Targeted Advertising and Consumer Privacy Concerns. Experimental Studies in an Internet Context

The rush of marketing expenditures in the Internet has made effectiveness and

efficiency increasingly relevant. In particular, online firms offering free content

need to provide powerful marketing tools to advertisers to support their own

business models. Behavioral targeting enables websites to selectively display

advertisements to consumers according to their surfing profiles, making

advertisements more relevant, and thereby increasing advertising revenues from

websites. Consequently, it is often seen as a savior by online firms struggling to

finance their free content. However, targeting can raise privacy concerns, leading

to negative consumer reactions. Furthermore, there is increasing regulatory

pressure for websites to inform surfers about targeting practices and provide them

with opt-in or opt-out functions. Proactively addressing those challenges to

sustain revenues from targeted advertising is highly important¿in particular for

advertising-supported websites¿and requires systematic research. Such research,

though, has to account for the fact that the profiling of consumers to increase

advertising revenues raises ethical questions, especially because targeting often

occurs without consumers¿ knowledge.

This doctoral dissertation studies consumer privacy concerns with regard to online

targeting practices. Specifically, it investigates how privacy concerns affect

consumers¿ perceptions of targeted advertisements. Furthermore, building on

social exchange theory, fairness norms, and previous research on consumer

privacy concerns in related areas, such as direct mail and e-commerce, I develop

tangible, managerial operational mechanisms to increase consumers¿ acceptance

of targeting and improve consumers¿ perceptions of targeted advertisements. In

order to ensure that these mechanisms are in line with principles of business

ethics, I derive normative requirements for these mechanisms from integrative

social contracts theory.