Legal and Ethical Challenges of Online Behavioral Targeting in Advertising
Abstract
Online behavioral targeting (OBT), the tracking of a consumer's online activities in order to develop a behavioral profile of the consumer, is a rapidly growing technique that enables advertisers to deliver relevant messages. While OBT provides many advantages to shoppers and advertisers alike, the practice has the technological potential to violate consumers’ privacy rights to a dangerous and unprecedented degree. Still, OBT is poorly understood by most consumers, is often nontransparent and deceptive, and in many cases does not even provide a reasonable chance to opt out. Due to OBT's relative newness, few laws, regulations, and policies, as well as in-depth ethical analyses of the practice, exist. Actions by the Federal Trade Commission (FTC), however, provide a notable exception. In a series of reports, in particular since 2009, the agency has engaged in dialogs with various stakeholders about OBT and the dangers it poses to consumers. Its efforts have also included legal enforcement activities. Within the context of these developments our article presents the evolution of the broader legal environment, including an ethical analysis of the FTC's efforts. Our objective is to shed light on the issue from a normative perspective and to assist online advertisers as well as regulators searching for guidelines and policies on how to use OBT in a responsible manner.
... [77] [78] [79] Ethical implications of targeted advertising and behavioral tracking Focused on publicizing and behavioral following have moral suggestions due to concerns around security, straightforwardness, and customer control. Online behavioral focusing on (OBT) permits sponsors to track and create behavioral profiles of buyers, but it can damage protection rights and needs straightforwardness and opt-out alternatives [80]. Behavioral promoting, a subset of online personalization administrations, requires distinguishing proof, following, and prescient analytics, which can lead to negative results such as segregation and disintegration of individual independence [81]. ...
Consumer behavior within the computerized age has seen a critical change due to the far reaching
appropriation of innovation and the development of e-commerce stages. This review paper points to
supply an diagram of the current patterns and techniques in e-commerce that impact customer behavior.
By analyzing the writing and observational thinks about, this paper identifies key components that shape
shopper behavior within the advanced age, counting the move towards online shopping, the rise of
versatile commerce (m-commerce), personalization and customization, the impact of social media, and
the affect of user-generated substance and online audits. In addition, it investigates different techniques
utilized by e-commerce businesses to impact customer behavior, such as client encounter (UX) plan,
personalized promoting, social media promoting, client relationship administration (CRM), and
information analytics. Additionally, this paper highlights the challenges and moral contemplations that
emerge within the consider of buyer behavior, counting protection concerns, online tricks, and the moral
suggestions of targeted advertising and behavioral following. The suggestions for businesses and e-
commerce stages are talked about, emphasizing the ought to get it and adjust to the changing shopper
behavior scene. Moreover, this paper distinguishes openings for future investigate in buyer behavior and
e-commerce, giving bits of knowledge into potential headings for understanding and successfully
catering to consumer needs and inclinations within the computerized age.
Keywords: Customer behavior, Digital age, E-commerce, Patterns, Techniques, Online shopping,
Versatile commerce, Personalization, Social media promoting, User-generated substance, Client
involvement, Information analytics, Protection concerns.
... As technological development, behavioral personalization is increasingly happening in real time and across various devices and media platforms (Segijn and van Ooijen 2022). This approach has been examined under various terms, including online profiling (Bennett and Segerberg 2011), online behavioral targeting (Nill and Aalberts 2014), and synced advertising (Segijn et al. 2021). To specify behavioral targeting as a subset of advertising personalization, the current study uses the term behavioral personalization. ...
Personalization is an essential tactic for enhancing social networking advertising (SNA) effectiveness. Brands leverage consumer data using artificial intelligence (AI) to pinpoint target audiences based on distinct behavioral and psychographic traits. This study examines the comparative effectiveness of behavioral and psychographic personalization, with a focus on impression motivation as a key moderator. Results from an online experiment involving 455 Facebook users showed that behavioral personalization significantly increased consumer digital engagement intentions, while psychographic personalization influenced consumers’ attitudes toward SNA and the advertised brands, contingent on the social desirability of the psychographic factors involved. Impression motivation proved to be a crucial factor in determining the success of psychographic personalization. These findings provide valuable insights into SNA personalization and offer practitioners empirical guidance to develop optimal SNA personalization strategies.
... Various authors have expressed different views on this matter, with some stating that there is a widespread lack of awareness among consumers regarding the mechanisms of OBA and their limited knowledge on how to control the tracking tools and dissemination of their personal data (Cranor 2012;Ur et. al 2012;Van Doorn and Hoekstra 2013;Nill and Aalberts, 2014). According to other studies (Chanchary & Chiasson, 2015), consumers express a higher willingness to share data when provided with control mechanisms to protect their privacy. ...
