Targeted Online Advertising: Using Reciprocity Appeals to Increase Acceptance Among Users of Free Web Services

Abstract

The Internet is dominated by free web services that depend on advertising revenues and need powerful marketing tools to support their business models. Targeted online advertising enables websites to increase their advertising revenues by selectively displaying advertisements according to users’ surfing behavior, sociodemographics, and interests. Yet targeting also creates negative consumer reactions, and websites confront increasing regulatory pressures to inform surfers about their practices. Proactively addressing those challenges is critical for advertising-supported websites. In one scenario experiment and two field studies, the authors show that a normative reciprocity argument generally is more effective than the current industry practice of using a utilitarian argument related to advertising relevance to increase acceptance of targeted online advertising. However, in some cases this dominance switches, due to specific website characteristics, such as website utility and level of user-generated content. Managers of free websites should remind their users of the free services they enjoy when asking for permission to target them online or to use their personal information.

Keywords: free web services, advertising, targeted advertising, privacy concerns, reciprocity, behavioral targeting, predictive targeting