The Consumer Experience of Online Behavioural Advertisements

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Theoretical Framework

In order to investigate the effect of the most important identified factors connected to consumer behaviour in relation to Online Behavioural Advertising (OBA) a conceptual framework, built on preexisting theories, has been developed. The conceptual framework is based on combining the theoretical findings of Boerman et al. (2017) and the service experience framework of Sandström et al. (2008). The original frameworks have been merged and extended in order to fit the needs of the intended research. Below, a step-by-step description and explanation of the elements included in the proposed conceptual framework are given.
Within research concerning Online Behavioural Advertising (OBA), Boerman et al., (2017) identified three major research areas that explain consumer response to OBA: (1) advertiser-controlled factors, (2) consumer-controlled factors, and (3) outcomes. These three research areas have been used in creating the conceptual framework presented below, used to interpret the results of the empirical study. Advertiser-controlled factors relate to the advertisement’s inherent components: ad characteristics, and the forms of transparency communicated by the advertisement. Consumer-controlled factors include individual filters and situational filters. Outcomes include research areas that focus on the effects of OBA.
It is important to disaggregate the consumer experience of OBA since it is the result of a complex interactional-process between advertiser-controlled factors and consumer-controlled factors. Both of these categories of factors can be further divided in order to improve understanding of their connection to each other, as well as the value they bring to creating a consumer experience of OBA that results in positive or negative effects of the advertising effort.

Physical and technical enablers

The conceptual framework is built on the assumption that in order for an online advertisement to exist and a consumer to be able to be exposed to, and perceive that advertisement, it must first satisfy criteria of physicality and technology on which it is formed and perceived.
OBA ads are based on personal data from consumers and the advertisement is designed using symbols and signs trying to communicate value, based on that personal and behavioural data. The authors of this study suggest that these physical and technical criteria, or enablers, include: signs, symbols, and the IT infrastructure that is needed to create the factors that have an impact on consumer behaviour in relation to OBA. These enablers are often related to the creation of an individual experience based on technical elements such as visual impressions and sounds. Hence, the authors of this study argue that the advertiser-controlled factors ad characteristics and transparency are facilitated by technical and physical enablers.

Advertiser-controlled Factors

In the conceptual framework, advertiser-controlled factors include of two main factors:
(1) ad characteristics and (2) OBA transparency. These factors represent elements controlled by the advertiser, and are built on the technical and physical enablers. Together, these two initial steps in the framework represent the signals that are allowed to be perceived by the consumer.

 Ad characteristics

In accordance with the findings of Boerman et al. (2017) ad characteristics are identified as the level of personalisation that the ad exhibit toward a consumer, as well as the level of accuracy by which the ad meets the individual consumer’s interests. These characteristics of an ad is shown to play an important role in the attitude that consumers form toward OBA ads as well as the following response, or outcome, as shown by several studies presented below.
The level of personalisation of an OBA ad can, and will, vary. Nevertheless, the level of personalisation communicated by physical and technical enablers of an advertisement is theorized to have an important influence on the consumer experience, outcome and effects of an OBA ad. As presented by Boerman et al. (2017) the findings of several studies propose that the level of personalisation of an advertisement influences perception of intrusiveness, vulnerability and usefulness of the ad. Additionally, the level of personalisation may give rise to privacy concerns and influence the consumers’ experience of and consequential effect of the advertisement. Highly personalised advertisements can cause resistance from the consumer if they feel an inability to protect themselves from the data collection process (Bleier, & Eisenbeiss, 2015). If a consumer perceives feelings of intrusiveness from OBA ads, whatever the reason for it may be, it may cause negative cues, thus affecting purchase intentions (Van Doorn, & Hoekstra, 2013). Further, Van Doorn and Hoekstra propose that the benefit for consumers, of being presented with an offer in the form of a highly personalised ad, will only partly make up for these negative cues.
The level of accuracy is also found, by Boerman et al. (2017), to be one of the key characteristics of OBA ads. When the advertisement is highly accurate in predicting the consumers’ needs and wants, especially in those cases where the consumer has a narrow frame preference, it is more likely to be received positively than a standardized advertisement would be.
Van Doorn and Hoekstra (2013) argue that the advantage the consumers may gain by accurate, personalised advertising, is that if it inhibits relevance and fit such as offering the right product at the right moment it relieves the consumer from the needs to search further for a product they actually feel a need to purchase. On the contrary, Van Doorn,
& Hoekstra also argue that if an advertisement provides a low level of accuracy it is more likely to promote irritation towards the advertisement.
Previous research has shown that the ad characteristics level of personalisation, along with the potential benefits of accuracy, of an OBA ad are important in shaping the consumers’ reaction. Therefore, it is clear that this is an interesting and potentially important factor influencing consumers’ experiences of OBA.