Purpose: Online Behavior and Data-Driven Advertising (OBA) have emerged as an influential tool in product and service promotion. The purpose of this research is to investigate the role of consumer awareness in decision-making, regarding data-driven advertising in the Albanian context. The research aims to address the digital literacy gap in Albania and its impact on OBA acceptance. Research design, data, and methodology: Employing a web-based survey, the study objective was to capture consumers perspectives and knowledge regarding online behavior in general and OBA in particular (N=171). Results: Research findings underscore the importance of OBA awareness and its impact in shaping acceptance or avoidance of OBA that is manifested through the click intentions of the targeted advertising. Conclusion: The study emphasizes the importance of awareness and knowledge, highlighting the link between consumer empowerment and understanding personalization strategies. The study contributes to both theoretical understanding and practical applications, setting the way for informed strategies in Albania's digital landscape. Received: 24 February 2024 / Accepted: 17 March 2024 / Published: 23 March 2024
... The use of machine learning, AI, algorithm-based personalization, and neuroscience has profound implications for marketing practice and, consequently, for consumer autonomy and privacy (André et al., 2018). These systems' use of big data to predict consumer behavior implies that consumers can be outsmarted and manipulated (Contissa et al., 2018;O'Neil, 2016), namely by the hidden practices of behavioral targeting (Nill & Aalberts, 2014), personalized advertising, and nudging (Lanzing, 2019;Tavani, 2008). Today, more examples of these practices are being brought to public attention, for example the Cambridge Analytica scandal, which serves as a disturbing real-world case of voter manipulation online (Wertenbroch et al., 2020). ...
The introduction of AI-based technologies has dramatically altered the premises for consumer privacy, enabling the unprecedented manipulation of consumers’ decision-making online. Given these recent threats to consumer privacy and autonomy, and considering autonomy as the ultimate outcome of privacy, I propose that a reconceptualization is warranted to reflect contemporary consumer privacy challenges and to realign the concept with its theoretical foundations. To this end, I introduce the dimension of decisional privacy, focused on autonomy versus interference in consumer decision-making. Building on previous privacy literature and extending previous theorizing about information privacy and decisional privacy as complementary, I posit that these two dimensions of privacy together comprise consumer privacy. Addressing protection from interference as an under-communicated function of consumer privacy, the paper aims to clarify, exemplify, and engage in the conceptual development of decisional privacy in the context of consumer decision-making online. In addition to its significance for consumer wellbeing and democracy collectively, the extension of consumer privacy to explicitly encompass interference has theoretical implications for privacy concern, the proxy used to measure privacy, yielding important insights for marketing scholars and practitioners.
... How should marketers tread this evolving consumer landscape? The marketing literature has provided some guidance as to conceptualizing privacy violation, loosely defined as unwanted marketing communications, highly targeted advertisement, and secretive online tracking (Nill & Aalberts, 2014). This approach focuses on companies' use of consumer data without consent. ...
The article offers a comprehensive view of the field of ‘digital advertising’, tracing its evolution from the occurrence of the first banner ad in 1994. The objective of the study is to trace systematically how the digital advertising industry has transitioned from being the traditional one-way communication model to its current ‘intelligent’ state. This study offers profound insights into the dynamic and continually evolving domain of digital advertising. More specifically, it traces the evolutionary stages, major themes, influential articles and citation networks from 1993 to 2023. The articles have been thoroughly examined in three phases, each covering a period of 10 years from 1993 to 2023. The first two decades saw significant growth in the subject domain of ‘digital advertising’; however, the maximum number of articles contributing to the subject from 2013 to 2023 focused mainly on ad-personalization using ICT tools and incorporating artificial intelligence (AI). The key findings indicate that the third decade witnessed a remarkable rise in the number of articles pertaining to AI-driven ad personalization, thus portraying further focus by the researchers on how best to leverage technology in driving advertising effectiveness. AI became one such pivotal innovation, changing the very concept of digital advertising with its capability, to automatically target precisely and develop personalized promotions to engage consumers. The work is unique for the contribution it can make to already existing works regarding digital advertising by coming to one synthesized view of its evolution and its function in its totality regarding AI. The article sets a common platform for future research efforts and innovations within this domain, therefore offering valuable insights both for industry practitioners and future scholars.
Defining a consistent and coherent ethical framework by which to assess advertising has been an elusive goal of scholars since even before the emergence of digital advertising. But despite appeals to various fundamental ethical principles, ultimately most conceptions of what makes advertising ethical come down to information ethics and to associated notions of trust, truth, and transparency. It is widely considered unethical, and harmful, if consumers make purchasing decisions that they otherwise would not have, on the basis of deceitful information. For them to have full agency, they need to act on the basis of truthful information. In the traditional pre-digital advertising era, these notions concerned the information ethics of the content of the advertising. Scholars and industry professionals concerned themselves with the likelihood of deceitful practices given the purpose of advertising was to sell a product to an audience. In this paper, I argue that the shift to the digital realm marked a paradigm shift in the ways in which to conceptualise advertising ethics because, with the rise of platforms (e.g. Google, Facebook, Amazon) that served as intermediaries between the two parties (advertiser and consumer), the role of the consumer in this relationship changed. The notions of transparency became applied to the process of extraction and commoditisation of consumer data, rather than the content of the advertisements themselves. Now, a new platform on which to advertise has become well established- digital personal assistants (DPAs). Digital personal assistants (DPAs) are characterized by the utilization of a different interface for interacting with information. These interfaces have been collectively referred to as “speech based interfaces” (Pridmore and Mols 2020:2) or “conversation as interface” (Luger and Sellen 2016:5295).
