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Personalized Advertising:
The Death of the Salesman
ERASMUS UNIVERSITY ROTTERDAM
Faculty of Economics and Business
Marketing, Entrepreneurship and Organization
Name:
Elio Keko
Exam Number:
313379
E-mail address:
[email protected]
Study:
International Economics and Business Economics (IBEB)
Thesis:
Bachelor (FEB13100X)
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Table of Contents
Abstract ............................................................................................................................ 3
Chapter 1: Introduction to the research ........................................................................... 4
1.1
The intent for the research ................................................................................ 4
1.2 The scientific and social relevance of the subject ................................................... 4
1.3 Nature of the research ............................................................................................ 5
1.4 The research process, structure and methodology ................................................. 6
1.5 The theoretical framework ..................................................................................... 7
1.6 The problem statement and research questions .................................................... 7
Chapter 2: Background information ................................................................................. 9
2.1 Consumer trends ..................................................................................................... 9
2.2 New media ............................................................................................................ 10
2.3 Advertising expenditure ........................................................................................ 12
Chapter 3: Benefits of personalized advertising ............................................................. 14
Chapter 4: Types of personalized advertising mediums ................................................. 16
4.1 Internet.................................................................................................................. 16
4.2 Digital television.................................................................................................... 17
4.3 Mobile phones ....................................................................................................... 18
4.4 Further innovative ideas ....................................................................................... 18
Chapter 5: Collection and data usage ............................................................................ 19
5.1 Considerations ...................................................................................................... 19
5.2 Internet.................................................................................................................. 19
5.3 Digital television.................................................................................................... 20
5.4 Mobile phones ....................................................................................................... 22
5.5 Real time bidding .................................................................................................. 23
Chapter 6: Issues and disadvantages ............................................................................. 24
6.1 Privacy and security concerns ............................................................................... 24
6.2 Targeting the consumer appropriately ................................................................. 25
6.3 Additional disadvantages ..................................................................................... 25
6.4 Limitations of the literature .................................................................................. 26
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Chapter 7: Consumer research ....................................................................................... 28
7.1 Explanation of research ........................................................................................ 28
7.2 Presentation of the general data .......................................................................... 30
7.3 Detailed analysis of results ................................................................................... 30
7.4 Significance and correlation of results .................................................................. 34
7.5 Limitations of the research ................................................................................... 37
Chapter 8: Conclusion ..................................................................................................... 39
Suggestions for further research .................................................................................... 41
References ....................................................................................................................... 42
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Abstract
As a result of constant and overwhelming exposure to the modern consumer,
traditional advertising has endured intense scrutiny due to its intrusive nature. With the
advent of digital media on the mobile phone and the internet and the use of modern
technology in television, marketers are attempting to minimize traditional advertising as
a form of promotion. It has therefore become necessary to be innovative in enticing and
involving the consumer. Personalized advertising is a recently developed platform that
can revolutionize the manner in which individuals are approached and in turn lead to a
paradigm shift in the way advertising is developed. This paper presents the cutting-edge
approach of personalization in interactive media utilizing a format which draws upon
information such as demographics, psychographics, personal preferences, consumer
clustering, and new opportunities in mobile space to create an advertisement targeted
and tailored to individual consumers. In this context, this paper will initially discuss
issues related to the provision and implementation of personalized advertising in
mediums such as the Web, digital TV and mobile phones. Subsequently, it will
incorporate personal research conducted via a statistical survey which will analyze and
comprehend the consumer’s attitude towards this development in an attempt to reveal
further implications. Ultimately, an in depth analysis of advanced techniques for
personalization will establish whether this is the right path to follow towards the future
of advertising.
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Chapter 1: Introduction to the research
1.1 The intent for the research
Through my concentrated studies and research in marketing, I discovered one
remarkable feature: the influence advertising has on the consumer and the manner in
which it is presented. In order for advertising to be successful, constant innovation and
research must be taken into consideration.
In regards to the latter, the cutting-edge
technology seems to create immense possibilities in terms of innovation and wide reach
of this promotional tool. Moreover, by examining my surroundings, it seems intriguing
to see how technology has been able to impose itself in most of society and has become
such an important part of our daily lives. The combination of these elements has led my
attention to personalized advertising which tends to combine technological
advancement and the consumer’s increased use of technology, in order to provide
innovative ways to attract and influence the consumer.
1.2 The scientific and social relevance of the subject
Advertising is a crucial component of a company’s marketing strategy which promotes
their success. In a society where technology is becoming a systematically greater part of
our daily lives, advertising has the potential to use this trend in order to attract
consumers. One method employed, still in its developmental stage, is that of
personalization. This form of promotion could become a great tool in the hand of
marketers and its potential should be evaluated. In addition, the willingness of the
consumer to accept this type of advertisement and allow the use of their personal
information plays an important role.
In a time where traditional advertising is criticized due to the intrusion and interruption
it causes, it is imperative to find innovative ways to draw the consumer’s attention. The
difficulty with marketing via the internet is that people disregard advertisement. Recent
research claims that an increasing amount of people switch channels when
advertisements air (Winer R. S. 2009). New methods of advertising, however, through
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digitalized television allow for minimum amounts of this form of promotion.
Techniques such as personalized advertising will attempt to draw their attention and
possibly make the consumers interested in viewing the advertisement.
Personalization would eventually lead to better information for consumers and better
efficiency for advertising companies previously spending millions on an advertisement
that only reaches a small proportion of viewers. Through personalization they would be
able to target individual consumers and hence spend their budget effectively.
Nevertheless, the main issue to be addressed is whether the consumer would be willing
to share or allow collection of their personal information and whether personalized
advertising is truly effective in this case.
1.3 Nature of the research
Even though extensive studies have been conducted in the field of market segmentation
so that advertisers can better target the consumer, consumers’ attitude toward
personalization and their willingness to disclose their personal information has not been
affected. In my study, I will attempt to tackle in particular the issue of consumers’ trust
in releasing their information and whether certain types of medias hold an advantage
over others. Moreover, assuming that personalized advertising will be logistically
possible, this paper will analyze whether the consumer will be drawn towards this
specific type of promotion. Furthermore, the survey I conducted has taken into account
individuals in the US and, although limited in the number of respondents, it allows for
the research to further understand cultural differences and the role of a different
environment. This will be followed by an analysis of various other aspects, such as the
effect of age and gender on the attitude of the respondent. The purpose of the research
lies in understanding exactly how personalized advertising operates, and thereafter
understanding the consumer’s attitude towards this form of promotion.
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1.4 The research process, structure and methodology
The initial part of the research will be obtained through the analysis of the work
presented by various authors, focusing mainly on books, research papers, and journal
articles. Background information on the market situation is necessary to understand the
reasons for these studies. The purpose of this research analysis is to enable the reader to
get accustomed and thoroughly understand the implications of personalized advertising
and its repercussions. In an attempt to explain today’s advertising challenges, I will
further examine the driving motivational force that urges advertising companies to use
this form of promotion.
Since one of the main difficulties advertisers face in terms of personalization is the
reluctance of individuals to provide personal information, it is imperative to examine
the consumer’s fears vis-à-vis their willingness to provide information. In this respect,
the research will further attest the effectiveness personalization could have on these
respondents.
The questionnaire itself, which can be found in the appendix (pg. 45-47), consists of
several close-ended questions with the inclusion of few open-ended ones. It also
includes a set of background questions, inquiring upon the respondent’s age, gender,
and nationality. The remaining questions are related to their attitude towards
personalized advertising and information they would release. The data will then be
arranged, coded and analyzed through the use of Excel and SPSS.
