Social Networks, Personalized Advertising, and Privacy Controls

Abstract

This paper investigates how internet users' perception of control over their personal information affects how likely they are to click on online advertising. The paper uses data from a randomized field experiment that examined the relative effectiveness of personalizing ad copy using posted personal information on a social networking website. The website gave users more control over their personally identifiable information in the middle of the field test. The website did not change how advertisers used data to target and personalize ads. After this policy change, users were twice as likely to click on personalized ads. There was no comparable change in the effectiveness of ads that did not make explicit that they used private information when targeting. The increase in effectiveness was larger for ads that used more unique private information to personalize their message.

Keywords: Privacy, Online Advertising, Social Networks