to protect their privacy from marketers (Youn 2009; Grant 2005)