The aforementioned questionnaire has been distributed online in order to achieve the
largest possible number and variety of respondents, including a list of respondents
varying in background. The survey has been completed by over 100 individuals
ensuring an adequate conclusion. Anonymity has also been secured, thus allowing for
more truthful responses. I have attempted to maintain a simple and concise
questionnaire in order to eliminate problems of misunderstanding and loss of focus,
even though its limitations will inevitably be discussed.
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1.5 The theoretical framework
There are numerous variables that need to be taken into account in order to achieve a
viable conclusion. Initially, there is a correlation between the increased use of
technology in our daily lives and the increased expenditure of advertising agencies to
reach the consumer through the use of these technologies. This paper will analyze this
relationship and explain the reason for personalized advertising, which in turn leads to
its benefits and challenges. The next step will be to assess its possibilities of success,
examining the relationship between acceptance by the consumer and the success of this
type of advertising. This success will also be measured by understanding whether the
consumer is willing to take part in creating personalization. By analyzing the answers to
the questionnaire, I will attempt to understand if and how personalized advertising will
achieve popularity, and hence become widely used as a powerful tool for advertisers.
Consequently, the possible relationship between consumer attitude and success of
personalization will be investigated.
1.6 The problem statement and research questions
The continues developments in technology and the increasing role in our daily lives
have led advertisers to create new ways in which to attract and influence the consumer.
One of these developments, whose success still remains to be seen, is that of
personalized advertising. This paper will present an in-depth analysis of personalized
advertising and by focusing on whether the consumer will allow and accept this
innovation should provide an examination of its future success.
The questionnaire will focus on understanding the attitude of the consumer towards
personalized advertising, leading to the imperative research questions below:
1.
Will the consumer provide or allow their information
to be used by advertising agencies?
2.
Will the consumer be more attracted by personalized
advertisements?
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The research will inevitably lead to the investigation of these partial research questions:
3.
Which information is the consumer willing to provide
to advertising agencies and what are their main concerns?
4.
Which information, if included in a personalized
advertisement, will appeal to the consumer?
5.
Which media is preferred in the eyes of the consumer?
6.
Does knowledge of personalization affect their
attitude?
7.
Does gender affect the consumers’ attitude?
(Ho: There is no significant difference between male and female responses)
8.
Does age affect the consumers’ attitude?
(Ho: There is no significant difference between the responses of separate age groups)
9.
Does nationality affect the consumers’ attitude?
(Ho: There is no significant difference between the responses of separate age groups)
This will then allow understanding as to whether personalized advertising could become
a successful new way for companies to get their message across and attract customers,
as well as consider further implications of the research conducted.
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Chapter 2: Background information
2.1 Consumer trends
The recent changes in technology and lifestyle of the consumers have caused major
concern for advertising companies. Throughout recent years, the use of media such as
television and radio has remained steady or diminished, while the use of the internet has
substantially increased. An interesting factor that needs to be analyzed when judging the
further development of this particular data would be how the internet currently provides
easy and cheap ways to use other forms of media such as e-magazines and television.
This will inevitably lead to a shift of resources and innovation in order to capture and
retain the individual’s attention. The graph below shows the changes that have occurred
in the use of several media, and research confirms that this pattern will continue in the
upcoming years. The biggest trend is the 117% increase in the use of internet
throughout the last half decade, while television remains steady but still taking up most
of an individual’s time.
Fig 1. Use of mass media1
1
Advertising Age, Klaassen A. (2009), The web is flat: why time spent online is leveling off, Available:
http://adage.com/digital/article?article_id=138159, (accessed 6 June 2010)
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2.2 New media
When considering the various platforms that are being used for advertising purposes, it
is important to understand and distinguish the different types of media. One crucial
development that needs to be taken into account is the use of what is being called “new
media”. Even though it has been around for more than a decade, it does not seize to
innovate and create opportunities for marketers. New media envelopes a digital and
interactive platform leading to an increased power of the consumer. An important aspect
is the greater availability and possibility by users to communicate with one another
bringing great challenges and opportunities for advertisers. Another aspect to consider
is the importance of social networks and the flow of information between individuals.
(Straubaar et al. 2009) This type of media, which is slowly taking over traditional
modes of communication, will inevitably lead to a new strategy being employed by
marketers. As a consequence, there seems to be a set of problems with the current
promotional platform.
Due to the invention of digitalized television, and use of technologies such as DVR and
TiVo, commercials can be skipped. In addition, the increased use of the internet allows
advertisements to be ignored and blocked when possible. Marketers are forced to
remain innovative in order for advertising campaigns to survive the technological
revolution. It is also of vital concern to TV broadcasters and internet websites to surpass
this obstacle.
The empowerment of the consumer leads to the necessity to engage individuals, making
relevance to the viewer an imperative characteristic of modern advertising campaigns.
There seems to be a consensus between marketers that they need to establish new ways
to engage the consumer with more original and interactive advertising and focus on
creating a more personal bond with these individuals in order to attract their immediate
attention (ZenithOptMedia 2010). Furthermore, social media has almost become an
obsession of today’s society and a clear and easy manner in which marketers can
acquire useful information for personalization.
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Another aspect that needs to be taken into account is the increased use of ”Smart
phone’s” such as the I-phone, which contain several interesting functionalities further
described below. In addition, there are a lot of resources being devoted to create further
improvement to this platform, and soon we will have phones with many of the same
characteristics as computers. As the figure below shows, the growing amount of people
who use these types of phones, take advantage of their services and are a clear target for
advertisers to exploit. These mobiles not only allow for advertising to be shown through
the individuals’ use of the internet application, but also allow for more creative and
interactive promotions due to aspects such as the recognition of the phone movements
and easy application of touch screen technology.
Fig 2. Usage of new smart phones (E.g I-phone)2
The newest product that is expected to revolutionize and enhance the mobile advertising
industry is the release of the I-phone 4 from Apple. It includes an innovative version of
iAds which make extensive use of personalization and will provide a better experience
for the consumer as well as higher profits for providers. These types of advertising will
be included within the various applications that the phone provides. Its progress relates
to the fact that 60% of revenues will be given to the developers of these free
2
Viral Housing Fix (2010), The mobile internet, consumer usage and implications for media and marketing brands,
Available:
http://www.viralhousingfix.com/2010/02/12/the-mobile-internet-consumer-usage-and-implications-formedia-and-marketing-brands/, (accessed 6 June 2010)
11
applications. This enables a general exchange of services which will satisfy all the
involved parties, and create a proposition in which the consumer gladly accepts
advertising. In an extensive presentation given by the CEO of Apple, Steve Jobs, on
June 3, 2010, just a few weeks before the release of this device, he explains this
reasoning by declaring that the rationale behind these advertisements reads:
“To help our developers earn money so they continue to create free and low-cost apps” and
“Combine the emotion of video with the interactivity of apps” 3
One of the many advantages of this system is also the fact that these iAds, as compared
to previous versions, keep the user in the application and a new window is opened to
view the further details of the advertisement which is initially presented as a banner.
Due to its many benefits, Apple has been able to sell a large amount of this service.
Even though still not in operation and available for purchase for only 8 weeks, sales
have reached an amount of 60 million from some of the biggest names in all areas of
business. According to recent analysis, this constitutes almost half of the total amount of
the US mobile advertising expenditure for the second half of 2010. The use of
personalization to create better advertising plays a major role in convincing both
developers and advertisers to accept and invest in this platform, and its success shows
the growth potential of this form of promotion in regards to the mobile phone industry.