Online Behavioural Advertising Transparency

As an advertiser-controlled factor, OBA transparency refers to the methods, signs, and symbols that are communicated by the advertisement for the purpose of providing information regarding the practices of online behavioural tracking.
As aforementioned, OBA has been a cause of privacy concerns amongst consumers. Advertisers have proposed the use of OBA disclosures in the forms of: icons, accompanying taglines, landing pages (Leon et al., 2012), and options to decline participation as an attempt to lessen the privacy concerns related to OBA. As found by Leon et al., disclosures about OBA often fail to clearly inform consumers. The majority of participants in their study mistakenly thought that ads would pop up if they clicked on disclosures. A higher percentage of the participants believed that by clicking on the disclosures they would be offered to purchase advertisements than the percentage that properly assumed that it would allow them to decline participation. Most participants believed that by declining the reception of tailored ads, they would also stop all online tracking.
Multiple studies have shown the importance of transparency in advertisements that are based on online behavioural data (Boerman et al., 2017). It is said to be important since the level of transparency can affect the effectiveness of the OBA ad. Research conducted by Aguirre et al. (2015) on the so-called personalisation paradox show that online behavioural advertisements are not always more effective than standardized advertisements. Further, Aguirre et al. found that as long as companies were overt about their information collection practices, OBA led to higher click-through rates. However, when companies kept the information of their data collection practices covert, the click through intentions did not rise above the levels of standardized advertisements. Aguirre et al. explain this by stating that consumers feel vulnerable to exploitation in the light of personalisation.
Informed and meaningful consent may provide increased value for the advertiser as Marreiros et al. (2015) found that many participants do mind how information about online tracking is provided to them. Further, consumers also care about the choices and options given to them simply by being informed as well as direct alternatives to decline the use of cookies. Friedman, Howe, and Felten (2002) present six elements that build informed consent:
o Disclosure
Refers to the advertiser providing the consumer with correct and relevant information about the benefits and risks that should be reasonably expected, and considered, from the agreement in question.
o Comprehension
Refers to the individual consumer’s correct perception of what is being disclosed.
o Competence
Refers to the consumer’s mental, emotional and physical capabilities with regard to being able to give informed consent.
o Voluntariness
Refers to the consumer being able to resist consent and thereby participation. In other words, there must not be any other party controlling or coercing the consent or participation in any way, shape or form.
o Agreement
Refers to a rationally distinct chance to accept or decline participation.
o Minimal Distraction
Refers to meeting the dimensions above, without unjustifiably distracting the consumer from their on-going psychosomatic or physical activities.
Meeting all of these criteria is a challenging task at hand for advertisers. Especially since the first three criteria are subjective to each individual consumer and the last component is subjective depending on the context in which the consent is given. Achieving minimal distraction is a challenge as the very nature of informing consumers’ about OBA practices and cookies automatically will need the attention of the consumer, thereby distracting them from their primary task (Friedman et al., 2002).
Another factor included in the conceptual framework of this study, which will be further detailed later, is trust. Stanaland, Lwin, and Miyazaki (2011) explain that trust can be enhanced by the use of disclosure, particularly in the form of a privacy trustmark. This kind of disclosure may cause a consumer to perceive the advertiser as trustworthy, and lower the privacy concerns felt by that consumer in relation to the advertiser.
As previously discussed, companies practicing OBA have been criticized of being able to collect more information than stated by them, which relates to the advertiser-controller factor transparency. Consumers link the information of which they are provided, with a diverse range of consumer-controlled factors, in this study entitled individual filters and situational filters (Marreiros et al., 2015). These filter will be detailed in the following sections of this chapter.

