Why Am I Seeing This Ad? The Effect of Ad Transparency on Ad Effectiveness

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  • Tami Kim
    Darden School of Business, FOB 191B, 100 Darden Blvd. Charlottesville
  • Kate Barasz
    Marketing Department at IESE Business School, Av. de Pearson 21 Barcelona, Spain
  • Leslie K John
    Leslie K. John is an associate professor of Business Administration in the Negotiations, Organizations, and Markets Unit at Harvard Business School, Bloomberg Center 462, Soldiers Field Road, Boston
  • Eileen Fischer
    editor
  • Andrea Morales
    editor

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<jats:title>Abstract</jats:title> <jats:p>Given the increasingly specific ways marketers can target ads, consumers and regulators are demanding ad transparency: disclosure of how consumers’ personal information was used to generate ads. We investigate how and why ad transparency impacts ad effectiveness. Drawing on literature about offline norms of information sharing, we posit that ad transparency backfires when it exposes marketing practices that violate norms about “information flows”—consumers’ beliefs about how their information should move between parties. Study 1 inductively shows that consumers deem information flows acceptable (or not) based on whether their personal information was: 1) obtained within versus outside of the website on which the ad appears, and 2) stated by the consumer versus inferred by the firm (the latter of each pair being less acceptable). Studies 2 and 3 show that revealing unacceptable information flows reduces ad effectiveness, which is driven by increasing consumers’ relative concern for their privacy over desire for the personalization that such targeting affords. Study 4 shows the moderating role of platform trust: when consumers trust a platform, revealing acceptable information flows increases ad effectiveness. Studies 5a and 5b, conducted in the field with a loyalty program website (i.e., a trusted platform), demonstrate this benefit of transparency.</jats:p>

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