2.3 Advertising expenditure
As expected, the change in consumers’ trends has inevitably led to a shift of expenditure
by advertisers. There seems to be an upward trend in terms of total expenditure
accompanied by a movement towards financing advertising through the internet, mainly
consisting of banner ads. As previously acknowledged, due to the difficulties being
faced, the efficiency of these advertisements plays a major role when analyzing this
expenditure. The table shown below presents a clearer analysis of the breakdown of this
expenditure between the various types of media. Television remains a clear giant in this
respect, but the highest increases have and will be in terms of internet and mobile
advertising, while other platforms remain steady or decline in popularity.
3
Taken from the presentation of Apple CEO Steve Jobs introducing the new I-Phone 4, 03/June/2010, From time
1:18:40 to 1:28:35 Available: www.apple.com/quicktime/qtv/wwdc10/index.html
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Fig 3. Worldwide advertising expenditure by medium ($ millions)4`5
Year
Media
Television
Internet
Mobile
Newspapers
Magazines
Radio
Cinema
Outdoor
Total
2008
2009
2010
2011
2012
($ millions)
($ millions)
($ millions)
($ millions)
($ millions)
185,813
173,399
180,952
189,614
199,730
(37.8%)
(38.8%)
(39.3%)
(39.3%)
(39.1%)
50,947
55,433
62,592
71,974
83,896
(10.4%)
(12.4%)
(13.6%)
(14.9%)
(16.4%)
4,586
7,375
11,179
15,250
19,149
(0.9%)
(1.6%)
(2.4%)
(3.2%)
(3.8%)
122,282
101,514
97,685
96,264
95,429
(24.9%)
(22.7%)
(21.2%)
(19.9%)
(18.7%)
56,342
45,272
43,279
42,476
42,284
(11.5%)
(10.1%)
(9.4%)
(8.8%)
(8.3%)
37,614
33,718
33,548
34,331
35,896
(7.6%)
(7.5%)
(7.3%)
(7.1%)
(7.0%)
2,328
2,183
2,250
2,359
2,469
(0.5%)
(0.5%)
(0.5%)
(0.5%)
(0.5%)
32,116
28,532
29,023
30,286
31,708
(6.5%)
(6.4%)
(6.3%)
(6.3%)
(6.2%)
492,028
447,426
460,508
482,554
510,561
*Information on mobile, other mediums and percentages gathered separately (table recalculated and modified)
An aspect to take into consideration is that the increase in funds, especially those related
to new technologies, occurs mostly in highly developed economies. Subsequently, the
rise of mobile advertising in countries such as the US has and will continue to double in
the upcoming years. The online availability of certain mediums such as newspapers,
magazines, and radio, currently responsible for a high share of expenditure, will cause
further movement of funds towards the internet and mobiles. This is also related to a
demographic trend, where younger generations prefer digital technologies to acquire
information. It is however interesting to examine the large amount of money that is
invested in the older forms of communication, in which personalized advertising will
not easily be able to penetrate.
4
ZenithOptmedia, Press Release (2010), Global ad market continues to improve, heralding healthy growth in 2011 and 2012
Digital
Intelligence
Consulting
(2009),
Digital
intelligence:
online
advertising
Available:http://www.digitalstrategyconsulting.com/intelligence/digital_intelligence_US_worldwide_advertising.htm, (accessed 11 June 2010)
5
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Chapter 3: Benefits of personalized advertising
One side deals with the economic benefits of personalization, while the other deals with
the efficiency of this form of advertising even though these aspects are closely related to
one another. What is important to understand is that personalization seems to side
positively with these factors, and provides aid in surpassing the previously mentioned
obstacles that have emerged due to technological innovation and the changing consumer
trends.
First of all, through the use of personalized advertising the consumer can be targeted
efficiently and hence deal with one of the main issues marketers face. At the moment,
vast amounts of money are being lost by advertisements aired to large amounts of
viewers but only reaching a minority of these viewers (Pavlou P. A. and Steward D. W.
2000). Due to its cost, the scope of the advertisement will inevitably decrease by using
personalized advertising but this will create a substantial positive repercussion on
effectiveness. Ultimately, it remains to be examined whether the improved effectiveness
will offset the individual costs and the decrease in scope while the targeting of the
consumer certainly upholds benefits.
Moreover, this form of advertising provides more relevant information to the consumer,
who in turn increases the reliability of information. This improvement in information
comes as a result of the data gathered on the consumer which subsequently allows for
irrelevant information to be removed. The general structure of a particular
advertisement would be replaced with information specific to an individual’s settings.
This inevitably relates to the fact that the avoidance of irrelevant information raises the
effectiveness of an advertisement.
These aspects of personalization are explained carefully by a researcher that states:
“First, by avoiding bombarding consumers with irrelevant messages that are likely to detract them from
accepting pertinent messages, the marketer can send messages that are most likely to generate purchases
or other desired responses. Second, mass advertising is costly and usually unnecessary for many products
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that do not apply to all people. Therefore, personalized advertising based on individual characteristics
and tailored to individual preferences is potentially more efficient for the marketer.” 6
Furthermore, personalization has the ability to capture the consumers’ attention and
their instant involvement in the advertisement. This is especially important in banner
ads, which are the most used form of promotion on the internet, and will also become
such for new technologies involving television and mobile phones. In addition,
literature on this topic states that users’ involvement improves effectiveness and
satisfaction significantly (Pavlou P. A. and Steward D. W. 2000).
Another problem that seems to be resolved by the introduction of personalization is that
of measuring advertisements effectiveness, or at least the number of people that were
truly reached granted that this also has to do with the improvements in technology and
increased use of the internet. Nevertheless, the fact that the consumer chooses to watch
these advertisements as they are becoming more and more interactive, will give
marketers a better benchmark in understanding the number of viewers reached.
The continued collection of data will allow for better monitoring and further
comprehension of the consumer, their needs, and the manner in which they can be
influenced. This will inevitably allow for better personalized advertisements to be
developed and will help in improving the vast research undertaken to understand the
consumer behavior. Hence, through the development of this form of advertisement
further benefits will arise in the near future.
Another benefit, which does not receive much attention but is nevertheless considered
important, is the fact that personalization will allow new and small businesses to
advertise efficiently. By keeping in mind their lower budgets and their subsequent
inability to advertise at a large scale, these types of enterprises will be able to advertise
to a few select users and slowly build up a customer base and reputation.
6
Pavlou P. A. and Stewart D. W., (2000), Measuring the effects and effectiveness of interactive advertising: A
research agenda, Journal of interactive advertising Volume 1
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Chapter 4: Types of personalized advertising mediums
4.1 Internet
The internet is the most prolific of all mediums as it provides an ever growing number
of users. The technological advances already implemented create optimal conditions for
personalization to occur, even though there are high growth margins and new methods
to be discovered and employed in order to achieve efficient targeting.
Firstly, it will be important to discuss the already available ways in which
personalization is being used to attract the customer. The simplest version is that of
knowing an individual’s IP address, hence their location, and providing advertising in
their own language.
Another unsophisticated manner in which personalization is attempted would be that of
inputting key words in a search engine to advertise various related products. This is
done extensively by major search engines such as Google and Yahoo.
Social networks have a lot more information on the consumer and are subsequently able
to create better personalized advertising. However, as it will be examined later, by so
doing, they have had legal issues to overcome.
Yet another type of website which efficiently uses personalized advertising is that of
retailers or sites in which someone is a member. They can easily and legally view the
information, searches, or purchases an individual has made within their site and provide
personalized suggestions on such items.
Using part of the information that can be gathered by internet marketers to achieve
personalization is closely related to a common practice which is that of behavioral
targeting. This technique examines the consumers behavior in terms of websites visited
and searches made in order to optimize the advertisement that they receive (Jun Y. et al.