Consumer-controlled Factors

The second step of the proposed conceptual framework adds individual- and situational-filters to the physical and technical enablers and advertiser-controlled factors. These filters are made up of every dimension connected to either the individual consumer or the situation that the individual consumer is in when being exposed to the advertisement. These filters influence how the consumer perceive and interpret the signals given by the technical and physical enablers and advertiser-controlled factors. For the purpose of this study, the individual and situational filters integrated in the framework are based on the consumer-controlled factors identified by Boerman et al. (2017).
Marreiros et al. (2015) report that pre-existing beliefs about the meaning of statements, perceptions of those statements’ legitimacy, along with individual sensitivity to privacy concerns are the main causes of heterogeneity between consumers in regard to their idea about what is positive, negative, or neutral. Consumers link the information that they are provided with to a diverse range of values and their own situation.

Individual Filters

The individual filters integrated into this framework are: (1) the individual consumer’s level of privacy concerns, (2) the individual consumer’s knowledge and awareness. These two factors are heterogeneous across consumers and shape how the advertiser-controlled factors are perceived and interpreted. The individual filters are shaped by digital literacy, socio-economic, cultural, geographic, and demographic characteristics (Reiter et al., 2014).

Level of Privacy Concerns

Level of privacy concerns is an individual filter in the framework created for the purpose of this study. Boerman et al. (2017) present previous studies related to consumer characteristics, which show that the consumers’ individual level of privacy concerns will affect their attitude and response toward OBA ads.
If consumers have concerns for their privacy, it is more likely for them to want to be able to protect their personal data in some way (Smit, Van Noort, & Voorveld, 2014). However, results of how consumers react to OBA may vary given their individual level of privacy concerns and willingness to share information. Consumers with low concerns for privacy, substantial experience from online shopping, and who are willing to share personal information are, according to Lee et al. (2015) those most profitable for companies implementing OBA.
The level of privacy concern is not fixed, but can be altered through adjusting the advertiser-controlled factors. As mentioned in Chapter 2, consumers may experience a decrease in privacy concerns if they feel as they are gaining meaningful benefits from OBA ads. Hence, there exist a possibility for companies to affect and accomplish a positive change in the consumer-controlled factors.
According to several researchers, negative perceptions related to privacy concerns could be explained by different social theories (Boerman et al., 2017), such as the Social Presence theory (Phelan et al., 2016) and the Social Exchange theory (Schumann, von Wangenheim, & Groene, 2014). Phelan et al. found that when a consumer perceive feelings of social presence in an online environment it is said to have the same negative effects and feelings as when someone is actually looking over their shoulder when browsing the Internet. The Social Exchange theory emerges from psychology, and is described as the evaluation of social exchanges in terms of benefits and costs for the consumer and is only expected to engage when the benefits outweighs the costs (Schumann et al.).

Consumer Knowledge and Awareness

Consumers often have insufficient knowledge about OBA. More specifically, they often have trouble understanding the intricate details of the technology behind OBA. Lack of knowledge as such is shown in the worry about companies misusing their personal data and violating privacy (Smit, Van Noort, & Voorveld, 2014).
In relation to awareness, consumers view OBA as a personal issue and concern rather than a social one. This may serve as an explanation as to why consumers cope with OBA through blocking ads or trying to protect their personal data (Ham, & Nelson, 2016). According to Ham (2017), several studies have investigated the lack of consumer perception and knowledge about OBA, but few examined how consumers with uncertain attitudes respond psychologically and how they deal with these covert behavioural information tracking practices.
As knowledge and awareness is an individual filter, it is, in line with Marreiros et al. (2015) and Reiter et al. (2014), something that is subjective to each consumer, as well as something that is affected by various other influential elements. Thus, the authors of this study suggest that as knowledge and awareness can be developed, a development as such may lead to a shift in either a positive or negative direction with regard to their experience of OBA ads.

