By Grigorios Lamprinakos, Solon Magrizos, Ioannis Kostopoulos, Dimitrios Drossos & David Santos
Birmingham Business School
The COVID-19 pandemic has cemented our growing dependency on the internet, with social distancing seemingly tipping our preference towards shopping online for good. According to ‘COVID-19 and E-commerce’, which surveyed more than 1,800 consumers from nine countries around the world, the majority of people now rely more on the internet than any other source for their news, health-related information and digital entertainment as well as shopping.
Perhaps because of this enormous shift, more and more academics in marketing and business are focussing their research on e-commerce and personalised advertising in particular. Our new research ‘Overt and covert customer data collection in online personalized advertising: the role of user emotions’ looks at whether the methods of collecting consumer information impacts the effectiveness of online adverts; a topic surprisingly few studies have covered.
When it comes to online data collection, businesses have two choices:
- covert data collection: collecting consumers’ information without their knowledge, or;
- overt data collection: explicitly collecting the information of consumers who are aware their data is being gathered.
Covert data collection techniques rely on tracking consumers’ online behavior – such as their browsing history, click-through rates, search histories, device fingerprints, social media-generated content and video consumption data – without their explicit knowledge and consent, in order to deliver personalised adverts to them. In contrast, overt data collection relies on trust-building marketing strategies, where visitors to a website are informed beforehand about the potential use of their data via headers or pop-up alerts that ask for consent before downloading any cookies.
Our findings reveal that overt user data collection produced more favourable cognitive, attitudinal and behavioural responses from consumers than covert techniques, increasing the effectiveness of online adverts. Moreover, consistent with the self-validation theory, our study reveals that the effects of data collection techniques can be enhanced, attenuated or even eliminated depending on the incidental emotions consumers experience after the advert introduction.
When a company’s online personalisation is based on overt information-gathering, cognitive responses (or put simply, thoughts generated as a result of exposure to the advertisement) are in the majority of cases favourable. In this customer-centric approach, consumers explicitly and willingly share their needs and wants with the result that they are offered exactly what they crave. In such a respectful, secure and customer-friendly environment it´s hard not to indulge. After all, who doesn´t want to be a bit ¨spoiled¨.
What happens though when consumers are exposed to adverts created based on covert personalisation techniques, where personal data are extracted in an unethical way without consumers’ permission? Our findings show that adverts violating consumers’ privacy are perceived as intrusive, resulting in negative cognitive responses, less favourable product evaluations and decreased purchasing intentions.
While the rationale behind the effects of personalisation seems straightforward, online advertisement and general omnichannel digital shopping are accompanied by an abundance of emotion charging stimuli that may intentionally or unintentionally influence consumers’ responses to the advert. On occasion, where these initially favourable cognitive responses are followed by emotions characterized by a sense of pleasantness or confidence such as happiness and pride, the mere experience of these incidental emotions (even in a context unrelated to that of the advert) will further validate these cognitive responses – ultimately leading to more favourable product evaluations and increasing purchasing intentions. On the other hand, when consumers generate negative cognitive responses due to exposure to adverts that violate their privacy (personalization based on covered data mining techniques), the very same emotions will validate consumers’ initial negative cognitive responses, thus leading to more unfavourable product evaluations and decreased purchasing intentions.
But not all emotions are pleasant and confidence-inducing. What happens in cases where consumers experience doubt-inducing emotions after being exposed to a personalised advert? Interestingly, the study reveals those emotions can invalidate previously generated cognitive responses reducing or even eliminating the effects of advert personalisation on product evaluations and purchasing intentions. Specifically, emotions associated with doubt or lack of confidence, such as sadness or guilt, may invalidate both favourable and unfavourable cognitive responses (resulting from any type of personalised advert), leading to the neutralisation of products’ evaluation and lesser (even no) differences in purchasing intentions.
It’s because of this cognitive nullifying effect that we recommend fear, sadness, guilt and other similarly doubt-inducing emotions should be identified and used responsibly by businesses in an advertising context. It would, perhaps, be too easy for an irresponsible company to use these emotions to downplay or alleviate consumers’ concerns about privacy and the intrusiveness of their covert data-mining techniques rather than switch to more overt and ethical practices instead.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.