2009). An important factor to take into consideration is that this type of advertising
receives a great level of interest worldwide and data shows that more and more money
is being spent for its use. This then provides a base for personalized advertising which
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makes use of this technique and attempts to improve its efficiency by gathering a larger
data set. The problem lies repeatedly in the fact that behavioral targeting is already
taking heat in terms of its privacy issues, which then become a major issue for
personalization.
Thereafter, there are more sophisticated ways in which personalization can be achieved
through the cooperation of the consumer. This would involve giving permission to the
marketer to gather and use the individuals’ information in order to create this form of
advertising, and subsequently provide continuous data to facilitate and improve this
process. The marketer needs to have permission to view aspects such as the browsing
and purchasing history besides obtaining the user’s personal data and interests.
4.2 Digital television
The next major application of personalized advertising will come through digital TV.
The improvement in technology and spread of this platform allows this medium to
provide a customized set of advertisement for individual households. In order to achieve
results through this medium, in addition to their consensus, a similar set of information
as the aforementioned is needed from the consumer itself.
As this medium has undergone constant innovation in the last decade, its ability for
interaction plays an important role in ensuring greater efficiency of personalized
advertisements. One of the major problems with advertising on TV is that people either
switch channels, take a break, or skip the advertisement through new technology. The
innovations that are occurring will allow the consumer to choose what and when to
watch a specific advertisement (Chorianopoulos K. et al. 2003). Personalization will
give the opportunity to better capture the viewers’ attention and increase the possibility
of them watching a commercial. Furthermore, if interaction occurs, this allows the
marketer to collect data on how many viewers were actually viewing or were affected.
The important aspect to understand is that, just like the internet, television advertising
will need the ability to capture the consumers’ attention in a short amount of time and
make them want to watch the advertisement since the choice becomes theirs.
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4.3 Mobile phones
It has become common place for mobile users to utilize several features of the phone,
especially with the rapid innovations that are occurring with the “smart phones”. Not
only can the above-referenced internet applications of personalization be exploited
though mobile phones, but this medium allows for further benefits and a new set of
information to be gathered. One interesting and significant advantage would be that of
knowing the individuals’ time and location which facilitates the advertising of nearby
businesses. This can be used for establishments such as bars, restaurants, stores, and
many others as per the consumer’s request. The geographical data acquired will then be
combined with the information already available to provide a significant improvement
in the advertisement’s relevance and subsequent efficiency. It is also important to note
that mobile phones are more easily personalized since they are typically used by only
one individual, and that the interactive ability of mobile phones has several benefits that
can be exploited by marketers.
4.4 Further innovative ideas
While understanding that the mediums mentioned above constitute the most profitable
and efficient use of personalization, there are several other ways in which this form of
advertising can appeal to the consumer. There are those, such as the personalization of
mail, which predictably follow this innovation. However, there are those which take
creativity into consideration and produce some interesting ideas.
Personalized
billboards constitute one of these with their ability to change once a certain individual
passes near. This method has already been tested with cars which are equipped with a
sensor recognizable by billboards (Shannon R. et al. 2009). Consequently, due to the
information that has already been given by the driver, the billboard changes to influence
this particular costumer. In this case it would be quite dangerous to attract the attention
of the driver, but one can appreciate the ideas that are being created to accommodate
this form of advertising. Yet another design, which combines various technologies, is
that of BMW in China. They created a personalized video for their mobile advertising
campaign and sent it via message (GoMo News 2010). This does not only show the use
and applications of personalization, but the positive outcome of this campaign
demonstrates the efficiency that it is able to reach.
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Chapter 5: Collection and data usage
5.1 Considerations
There are two aspects to be considered when examining the information needed for
personalized advertising. On one hand there is the collection of data, and on the other its
efficient use. Furthermore, an important feature is that of privacy and security concerns.
With data collection there needs to be an initial gathering of information followed by a
continued search for consumers’ change in needs and wants. At first, the individual
needs to provide data himself, and subsequently allow for marketers to view and use
aspects such as his browsing and purchasing history. Hence, the data can be gathered
explicitly, where the consumer provides information at several points in time, or
implicitly, where information is collected from the individuals’ interaction with a
particular medium (Bidgoli H. 2004). As such, the efficient use of this data becomes of
great importance.
Even though still at its initial stage, there are several methods that can allow for
personalization. Especially when the amount of people and data collected becomes
extremely large, a specific program will be needed to accommodate this information
and create appropriate advertising. Without wanting to get into computing terminology
and the long and complicated algorithms involved, this idea will be explained in simple
terms. It has to be taken into consideration that not every advertiser will use the same
methodology or amount of information to create their final product. Furthermore, there
are a number of distinctions between the ways that information is collected for use by
different mediums.
5.2 Internet
Generally, personalized advertising on the internet comes as a result of a subscription to
a certain website and the acceptance of this form of promotion. It has to be mentioned
that most times people do not read the long and detailed agreement and that they do not
have a choice of whether to allow advertising on the site. However, in order to be able
to gather more detailed information marketers have to provide a certain service to the
19
consumer. This can be seen in the case of free internet providers, such as NetZero,
which exchanges these services to gain permission to the individual’s data and is able to
collect large amounts of information. In turn, there are those which simply have access
to the data that is produced through the search and purchases in their own website, such
as search engines, social network websites, and retailers. However, this form of
advertising is being criticized not only because of these types of websites, but due to the
gathering and use of information without the knowledge and permission of the user.
Hence, it becomes imperative that marketers devise a way to persuade the consumer to
provide and allow information to be gathered.
Assuming that this particular agreement has been reached, the collection of the data and
the personalization can be initiated. This can occur on a particular website created for
advertisements only, where the consumer allows the marketer to do product research for
him and simply views the results (Lemole S. et al. 1999). Alternatively, the most
common way would be the use of the internet where advertisements seem to be
everywhere one goes. A technique that is used in all the mediums is that of data mining
which gathers all the data available and attempts to form a pattern. Personalized
advertising can make use of little pieces of information such as simply the age and sex
of the viewer to create an advertisement or through the use of algorithms and computer
programs to put a weight of importance (Lemole S. et al. 1999) to each piece of
information in order to create the most effective promotion.
5.3 Digital television
Due to the fact that personalized advertising is still at an early and experiment stage of
development, when dealing with promotion on this particular platform one encounters
various distinct approaches. The differences are mainly in relation to the appropriate
screening of these advertisements, in addition to how and what data should be collected
and used. Several of these ideas will be presented, and most of the search will come
from a set of researches that seem to be widely recognized and have conducted several
studies in this field. Nevertheless, many questions are still posed on the inner details of
the proposals presented by these authors.
20
In comparison to internet, much of the information needed to create the advertisement
will have to be given by the individual himself. The data that is gathered explicitly
throughout the actual viewing will simply help the marketer to choose an appropriate
time for broadcasting the commercial and grouping certain individuals within one
category. However, the subsequent interaction of the consumer with what is being
shown will become an important indicator. Consumer clustering and the response of the
consumer are the most important aspects when wanting to achieve personalization on
this platform. It therefore attempts to use the vast research that has already been done on
market segmentation and consumer behavior in combination with the applications that
modern technology allows. One approach that has been considered in much of the
papers examined is that of understanding the lifestyle of a particular individual and
subsequently providing appropriate advertising (Lekakos G. and Giaglis G. 2002).
The figure shown below explains how one system named iMEDIA would collect and
process information. As in the case of the internet, this system makes extensive use of
data mining techniques, which are used to form patterns from the data collected.
