The Potential of Personalized Advertising in Tablet/eReading Context

Due to decreased effectiveness of traditional mass advertising (i.e. messages produced in identical messages for a non-specific audience) and increase in new communication technologies (Hyunjae & Cude 2009a), Internet’s popularity, and personal information databases (M2PressWIRE, 2006; Marketing News, 2006; Trollinger, 2006), different one-to-one marketing (Friedman and Vincent, 2005), database marketing (Wehmeyer, 2005) and relationship marketing (Palmatier et al., 2006) methods have been gaining ground. Indeed, not only have budgets for personalized advertising been increasing but also diverse types of personalized advertising have been proliferating (Yuan and Tsao, 2003). This diversity in the type and amount of personalized advertising (Pramataris et al., 2001) manifests itself in online consumption in the form of website cookies, personalized interactive advertising, and smart banners (Yuan and Tsao, 2003). Since tablets and eReading devices have several similarities with personal computers and, hereby, online advertising, it is presumable that the utilization of personalized advertising will find its way to the tablet/eReading medium.

Definition

Personalized advertising is “designed to convey a customized message at the right time to the right person using diverse, advanced media” (Hyunjae & Cude 2009a, p. 503) with the help of personal information about consumers (Hyunjae & Cude 2009b). It is advertising that is created for a consumer using information about the consumer (Yuan and Tsao, 2003; Wolin and Korgaonkar, 2005). It differs from somewhat similar concepts, such as customized advertising (Tsang et al., 2004; Gal-Or and Gal-Or, 2005) and interactive advertising (Sasser et al., 2007) in the sense that the message can be delivered via any type of media (Hyunjae & Cude 2009a).

Benefits

There are several benefits associated with personalized advertising that speak for its use in marketing. First of all, personalized advertising may be more effective because messages are individualized (Pavlou and Stewart, 2000); personalized advertising can increase user involvement and, hence, advertisement’s effectiveness (Stewart and Ward, 1994; Roehm and Haugtvedt, 1999; Pavlou and Stewart, 2000; Yuan and Tsao, 2003; O’Leary et al., 2004). As consumers receive only messages that are relevant to them (e.g. referring to users by name and mentioning consumers’ specific interests in an advertisement) (Rodgers and Thorson 2000), personalized advertising can generate purchase intentions or other desired responses (Pavlou and Stewart, 2000). Consumers’ greater involvement (i.e. increased clicking activity) (Nowak et al. 1999), in turn, may increase overall satisfaction with advertising (McKeen et al. (1994) and advertising effectiveness (Howard and Kerin 2004). Indeed, advertising effectiveness is affected by the degree to which advertising is perceived personalized and individually focused (Pavlou and Stewart 2000).

The above-mentioned benefits are remarkably relevant for the highly interactive tablet/eReading medium where it is technically possible to collect personal information about users. Since e-commerce is strongly present in the tablet/eReading context commerce (cf. Forrester Research; Miller 2011), personalized advertising may offer distinctive benefits for call-to-action advertising. In other words, consumers are not only exposed to more relevant advertising but they may also purchase these custom offered goods through the same medium right away.

Drawbacks

Personalized advertising entails certain drawbacks too. Consumers may, for instance, reject personalized advertising due to increased privacy concerns (Sheehan and Hoy, 1999; Tsang, Ho, and Liang, 2004; Miyazaki and Fernandez, 2000; Sacirbey, 2000; Phelps et al., 2001); they may experience negativity, when they have not allowed it in the first place (Tsang et al. 2004). These feelings of privacy invasion (i.e. abuse of consumer information in databases) (Caudill and Murphy, 2000) are to decrease advertising effectiveness (Sheehan, 1999; Gurau et al., 2003).

Secondly, as advertisers and consumers become more sophisticated, both parties expect personalized advertising ever more (Hyunjae & Cude 2009a). Consumers, in particular, urge increasingly individualized attention, one-to-one communication and personalized offers (Gurau et al. 2003), which can become very burdensome.

Finally, research results suggest that consumers are very unlikely to take personalized advertising seriously if it is delivered online; they are not very interested in the advertised products, their purchase intentions are low, and they are unlikely to recommend advertised products (Hyunjae & Cude 2009a). However, personalized ads on the pages of electronic newspapers or magazines may yield different results.

Conclusion

Personalized advertising entails both benefits and drawbacks. As some researchers argue that consumers are likely to experience negative perceptions of personalized advertising, regardless of delivery channel (Hyunjae and Cude 2009a;b), it is recommended that marketers who utilize personalized advertising acknowledge its possible negative effects (e.g. Nowak et al., 1999; Sacirbey, 2000). In particular, marketers ought not to send personalized advertising messages to potential customers without prior permission (Tsang et al. 2004) nor use online personalized advertising as such but rather in a balanced combination with traditional personalized advertising (Trollinger, 2006; Hyunjae & Cude 2009a;b). Eventually, it is essential to understand consumers’ perceptions of personalized advertising (Hyunjae & Cude 2009a). In particular, in terms of tablet/eReading context it essential to acknowledge that tablet and eReading device manufacturers can restrict the amount of user information they give away. Hence, user “personification” may not be as effective as it could be in a situation where the media “owners” have full access to customer data.