Raise the Curtains: The Effect of Awareness About Targeting on Consumer Attitudes and Purchase Intentions

All rights reserved. We investigate the effect of awareness about targeting on users' attitudes towards a targeted ad and behavioral intentions towards the advertised product. Specifically, we study the effect of a notice that makes individuals aware that a particular advertisement has been targeted to them on their attitudes about the product and intentions to purchase the product. We find that, among individuals who have negative opinions about the practice of targeted advertising, awareness about targeting significantly worsens attitudes towards the targeted product and reduces the likelihood of purchasing the targeted product. Among individuals who have positive and neutral opinions about targeted advertising, awareness about targeting does not impact attitudes or purchase intentions towards the targeted product. We develop a scale to measure opinions about targeted ads and find that a substantial proportion (at least 33%) of our participants have negative opinions about targeted ads. This suggests that the self-regulated advertising industry is not incentivized to follow recommendations from the U.S. Federal Trade Commission to make consumers aware about their targeted advertising practices.