Fig 4. Inner workings of iMEDIA: Personalized advertising for Digital TV7
Thereafter, the point is reached where the advertisement created has to be presented to
the consumer in a digitalized television platform which provides the ability to reduce
advertising. Hence, commercial breaks might not be possible and the interactive nature
of this platform becomes essential. Even though some believe that consumers will
accept and request personalized advertising due to its benefits, others suggest ways in
7
Bozios T., Lekakos G., Skoularidou V. and Chorianopoulos K. (2001), Advanced Techniques for Personalized Advertising in a
Digital TV Environment: The iMedia System
21
which to bypass the traditional interruption of programming. The advertisement will
have to be shown while another program is being viewed, and through the use of multifunctioning remotes, the consumer will choose whether and when to watch it. These
promotions will initially take a similar form to those seen on the internet, and if
requested will then send the viewer into a new area. An interesting example8 to put all
of this into perspective was that of a mother watching a program on Switzerland.
Knowing that she has two children, her income, and her passion for travel due to the
long hours spent on these types of programs, at the bottom of the screen an image
appears that simply says: “a trip around Geneva”. If she is captivated by this and
chooses to view the advertisement, she is than offered among other things, a set of
hotels and travel agencies which take her budget into account.
5.4 Mobile phones
The increase in use, applications, and broader access to the internet has led to the
flourishing of mobile advertising industry. By considering this rapid growth and profits
available, personalized advertising has the possibility to gain a strong foothold in this
market. One important finding is that the use of internet through the mobile does not
influence the use of this media in general, but in fact increases its overall utilization, and
hence the amount of advertising that an individual is exposed to daily. Furthermore, this
particular study9 has found through a large survey that people have a positive response
to mobile advertising in exchange for content and other free services. Yet another
valuable aspect is that an increased amount of operations such as visiting the
advertisers’ website and purchasing products online are being made via the mobile.
Even though much of the information is collected in the same manner as for digital
television and the internet, mobiles offer various specific benefits. The fact that the
consumer’s location is known and that mobiles are generally only used by one user can
provide a comparative advantage. Moreover, the effortless interactivity that this device
provides will allow for easier access to data by the consumer and the design of creative
ideas to involve users.
8
López-Nores M., Marta R., José J. P., Jorge G., Yolanda B., Alberto G., Rebeca P. D., Ana F. and Manuel R. (2009), Spontaneous interaction with
audiovisual contents for personalized e-commerce over Digital TV, Journal of computational science, Volume 36 Issue 3 Part 1, pages 4192-4197
9
Online Publisher Association (2007), Going mobile: An international study of content use and advertising on the mobile web, Available:
http://www.online-publishers.org/media/176_W_opa_going_mobile_report_mar07.pdf, (accessed 11 June 2010)
22
There are some very interesting propositions that are already in development or being
tested through a small amount of users. Such is that of providing special offers in a mall
or even a supermarket once a person’s specific location is known. Through mobiles,
marketers are also able to know the traveling pattern of an individual and act
appropriately. An article in the New York Times10 explains how:
“Advertisers will pay high rates for the ability to show, for example, ads for a nearby restaurant to
someone leaving a Broadway show, especially when coupled with information about the gender, age,
finances and interests of the consumer.”
This type of situation explains the amount of information that can be gathered by
marketers, but also the detailed level of personalization that can be achieved. Whether
this in-depth exploration of an individual’s data will be welcomed by the general public
remains to be seen, however this form of advertising certainly provides an innovative
way to attract and provide relevant advice to the consumer.
5.5 Real time bidding
Marketers are spending a large amount of funds on advertisement that do not reach the
intended consumer. While personalization helps in resolving this problem, it can be
greatly aided by real time bidding. This technology allows companies to purchase an
advertising space within milliseconds after the consumer has entered a particular
website (New York Times 2009). By analyzing the data collected on these individuals, a
program is able to identify the most appropriate advertisement to be shown. Various
companies can then compete with one another to show their promotion. Hence,
advertisement will not only be tailored to an individual, but relevance and efficiency
will be enhanced by choosing the appropriate company to put in the available
advertising space. This will occur taking into account that those companies that are
more suitable will engage and prevail in the bidding. However, this might drastically
increase the price of the offered space which is as much an advantage to websites as a
disadvantage to advertisers. Once again, the relation between the increased efficiency
and cost needs consideration. Interestingly, giants such as Google, Yahoo and Microsoft
have or are in the process of adopting this technology.
10
New York Times, Clifford F. (2009), Advertisers get a trove of clues in smartphones,
Available: http://www.nytimes.com/2009/03/11/business/media/11target.html?_r=2, (accessed 10 June 2010)
23
Chapter 6: Issues and disadvantages
6.1 Privacy and security concerns
The main objections that seem to revolve around personalized advertising are the breach
of privacy that it constitutes, and the security concerns related to the release of a wide
range of private information. Subsequently, in addition to the consumers’ unwillingness
to provide data, many legal issues have been raised in relation to this form of
promotion. This is especially linked to those companies that have pursued consumers
without their direct consent. This has led to several discussions and laws to be passed
which help to protect the consumer. First of all, the collection of some financial data
and that of medical prescriptions has been prohibited (Michael T. Z. et al. 2000). The
following step to be taken in this direction would be that of the empowerment of the
consumer. Advocates against the collection of this data demand that consumers know
exactly why, who, and what is being done with their information and their authorization
to become a requirement (Internet Business Law Services 2009).
However, consumers themselves seem to be torn between the positive prospects of
advertising and their willingness to provide or allow information to be gathered. One
study explains its analysis of personalized advertising from the consumer’s point of
view when stating that:
“Targeted advertising is often seen as a social contract, in which the disclosure of information is used in
exchange for economic and social benefits subject to a privacy calculus” 11
The dilemma seems to emerge when certain information is collected, in addition to the
fear of misuse by untrustworthy individuals who might collect or acquire access to this
data. In this respect, some might not want a billboard on the street to mention personal
aspect of your life and suggest the purchase of specific products. Others have high
regards for privacy and will consider the gathering of information as an invasion of their
11
Culnan M. J. and Amstrong P.K. (1999), Information privacy concerns, procedural fairness, and impersonal trust: an empirical
investigation. Organization science, pages 104-115
24
personal space. Furthermore, in a time when a substantial amount of financial
transactions are being completed through the internet, one has to keep in mind the
security issues that are raised when someone is allowed to track your operations.
6.2 Targeting the consumer appropriately
The question still remains as to whether all the information gathered will allow for the
creation of truly relevant and effective advertisement. Does the collection of a few
pieces of data on an individual give you enough to know exactly what their wants and
needs are? Will the initial appeal of personalization continue into the future, or will we
simply ignore and find ways to remove these types of advertisements such as the case
with the current platform? One cannot present answers without a longer assessment, but
it becomes apparent that personalization still has to prove itself and that several issues
in regards to its claimed efficiency persist.
One observation relates to the disregard by most of personalized emails. Even though
some might consider these as better than the ones without individual targeting, a large
amount of funds is being spent in collection information and creating advertisement that
will not even reach the sight of the consumer.
The multiple use of televisions and computers raises a further concern. Not only will the
data gathered be a result of several users, but also the succeeding advertisement could
be targeted to the incorrect individual. This becomes a larger issue when dealing with
television, due to the fact that it is often viewed by several people simultaneously
(Lekakos G. and Giaglis G. 2002).
6.3 Additional disadvantages
The virtues of the current advertising concept cannot be disregarded. Occasionally
people want to learn about something new and a range of advertising helps in allowing
the discovery of latest products and services. If an individual’s interest and sites visited
are related to only a few fields, then all personalized advertising provided to them will
constrict their acquisition of knowledge.
25
Another negative aspect is the use of the benefits achieved through personalization to
continue the bombardment of the consumer with advertising. The numerous
technologies that have been made available to limit the amount of commercials that we
receive was due to the intolerable quantity that consumers were exposed to, and now
this new platform uses relevance as an excuse to continue in this course of action.
