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

The rush of marketing expenditures in the Internet has made effectiveness andefficiency increasingly relevant. In particular, online firms offering free contentneed to provide powerful marketing tools to advertisers to support their ownbusiness models. Behavioral targeting enables websites to selectively displayadvertisements to consumers according to their surfing profiles, makingadvertisements more relevant, and thereby increasing advertising revenues fromwebsites. Consequently, it is often seen as a savior by online firms struggling tofinance their free content. However, targeting can raise privacy concerns, leadingto negative consumer reactions. Furthermore, there is increasing regulatorypressure for websites to inform surfers about targeting practices and provide themwith opt-in or opt-out functions. Proactively addressing those challenges tosustain revenues from targeted advertising is highly importantin particular foradvertising-supported websitesand requires systematic research. Such research,though, has to account for the fact that the profiling of consumers to increaseadvertising revenues raises ethical questions, especially because targeting oftenoccurs without consumers knowledge.This doctoral dissertation studies consumer privacy concerns with regard to onlinetargeting practices. Specifically, it investigates how privacy concerns affectconsumers perceptions of targeted advertisements. Furthermore, building onsocial exchange theory, fairness norms, and previous research on consumerprivacy concerns in related areas, such as direct mail and e-commerce, I developtangible, managerial operational mechanisms to increase consumers acceptanceof targeting and improve consumers perceptions of targeted advertisements. Inorder to ensure that these mechanisms are in line with principles of businessethics, I derive normative requirements for these mechanisms from integrativesocial contracts theory.