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Invasion of Privacy? What Consumers Think of Personalized Online Ads

Neil Cumins
Neil Cumins
Business News Daily Contributing Writer
Updated Jan 23, 2023

Studies suggest consumers have mixed feelings about personalized online ads, which can benefit businesses if executed transparently.

  • Personalized advertising is pervasive and growing, but consumers have mixed sentiments about the digital ad market.
  • Some consumers are wary of how advertisers obtain their personal information and what they’re doing with it, but others like being catered to.
  • Companies that use targeted advertising should be transparent about their methods.
  • This article is for business owners and marketers wanting to know how consumers feel about personalized online ads.

Just as online advertising has evolved over the last decade, so too have consumer feelings about personalized ads. When scrolling Facebook, some users are delighted to see an advertisement in their feed that’s related to one of their recent Google searches, while others are concerned about the proverbial “Big Brother” watching over them. But what’s the consensus?

As it turns out, there isn’t one. Depending on which study you look at, the majority of people either prefer or don’t prefer personalized ads, which can make it difficult for businesses to know how to proceed. Regardless, though, companies should practice transparency if they’re going to use targeted advertising.

What consumers think of personalized ads

Back in 2017, a study designed to explore how consumers cope with online behavioral advertising, published in the International Journal of Advertising and shared by Taylor & Francis Online, found that many consumers are worried about the risks to their privacy that come with personalized ads. “The perception of risk is much stronger than the perception of benefit,” the author’s study said in a statement.

Subsequent studies, however, suggest a considerably more mixed reaction.

Consumer attitudes on personalized ads

Advertising and analytics company Innovid‘s July 2020 study, “Consumer attitudes on personalized ads,” found that 43% of survey respondents – a sample of 1,000 U.S. adults – believe it’s important that digital ads are personalized. They want to see online advertisements catering to their interests, location and behaviors, and they want to see these ads on social media, in videos and on websites. The study also found that consumers are particularly interested in personalized retail and entertainment ads.

Among participants, 29% said they would be more likely to make a purchase if advertising was personalized, and 31% said personalized ads drive brand loyalty. The company deems this audience “now consumers,” perhaps because respondents expressed an interest in seeing advertising that reflects “the context of [their] moment” – what websites they’re visiting or TV shows they’re streaming at any given time. [Find out why simplicity is often the key to effective online advertising.]

Consumer attitudes on personalized online experiences

The Innovid results stand in contrast to a study commissioned by social justice organization Global Witness and YouGov less than a year later on German and French social media users’ views about personalized online experiences. In February 2021, 57% of those polled said, “I don’t want my personal data being used to target me with any ads, either commercial or political.” Only 11% were OK with it.

The respondents were largely against personalized ads based on income, health information, voting records, sexual orientation, religious views, personal events (like pregnancy), race or ethnicity, location, gender and age. Additionally, 44% said platforms should disclose which companies are paying for personalized ads and how the targeting works.

Consumer psychology poll

Not long after Global Witness released the results of its examination, marketing platform Iterable shared the findings of its 2021 Consumer Psychology Survey, which focused on shoppers in the U.S. and U.K. In this case, the insights were more in line with Innovid’s discoveries – 58% of those polled said they feel “positive” about being targeted with “hyper-personalized” online ads. 

That led the company to conclude that a personalized experience is what consumers want, and that they are fine with their information being used for targeted marketing. This is far different from what Global Witness or even the author of the 2017 study would say. Of course, looking at these studies together isn’t technically an apples-to-apples comparison. Participant demographics weren’t consistent across the surveys, nor were the questions. But even when considering the variables, consumer sentiment on personalized ads remains an open question without a consensus answer.

Did you know?Did you know?: Target was the recipient of well-deserved outrage when it sent maternity-related coupons to shoppers it inferred were pregnant, only to find itself in the awkward position of tipping off a father that his teenage daughter was expecting.

How online ads have evolved

Online advertising has long been a game of cat-and-mouse between brands and their ad agencies on the one hand and everyone else on the other. Early Flash-powered banner ads often ran into browser compatibility problems before HTML5 standardized webpage content displays. Hover ads (also known as interstitials) were so reviled by consumers that search engines began grading them as that page’s primary content to discourage their use. In the meantime, the print advertising industry collapsed in on itself, forcing advertisers to seek new digital platforms for their content.

Simultaneously, cookies were being refined to provide granular tracking of individual consumers. Search for something on Google or Bing today, and for months afterward, you’re likely to see sidebar ads relating to that search on unrelated webpages. This is the phenomenon of personalized online ads. Similar technology underpins other strands of digital marketing as well. For example, it’s expected that the future of email marketing lies in data and personalization.

How businesses should approach online ads 

When do personalized ads cross personal boundaries? That’s the question at the heart of another study featured in a 2021 edition of Computers in Human Behavior Reports shared online by ScienceDirect. This investigation determined “people hold quite negative attitudes towards personalized advertising.”

However, the authors acknowledged a “personalization paradox,” in which personalized ads can be both effective and ineffective because consumers accept them only up to a point. It was said a “tipping point” occurs when companies serve consumers higher prices based on personal data they’ve collected about them, further fueling those “negative perceptions” about the businesses and how their personal information is being used.

Douglas Karr, founder of marketing technology publication Martech, cautions against careless personalization. “There’s nothing more insulting than getting an email with an intro like ‘Dear %%FIRST_NAME%%.’ Not only are you not listening to your customer as they grant you the privilege of access to their personal information, you didn’t even take the time to validate the data before pushing them a message. It’s basically letting them know that you don’t care about them.” [Avoid mistakes and save time by investing in the best email marketing software for your business and industry.]

Situations when personalized online ads are acceptable and when they aren’t – and to whom – may seem like a giant gray area. That’s why businesses may be better off focusing on personalization that isn’t specific to an individual, but to their audience en masse. A conjoint analysis can help companies determine consumer preferences and use the results to guide marketing decisions. Customer segmentation is another option, as you’re usually breaking customers into major groups (like geographic ones) without getting insensitively personal.

When collecting data on customers, businesses should be forthcoming about not only doing so but also about how that information will be used and protected. That transparency demonstrates the ethics you value as a company and signifies to the consumer that you respect them and their privacy. If a data breach does occur, be honest with your customers and do everything you can to mitigate the damage.

Key TakeawayKey takeaway: Safeguard any private information customers entrust you with while assuring them how they’re being protected. Let them know how you got the information and what you’re doing with it. Personalized, transparent, honest advertising can still work.

The ongoing debate over personalized online ads is a microcosm of the issues surrounding today’s internet. After decades of light-touch regulation, some consumers are understandably concerned about the risks to their privacy that personalized online ads pose, alongside wider issues surrounding workplace monitoring and state surveillance. Yet, at the same time, companies are pouring resources into customized advertising in an attempt to make up for collapsing print advertising revenue and increasing consumer blindness to traditional banner ads. However, targeted online ads aren’t as extreme as some other methods, like facial recognition advertising, and if done well, can attract customers rather than turn them off.

Chad Brooks contributed to the writing and reporting in this article. 

Image Credit: fizkes / Getty Images
Neil Cumins
Neil Cumins
Business News Daily Contributing Writer
Neil Cumins is an award-winning writer and journalist from Carlisle, England. With over 20 years of experience writing about technology and marketing on both sides of the Atlantic, he’s worked with some of the world’s biggest hardware and software manufacturers, as well as countless SaaS brands. An amateur coder and semi-pro photographer, Neil launched his own business in the Noughties, and has subsequently helped many other small firms to grow and prosper.