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.