A further aspect that plays against personalization is that consumers might not be
inclined to interact after a certain point. At the moment there seems to be very positive
feedback on this form of promotion and consumers are eager to view and interact with
new create ideas. However, this attitude might not continue in the future, and it will
become especially apparent in relaxed situation such as is the viewing of television
where the effort of constantly having to interact with the system will not be welcomed
by the user.
While we might be used to having advertisements on our internet web pages, it might be
frustrating to have them show up when we are watching something on television or
using our mobile phones. In relation to TV advertising, the issue of blocking part of our
view has become highly irritating. On the mobile the concern involves the already
limited amount of viewing space we are provided with.
The above mentioned negative aspects of personalized advertising could inevitably lead
to antagonizing the consumer. This would then have further repercussions by increasing
the amount of people against this form of advertising and cause further restrictions to
marketers.
6.4 Limitations of the literature
The first part of this paper provided a collection and subsequent analysis of research and
written works of several authors in addition to data collected from marketing agencies.
There were many difficulties encountered when conducting this examination, which can
be mainly attributed to the relatively new development and implementation of
personalized advertising.
26
This is especially so when dealing with the research made on television, which has
proved to be a difficult platform to explore and penetrate by this form of promotion.
The papers found in relation to this platform were limited to a few authors, and at times
written for a specific purpose. Therefore, there was a limitation to the points of view
that one might observe, and a disregard of some authors of the disadvantages of the
ideas they were proposing.
Subsequently, there were a number of contradictions that existed in the literature
employed and an attempt to choose the better works or present both ideologies was
undertaken. One aspect which proved problematic in collecting the most reliable data
was related to advertising expenditure and use of media. This is due to the fact that
several agencies released their current and future predictions which included variations
between one another. Moreover, these numbers were even more diverse when
associated to personalized advertising due to the fact that new innovations and contracts
are constantly being made to expand this form of promotion.
Moreover, the law is still ambiguous on this type of advertising and especially on the
amount of data that can be collected. Several actions are occurring in this regard which
leave independent variables that this paper cannot account for.
27
Chapter 7: Consumer research
7.1 Explanation of research
The digitally administered questionnaire, which can be found in the appendix **(pg….),
consisting of sixteen questions, of which 14 are closed-ended and 2 open-ended
enquires upon age and nationality. Its purpose was to acquire a better understanding of
the consumer’s point of view in relation to personalized advertising. The various
questions posed enquired upon several aspects of personalization and can be classified
as follows:
Fig 5. Classification of the survey questions
Inquiry into:
Further details
Question(s)
Awareness of concept
Whether the respondent is aware of
1
personalization
Attitude toward concept
Does it lead to improvements and is it a
2 and 4
good idea
Type of advertising preferred
Current, personalizes, or combination
3
Attitude toward inclusion of
Whether and which personal
5, 6, and 7
personal information
information is appealing
Q8: Which info would they release
Release of information
8, 9 and 10
Q10: Largest concern of privacy or
security
Q11/Q12: Trust of mobile and TV
Difference between mediums
11, 12, and 3
provider
Q13: Preference of provider
Background information
Nationality, age, and gender
14, 15, and 16
In addition, it will be important to understand the reasons why these questions have
been specifically devised, and subsequently the significance that their combination has
on the ability of this research to provide appropriate answers to the research questions.
28
First of all, it was important to understand whether the respondent has prior knowledge
of this form of promotion. The ones that have not encountered personalization respond
to the questions in a more theoretical manner, while others will also include their
personal experience.
Consequently, there are a set of questions created to examine whether personalized
advertising is seen as a good design and a way to improve upon the current promotional
format. It is necessary to recognize the opinion of the public on the basic concept before
one can inquire into more specific aspects.
The subsequent questions were related to the use of personal information within the
advertisement. This will provide an observation of those features that, if at all, appeal to
the consumer.
At this junction, it becomes imperative to determine the type of information that
individuals are willing to disclose. Even though personalization might be appealing and
efficient, the reluctance of the consumer to release information has proved a great
barrier for the marketer. The following questions attempt to identify the primary
concern between privacy and security. Even though a combination of these affects the
consumers decision, seeing which one prevails suggests the primary area in which to
focus.
As the major media platforms to adopt this technique, the succeeding questions relate to
the preferences between the mobile phone, internet, and television. They are associated
with the trust in these providers, as well as the favored platform in which to confront
personalization. These three media types are at quite a different development stage at
the moment and the consumer needs and wants will lead to their advancement.
Finally, the demographic information concerning nationality, age, and gender were
collected. These constitute the analysis to discover whether they have an effect on the
responses, and might give an indication on the market segment that personalized
advertising should capture.
29
7.2 Presentation of the general data
Ultimately, the questionnaire was completed by 106 respondents consisting of 55%
female and 45% male. There were 19 distinct nationalities participating in this research,
which predominantly consisted of citizens from The Netherlands, Albania, and U.S.A.
Also to be noted are a
reasonably large amount of
Belgian,
Bulgarian,
and
German nationals. The age
of the respondents begins
at 18 and goes up 65, with
a distribution as shown in
the adjacent figure.
7.3 Detailed analysis of results
Before commencing a more thorough and statistical analysis of the available data, the
responses to several relevant questions must be presented and examined. After a note
explained the idea of personalized advertising,
the respondents were asked whether they were
previously aware of this form of promotion.
Figure 7 displays the responses, which show
that
personalization
recognized,
and
is
still
furthermore
not
widely
allows
an
investigation of the answers presented by these
two groups of individuals.
Thereafter, the questions concerning the attitude toward the concept showed a relatively
positive response by the individuals taken into consideration. As figure 8 shows, a great
proportion believes that personalization will improve the information received through
advertising, and most consider it to be a fairly good idea. It will be important to
30
examine whether these considerations will then translate into providing information to
then receive personalization.
The next responses to be considered are interrelated once inquiring upon the intrigue of
personal information in advertising. There is an almost equal division of opinions,
which can be considered as quite negative for personalization. However, the following
question which was only asked of those that answered positively shows that individuals
who are attracted by this form of promotion will continue to be influenced.
The subsequent questions, which in fact include a set of responses to be analyzed, can
be considered as some of the most revealing pieces of information to comprehend the
consumer judgment of personalization and its prospective. The first one to be inspected,
as shown by figure 10, will be the 7th question which gathers data on the particular
aspects that would appeal to the consumer.
31
By observing the above figure, it can be concluded that consumers are not influenced
from the inclusion of simple characteristics, such as the name of the individual. Creating
an advertisement by taking into account a clients previous purchases, their age, and their
gender provide a clear improvement. However, from the available propositions, the
inclusion of one’s interests or explaining to them why this particular product has been
recommended seems to greatly improve the appeal of an advertisement. As expected,
the succeeding question is related to the information that consumers are willing to
release,
and
shows
whether
their
consent
will
be
provided.
32
At first glance, one can observe that the disclosing of information will inevitably
become a large barrier to personalized advertising. There is a large amount of
responders that are never or almost never prepared to provide data and particularly so
when it comes to income, address, and information on their family. Consequently,
people are least disposed to reveal their first and last name, their browsing and
purchasing history. They seem most prone to providing their age, gender, weight, and
interests. While considering the inability to collect certain information, marketers are
nevertheless left with quite a fair share to create a personalized advertisement. Besides
the data that consumers are willing to provide, there are certain others that they cannot
escape from disclosing when singing up to a general or retailer’s website. Whatever the
amount of information gathered, even if limited, marketers need to establish techniques
to employ them efficiently. The simple age, gender, and location of a consumer, through
the combination with market trends and segmentation could then be sufficient.