This paper argues that ethical concerns regarding advertising on DPAs are not merely an extension of the previous paradigm (transparency regarding data extraction), but instead a second fundamental shift, as now the role of the intermediary platform has changed. Indeed, as will be shown, as the platform itself now presents as an always listening advisor and assistant, it now has the ability to not only illicitly extract more data, but also purchase on behalf of the consumer based on content that might not necessarily be revealed as sponsored. This marks a dimensional shift in what requires transparency. The ethical debate surrounding advertising now not only concerns deceitful information content and illicit information extraction- but now, the ability to purchase on behalf of both of these components, without consumer awareness of what was an advertisement in the first place.
Technological advancements have made it possible to personalize advertising messages across media in real time based on consumers’ offline media behavior (i.e., synced advertising). This is thought to positively influence consumers’ brand attitudes. However, consumers encountering multiple synced advertising exposures could decrease the strategy’s effectiveness by increasing the perceptions of surveillance among consumers. Moreover, these effects may differ depending on privacy cynicism; consumers may decrease their privacy protection behaviors as a result of feeling hopeless and frustrated by the high demands and lack of control of their data being used for personalized advertising purposes. An online experiment (N = 527) showed the more that ads were synchronized, the higher the perceived surveillance, which led to less positive brand attitudes for participants with the lowest levels of privacy cynicism and positive brand attitudes only for participants with intermediate to high levels of privacy cynicism. The results advance theory on the direct effects, underlying mechanisms, and consumer-related factors that play a role in synced advertising effects. It shows that synced advertising could be a promising advertising strategy but that considerations around privacy and ethics are essential.
This report offers a history of Fair Information Practices (FIPs) with a focus – but not an exclusive one – on activities in the United States. The text usually quotes key portions of source documents in order to allow for comparison of different versions of FIPs. For the most part, the analysis is neutral, with only limited interpretation, comment, and criticism.
FIPs are a set of internationally recognized practices for addressing the privacy of information about individuals. Information privacy is a subset of privacy. FIPs are important because they provide the underlying policy for many national laws addressing privacy and data protection matters. The international policy convergence around FIPs as core elements for information privacy has remained in place since the late 1970s. Privacy laws in the United States, which are much less comprehensive in scope than laws in some other countries, often reflect some elements of FIPs but not as consistently as the laws of most other nations.
The computer revolution has created a world where communication is cheap and instantaneous, and where vast amounts of information and consumer goods are just a click away. It also has created a world where the electronic gadgets we use every day create a trail of information that is being collected, examined, sold, and-far too often-stolen. Individuals have little to no control over the use and sale of this personal, private information, and the law has failed to keep pace. Some privacy advocates have suggested that traditional privacy torts should be used by the courts to stop the worst of these privacy invasions. However, these torts, developed more than fifty years ago, are ill-suited to the task. In addition, many states and the federal government have passed laws and regulations to protect the most sensitive of private information from prying eyes. But these laws have proven to be inadequate in a rapidly changing world of iPhones, Netflix, and Internet searches. What is needed is a national standard that will protect the privacy of individuals without stifling innovation. A ban on the dissemination of private information, along with more stringent laws meant to prevent identity theft, will go a long way to achieving these twin goals.
Strategic Management: A Stakeholder Approach was first published in 1984 as a part of the Pitman series in Business and Public Policy. Its publication proved to be a landmark moment in the development of stakeholder theory. Widely acknowledged as a world leader in business ethics and strategic management, R. Edward Freeman’s foundational work continues to inspire scholars and students concerned with a more practical view of how business and capitalism actually work. Business can be understood as a system of how we create value for stakeholders. This worldview connects business and capitalism with ethics once and for all. On the 25th anniversary of publication, Cambridge University Press are delighted to be able to offer a new print-on-demand edition of his work to a new generation of readers.
This article addresses a significant gap in the theoretical literature on marketing ethics. This gap results from the lack of an integrated framework which clarifies and synthesizes the multiple variables that explain how marketers make ethical/unethical decisions. A contingency framework is recommended as a starting point for the development of a theory of ethical/unethical actions in organizational environments. This model demonstrates how previous research can be integrated to reveal that ethical/unethical decisions are moderated by individual factors, significant others within the organizational setting, and opportunity for action.
The authors examine the impact on consumers' purchase likelihood after learning about online covert marketing practices. The findings suggest that while learning of online covert marketing practice lowers purchase likelihood, it is moderated by contextual factors including prior purchase experience, whether the company is well known or a start-up, and whether covert marketing involved information gathering or promotions. Consumer background variables were also found to moderate the negative impact on purchase likelihood resulting from consumers learning about online covert marketing activities. Conjoint scenarios were examined and a segmentation study was conducted based on a national survey of U.S. consumers. Implications for advertisers and regulatory action are discussed.