Situational filters

The situational filters can be explained as being the current situation that depends on the context in which the consumer is in whilst being exposed to an OBA advertisement. These kinds of situations are uncountable, but are for the purpose of this study divided into two sub-groups for easier interpretation: (1) trust and (2) contextual setting.

Trust

There are evidence that trust is an important concept when studying OBA. Bleier and Eissenbeiss (2015) discuss and highlight the importance of consumer trust if advertising strategies such as OBA are to be effective. Bleier and Eissenbeiss’ study show that trust relate to effectiveness of an OBA ad by investigating consumers’ responses to ads belonging to either a trusted company, or a less trusted company. When an online retailer, which the consumer perceive as trustworthy, shows personalised ads there is an increase of 27 percent in click through-rates, compared to when that same, trusted, online retailer uses standardized advertisements. In contrast, the less trusted online retailer suffers a drop of 46 percent in click-through rates for ads with a higher level of personalisation, compared to if they were using a less personalised advertisement strategy.
Findings by Jai, Burns, and King (2013) show a disconnection for consumers and a, by them, trusted online retailer when it comes to the information that companies allow third-party advertisers to collect data on their consumers. Jai et al. mean that if left unresolved, this issue can result in deterioration of the relationship between the company and consumer, and undermining repurchase intentions.
Trust is not only important in the sense of consumers trusting the advertiser from before seeing the OBA ad, but also in the aspect that the ad may influence the consumer’s trust in the advertiser based on the experience of the ad. Distrust toward companies can be created if consumers’ feel that a “social contract” has been violated by certain measures to collect and use personal information (Miyazaki, 2008).
Contextual Setting
Contextual setting is mainly made up out of two components: (1) the physical setting that a consumer is in when viewing the advertisement, and (2) the digital setting currently experienced by the consumer whilst being exposed to the ad.
Physical setting is a context (Marreiros et al., 2015) that influences consumers’ experience of OBA depending on their physical location in the real world whilst being exposed to an OBA ad. The digital setting is the digital circumstantial environment such as: device used, the intent of browsing and contextual appearance. In this conceptual framework, contextual appearance refers to the digital context of the ad, such as which website or social media the ad is communicated through. Consumers’ preferences, or attitudes, might be influenced in either direction based on what type of device they are using when accessing the Internet (Sandvine as cited in Stocker & Whalley, 2018).

The Consumer Experience of Online Behavioural Advertisements

In the conceptual framework of this study, the authors theorize that the consumer experience of OBA ads is the resulting attitude or perception held by a consumer toward that ad. The experience is suggested to as being the result of the individual and situational filters. In turn, the consumer experience has strong influence over the advertisement outcome and effects.
In line with Raake and Egger’s (2014) definition of Quality of Experience, the consumer experience of OBA ads will be graded on the degree of delight or annoyance that a consumer feels when being exposed to the ad. The experience is the result from the consumer’s evaluation of the fulfilment of his or her expectations and needs in the light of the advertiser-controlled factors and the consumer-controlled factors.

Table of Contents
1 Introduction
1.2 Background
1.3 Problem Statement
1.4 Research Questions
1.5 Purpose
1.6 Delimitations
2 Literature Review
2.1 Characteristics of Online Behavioural Advertising
3 Theoretical Framework
3.1 Physical and technical enablers
3.2 Advertiser-controlled Factors
3.3 Consumer-controlled Factors
3.4 The Consumer Experience of Online Behavioural Advertisements
3.5 Ad effects
4 Method
4.1 Choice of Subject
4.2 Methodology
4.3 Research Strategy
5 Empirical Findings
5.1 Advertiser-Controlled Factors
5.2 Consumer-Controlled Factors
5.3 Experience, Outcome, and Effect
6 Analysis
6.1 Consumer-Controlled Factors
7 Conclusion
8 Discussion
8.1 General Discussion
8.2 Managerial Implications
8.3 Societal and Ethical Implications
8.4 Limitations and Further Research
References
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