Thereafter, every additional piece of information will serve in enhancing the targeting
efficiency.
Since privacy and security are the main reasons preventing consumers from releasing
information,
question
10
was
devised
to
understand which of these two is reasonable for
the most concern. Even though it cannot be
considered conclusive evidence, security seems
to be more important and an hence an area in
which to improve to convince the consumer. It
also has to be recognized that these two aspects are interrelated, in the sense that privacy
can only be ensured if security of the data collected can be guaranteed.
The last question to be considered in this manner is
related to the type of media that the respondents
would rather see personalization of advertisements.
Quite clearly, the internet takes center stage, also
being the most common used media at the moment.
The classification “others” include magazines and
newspapers, and magazines and email. However, the
recent development in mobile advertising, not yet in the market, needs to be considered.
33
7.4 Significance and correlation of results
Following the review of the respondents’ answers, a further analysis has been done in
order to understand whether there exist distinctions between the individuals taken into
consideration. Throughout this section, a significance level of 5% (0.05) will be taken to
accept or reject the various null hypotheses. There are more tests that can and have been
done with this data set, but this part of the paper will only present those that clarify the
approach taken or are relevant to the study.
First of all, the demographic characteristics of the respondents were taken into
consideration in order to see if there is a significant difference between their answers.
As figure 14 illustrates, gender was first to be analyzed in relation to several attributes.
Fig 14. Analysis of difference between male and female responses
Testing on
Variables
F -test
Dependent: Improved info (Q2)
1,205
Significance
level
0,275
Dep.: Categorization of concept (Q4)
0,025
0,875
Dep.: Appeal of personal info (Q5)
0,786
0,377
Dep.: Continued appeal (Q6)
Dep.: Particular info: Gender and age
specific products* (Q7)
Dep.: Particular info: Interests and
browsing history* (Q8)
Dep.: Exceptions(Q9)
Dep.: Largest concern (Q10)
0,627
0,432
5,625
0,020
6,156
6,765
3,634
0,056
0,015
0,011
0,059
0,814
Independent: Gender (Q16)
Attitude toward concept
Attitude toward inclusion
of personal info
Release of information
*Only these taken into consideration due to their significance.
The data shows that there is no significant difference between the responses given by
the two genders, which leads to the first null hypothesis (Ho: There is no significant
difference between male and female responses) to be accepted. However, if questions
seven and eight were separated to form several categories, then there exist noteworthy
differences. When it comes to gender and age specific products, female respondents
seem to find the inclusion or use of this information significantly more appealing, with
an mean rating of 3.5 out of 5 as opposed to the male 2.9. In relation to the release of
information, female respondents seem to be significantly more comfortable in releasing
34
their interests and browsing history. When translated into scores for purposes of
analysis, females scored a mean of 3.7 (≈Almost always) and 3.2 (≈Sometimes), while
male participants scored 2.8 (≈Sometimes) and 2.2 (≈Almost never) respectively. This
analyses shows that even though there are no differences in the general attitudes of the
two genders, there seems to be information that can be more easily collected and other
that can be used to influence the female consumer.
The second demographic characteristic to be examined, correlated to the same attributes
as previously, is the effect of age on the respondents’ answers. Figure 15 shown below
illustrates the relevant information to be taken from this analysis.
Fig 15. Analyses of differences between the responses of distinct age groups
Testing on
Variables
F -test
Dep.: Particular info: Reason for
particular advertisement* (Q7)
Dep.: Particular info: Name* (Q8)
2,780
Significance
level
0,015
1,997
0,073
Dep.: Dep.: Exceptions(Q9)
2,727
0,017
Independent: Age (Q16)
Attitude toward inclusion
of personal info
Release of information
*Only these taken into consideration due to their significance.
Once again the null hypothesis (Ho: There is no significant difference between the
responses of separate age groups) has to be accepted. However, there are several aspects
that can be considered. First of all, there is a significant difference between the level of
appeal brought by the reason why a particular advertisement is proposed. It seems to be
most attractive for the age group 26-30 (4.4) and least engaging to the ages 18-25 (3.1),
with others not considerably close to either group. In relation to disclosing information,
which also constitutes a significant difference, those of age 50+ are most comfortable
(4.7) releasing this info, while those in the group 26-30 are the least comfortable (2.3),
with others generally skewed towards the second grouping. When it comes to trusting
certain websites, the age group 41-45 seems to have most belief, while those among 1825 having the least. This type of data will give the possibility for marketers to focus on
particular age groups when providing personalized advertising.
The last aspect to be considered is that of the nationality of the respondents. Initially a
general analysis was made to test significance, and thereafter the nationalities were
35
clustered into separate groups to view whether any changes occurred. Figure 16 shows
the relevant conclusions.
Fig 16. Analyses of differences between the responses of distinct nationalities
Testing on
Variables
F -test
Significance level
Dep.: Particular info: Address* (Q8)
1,890
0,027
Dep.: Dep.: Largest concern (Q10)
1,949
0,022
Independent: Nationality (Q16)
Release of information
*Only this taken into consideration due to its significance.
By taking into account the complete set of data it can be concluded that this null
hypothesis (Ho: There is no significant difference between the responses of distinct
nationalities) will also be accepted. However, when observing specific aspects, the
disclosing of an individual’s address seems to have a significant difference. This is due
to the fact that mainly American and British responders are highly against (1.5 =
never/almost never) releasing this information, while others such as Albanians and
Bulgarian feel more comfortable (2.3 and 2 = almost never) disclosing this information.
There are other such as the Dutch, Belgian and German citizens which fall in between.
Even though in the end all these responses suggest that people rather not give out this
information, there still remain more possibilities for personalization in certain countries.
Another significant difference lies in the concern over privacy and security. In this case,
the difference lies in the fact that citizens of Britain and Bulgaria seem to be mostly
worried about security, while Dutch and Belgian ones in about privacy.
Another aspect to be taken into consideration is that once the nations are categorized
between North America, Western Europe, and Eastern Europe, there is a slight change
in the data, however there still remains a lack of significance. This is also related to the
fact that even though there is a large diversity of nationalities, they were clustered
within a few distinct ones.
Thereafter, several investigations were conducted to understand whether the
combination of aspects such as age, gender, nationality, and awareness put together
would be able to predict the attitude of the consumer. The only relevant piece of
information is portrayed in figure 17 shown beneath.
36
Fig 17. Analyses of differences between the responses of distinct nationalities
Model
(constant)
Q1 (previous knowledge of personalized advertising)
B
4,006
-0,372
Significance Level
0,000
0,064
The pertinent conclusion is that awareness affects attitude towards the idea of
personalization negatively. Even though not significant at the 5% level, it comes quite
close and its worth investigating. Marketers need to understand what these individuals
have encountered to make them have this attitude. When combined with other variables
such as age and nationality, then awareness does become significant, hence further
research can be conducted to recognize the exact relation between these factors.
7.5 Limitations of the research
Every research contains several limitations which need to be carefully analyzed in order
to understand aspect such as the variation within the answers and ways to improve
further studies. This section will therefore discuss the issues that came across when
analyzing the questionnaire provided to the consumer in terms of its reliability and
validity.
To start with, the length of the survey might have constituted a drawback as it leads to
lack of concentration or willingness to carefully answer each question. On the other
hand, it’s already extensive size did not permit the inclusion of additional questions.
In some instances, also considering the fact that a large proportion of the respondents
were not native English speakers, the use of certain terms might have led to confusion.
Furthermore, while the wide spread of nationalities and ages could be considered as a
positive attribute, at the same time does not allow the focusing into a particular segment
of the market. This also relates to the large diversity of nationalities within a relatively
small number of responses.
