Study: Consumers See More Risk Than Reward, Fear Privacy Breaches In Online Ads

CHAMPAIGN, Ill. — Does it feel like your computer is following you? Online advertisers are fine-tuning their algorithms to match our Internet habits as closely as possible. While advertisers have suggested that consumers believe the benefits of online ads tailored to their search are equal to the risks, a recent study finds the contrary: most people are far more skeptical.

Researchers from the University of Illinois sought to find out how people feel about online behavioral advertising (OBA), the mechanism behind those pesky images that match up with our online searches and travels.

Person searching on Google
A recent study finds that consumers see far greater risk than reward in those pesky online ads tailored to our search habits and web travels.

“The perception of risk is much stronger than the perception of benefit,” concludes Chang-Dae Ham, a professor of advertising, in a university news release. “That drives them to perceive more privacy concern, and finally to avoid the advertising.”

Ham and his research team surveyed 442 college students on how they dealt with and perceived OBA in their daily lives, investigating the confluence of “five or six” psychological factors behind how people respond to online ads, and why they avoid them. The researchers examined the college students’ interactions with the ads related to risk, benefit, and privacy, as well as sense of control, personalization, and reactions against perceived restrictions on freedom.

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Ham also studied how consumer reactions changed when individuals were made aware of how OBA works. He found that those with greater background knowledge of OBA were more likely to see greater benefits, but also greater risks — similar to the reactions of those with lesser knowledge of OBA. In both cases, consumers were more likely to avoid the ads over privacy concerns.

Ham, who has studied product placement, advergames, and user-generated YouTube videos in the past, calls OBA “a very special type” of hidden persuasion. He thinks that the advertising industry would be wise to give consumers more control over their advertising experience, and build more transparency into their systems.

“They need to educate consumers, they need to clearly disclose how they track consumers’ behavior and how they deliver more-relevant ad messages to them,” he said.

The study appeared in the International Journal of Advertising.

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