Moreover, the fact that some were not aware of personalization provides the ability to
consider their views as compared to those who have experienced this form of
37
promotion, but simultaneously provides the view of those that might not fully
understand how this concept operates. Especially for these individuals, it might be
difficult to fully comprehend some of the questions posed. Possibly a more extensive
explanation of personalization should have been made, but this would have been at the
risk of irritating the responder.
In addition, there are questions such as the amount of time they spend on the various
medias or activities such as purchases they conduct that could have improved the
acquired data set. However, it has to be considered that these inquiries would have been
difficult to answer, as they vary depending on the time when the survey was
administered, and hence be quite unreliable.
There are also a number of more specific aspects that can be examined starting with
question three that asked about which type of advertising would the respondents prefer.
Its usefulness is discarded due to the fact that it makes it gives the obvious choice of
picking a combination of the two
The same though process applies in questions 11 and 12 when inquiring if Television or
Mobile providers where more or less trusted with their personal information. Once
again people where inclined to respond that they felt the same. This might be due to the
lack of thought put into considering these providers or the lack of information provided
to compare the three.
The last specific limitation relates to questions 6 and 9. Even though serving a specific
purpose, they seem to be slightly ambiguous. Furthermore, the 6th question was only to
be answered by those that responded positively to question 5, but was in fact answered
by a larger number of respondents, which once again shows the apparent lack of focus.
38
Chapter 8: Conclusion
Due to the fast pace in which change is taking place, a company’s advertising campaign
can only achieve success if they are able to adapt to the transformations of their
environment. Two of the most important trends that marketers need to consider are the
constant technological innovations occurring and the shift in the use of distinct media.
In this respect, a form of promotion designed to bypass those technologies will constrict
advertising and subsequently make an informed decision on which media to employ.
These challenges require immediate attention seeing that advertising provides a large
proportion of the income necessary for media providers to continue operations.
An improvement in this field and a possible solution are demonstrated in the form of
personalized advertising. By taking advantage of information such as demographics,
psychographics, personal interests, browsing and purchasing history, this platform aims
at improving the relevance of an advertisement, hence creating larger possibilities to
attract the consumer. This will be especially important in a time when the individual has
to be persuaded through the by means of viewing a single image. Among other rewards
that personalization brings would therefore be the efficient targeting of the consumer.
The main mediums in which personalization can achieve its success are those of the
internet, digital television and mobile phones. While the internet is an already
established platform, mobile phones seem to offer the greatest advancement in the
upcoming years, whereas digital television has still not been fully explored. Much of the
research being done relates to the collection of data, its efficient use, and the
improvement that can be made in terms of interactivity.
However, the collection of information on the consumer has led to several privacy and
security concerns. This might become one of the greatest obstacles that personalization
faces on its road to success. Marketers need to persuade the user that this promotional
design comes with benefits or otherwise provide an incentive for them to allow the
collection of personal data and the display of advertisements.
In order to achieve a scrutinized examination of the consumers’ point of view, this
paper provides personal research made possible by the responses collected through a
39
questionnaire. The analysis of the acquired data has granted access to several points of
interests.
First of all, personalized advertising seems to have quite a good foundation upon which
to build its success. A large part of the consumers believe that this form of promotion
constitutes advancement and provides better information than the current platform.
However, marketers need to be careful not to antagonize the consumer by bombarding
them with advertisement, so that they will be able to maintain this positive view and
gain permission to collect a user’s personal information.
Furthermore, there is certain information that appeals to some consumers more than
others, and marketers should focus their advertisement toward their inclusion. There is
also certain information that people are willing to disclose. Marketers need to find ways
in which to create the best advertisement with this information, or provide better
privacy and security measures to convince the consumer to disclose this data.
From a consumer’s point of view, the internet seems the appropriate and most wanted
medium from which to receive personalized advertisement, even though there is a
considerable amount of individuals who would prefer other mediums. However, the
respondents taken into consideration lack complete knowledge, and as we have
previously examined, innovative mobile phones provide impressive opportunities.
Even though this research shows no significant difference or predictive power from
nationality, age, and gender, there are grounds for further studies to take these aspects
into consideration.
Upon reflection on all aspects, personalization appears most inevitable for the future of
advertising. Regardless of the challenges it faces, the need for appropriate targeting and
increased relevance will ensure its success.
40
Suggestions for further research
In relation to the research done through the questionnaire, the limitations previously
provided suggest several aspects that need to be considered when conducting additional
studies on personalized advertising.
There are several areas upon which further analysis could be conducted. This might
involve investigations to understand which particular products would benefit from
personalization. Another aspect would be the level of reward necessary for user to
accept advertising in the various platforms. Inevitably, one could inquire on a larger set
of personal information items that were researched by the questionnaire provided in this
paper.
Moreover, even though several aspects relating to personalization were investigated,
there is a lack of detailed responses provided. More open questions, research panels, or
interviews with individuals might be able to contribute further insight, subsequently
creating a clearer picture of the consumer’s point of view.
This research can be undoubtedly improved by increasing the amount of respondents
and conducting surveys on separate groups of individuals. Furthermore, by showing the
consumer sets of current or personalized advertisement, research can be conducted on
aspects such as relevance, recall, and ultimately effectiveness.
Important research can and should also be made once the personalization becomes more
widely spread. This might be particularly important in the case of a platform, such as
television where personalization is merely a concept. Longitudinal research will then be
possible which will provide a better understanding of the true efficiency of
personalization.
41
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44
Appendix: Personalized Advertising Questionnaire
Thank you for participating. This will only take a few minutes of you time! Your answers and identity will remain
anonymous and used as part of a bachelor thesis research.
Important note: Personalized advertising is defined as the communication of a message or media content to one or
more potential customers that have been adapted or modified to match the interests of the recipients.
Hence, advertisements made specifically for you.
1. Where you previously aware of personalized advertising?
Yes
No
1
2.
1244413
Do you believe that personalization will improve the information you receive through advertising?
Yes
No
1
3.
1244414
What type of advertising would you rather have?
Current advertising concept
Personalized advertising
Combination of the two
1
4.
How would you categorize personalized advertising? (From 1 being a terrible idea to 5 being a great
idea)
1
2
3
4
5
1
5.
1244416
Would you be more intrigued by an advertisement with some of your personal information included?
Yes
No
1
6.
1244415
1244417
If yes, do you believe this attitude will continue if this becomes common practice?
Yes
45
No
1
7.
1244418
What particular information, if included, would appeal to you? (From 1 signifying no appeal at all to 5
meaning great appeal)
1
2
3
4
5
Name
991481
Interests
991482
Previous purchases
991483
Gender and age specific products
991484
Reason why this advertisement is directed to you
991485
7
5
1
1244420
8.
1244419
Would you be comfortable disclosing this information to a website or advertiser?
Never Almost never Sometimes Almost always
Always
Name
991465
Last Name
991466
Age
991467
Weight
991468
Gender
991469
Address
991470
Interests
991471
Websites visited/Browsing History
991472
Purchase History
991473
Income
991474
Information on family
991475
7
9.
11
1244421
Are there certain websites that you trust in disclosing the information that you previously answered
with never or almost never?
46
Yes
No
1
1244422
10. What is your largest concern when releasing information?
Privacy
Security
1
1244423
11. Would you be more or less comfortable disclosing information to your TV provider?
More comfortable
The same
Less comfortable
1
1244424
12. Would you be more or less comfortable disclosing information to your Mobile provider?
More comfortable
The same
Less comfortable
13. Where would you rather have personalized advertising?
TV
Internet
Mobile
Other (please specify)
1
1244425
14. Nationality
158829
2
1
1244426
15. Age
158830
2
1
1244427
16. Gender
M
F
47
48