The Balance Between Privacy and Personalization in Mobile Location Based Advertising
Mobile advertising, especially mobile location-based advertising (LBA), aims to use user data to create personalized, convenient messages to persuade, while also avoiding issues of dissuasion due to privacy concerns. Advertising that requires knowledge of a user’s location is useful for many industries, most notably the restaurant and retail industries. Brands that differ greatly can benefit from pulling user location in a way much easier than before, as many humans now carry around a location tracker in their pocket. For example, coffee brands like Dunkin and Starbucks create customer loyalty through mobile payments and mobile advertising. This paper will summarize prior research on mobile communication, marketing strategies, ethical marketing and privacy perceptions to understand the best strategies for persuasion in LBA.
In order to properly understand mobile advertising, it’s important to understand mobile phone use. Prior research on this topic covers the affordances of mobile devices, as well as how demographics differ with access to the internet and smartphone use. Affordances explain how people perceive and use objects based on the abilities of that object (Shrock, 2015). In the case of mobile phones, the affordances are locatability, multimediality, availability and portability according to Schrock (2015) and communications scholars. Another way to understand how people use mobile phones is through the idea that mobile smartphones are an extension of the “self”. This is because our smartphones are so incorporated into our lives and connect us to our friends and family (CHI Conference Corporate Author, & Jones, Matt, n.d.). This idea of the phone being an extension of the self also explains how people feel about privacy. A lack of personal space can make people feel uncomfortable, and it’s no wonder people often lock their phones just as they would lock their phone or apartment. This understanding of how humans feel about their mobile phone can help marketers prevent messages that seem too “creepy” or intrusive.
The way people use smartphones differs based on multiple factors and demographics. People incorporate their smartphones into their daily lives, and according to a study from Tsetsi in 2017, 12% of people only have access to the internet through their smartphone. This 12% has less access to content as many sites are suited for a desktop or laptop, making the user experience subpar. Mobile phones also have much less storage than a desktop computer. In this same study, the researchers found that race played a role in both whether people had internet access and what kind information these individuals consumed on their smartphone (Tsetsi, 2017). While whites used smartphones to gain news and information, people of color were more likely to use their smartphones for social activities. Demographics like gender, age and socio-economic status also can predict how people use mobile technology. For example, a study covering 12 countries found that the people with the lowest level of education spent 60% more time on talking on the phone and made 50% more phone calls (Langer, Chelsea E, De Llobet, Patricia, Dalmau, Albert, Wiart, Joe, Goedhart, Geertje, Hours, Martine, . . . Maule, Milena, 2017). In order for a company to persuade customers by using mobile marketing, they first must understand both the abilities of the technology and the behaviour of the customer. The communication theory of Social Shaping also suggests that social and cultural forces influence technological advancement (Shrock, 2015). One way to understand the customer better is to use the phone’s existing location-tracking capabilities. Location data is important to gather not just because it tracks a consumer’s physical location, but also because it brings in data about what types of weather they are in, their time zone and their possible social attitudes. For example, fashion brands that track user location will send targeted messages to consumers about coats only if that consumer lives somewhere that is currently cold enough. Other types of brands that may use LBA include restaurants, food delivery services and professional service companies.
After understanding the affordances of mobile devices and the use of mobile smartphones with different demographics, we need to consider research on mobile marketing strategies and calls for transparency in app data collection. Marketing to consumers on mobile phones to is not quite the same as traditional advertising like print and direct mail. This is because mobile phones allow for increased personalization, and can collect user data to send messages where users will see them. Factors in mobile advertisements include context, the consumer, the advertisement’s goal, market factors, ad elements and outcome metrics (Grewal, D., Bart, Y., Spann, M., & Zubcsek, P. P., 2016). These factors are all things to consider when building a mobile advertising campaign. Some of these factors are similar to traditional advertisements, while others are different. For example, outcome metrics are much more concrete, robust and reliable with online and mobile advertising as it is easier to track data. It is important for marketers to consider both the environmental and technological context. The environmental context includes the time of day, physical location, social environments and the weather (Grewal et al, 2016). According to Social Impact Theory, people in close proximity to each other have similar social values and therefore may use an app or react to content similarly. By tracking consumer location using the locatability of smartphones, marketers can more accurately create personalized, effective messages. Even though gaining this data helps some, people are not always aware of what information they disclose to an app. According to a study, most people call for more transparency about what data they are sharing (CHI Conference Corporate Author, & Jones, Matt, n.d.). For example, companies can be more transparent by including “opt out” buttons or by asking for explicit permission to share data. Many apps such as FruitNinja and Flashlight use the user data they collect to sell illegally to third parties (CHI Conference Corporate Author, & Jones, Matt, n.d.). These strategies of creating more personalized messages by collecting user data collides with the idea of becoming more transparent and building trust through limiting privacy concerns.
There are several ways to personalize a mobile advertisement. Messages are made personal by collecting data such as location, birthday or perhaps even a first name. While personalized advertisements are more likely to be opened, other factors influence their success rate as well. The content of the marketing message and the timing of the message also play a role in how the message is received (Sahni, 2018). Research on geographical and temporal targeting for marketing campaigns shows that sending messages about something that is both close geographically and close in time is most effective (Luo, Xueming, 2014). Temporal targeting, or targeting based on time, helps marketers send messages when consumers are most likely to make spontaneous decisions. As emotions are an extremely important factor in determining purchase behavior, they also influence mobile app usage and purchase behaviour. For example, people are more likely to make spontaneous decisions when they are in a good mood (Bues, Mirja, Steiner, Michael, Stafflage, Marcel, Krafft & Manfred, 2017). When consumers make these decisions, they determine the balance in their head between the risk and the benefit of the decision (Xu, 2011). This idea that humans evaluate risks and benefits when making choices is called Privacy Calculus Theory, and is often brought up when discussing privacy concerns about mobile advertisements or mobile apps. In addition to privacy, other risks that may alter consumer decision-making include possible “manipulation” and concerns about new technology or technology addiction.
In order to create personalized, effective messages that do not come off as “creepy”, marketers must make sure their advertising campaigns are ethical and do not manipulate people. There is an even bigger risk of manipulation when the consumer is under 12, as most research shows humans gain cognitive defense around that age (Nairn, 2008). However, people who develop ad campaigns know how to persuade in ways that are not immediately clear, showing how cognitive defense may not be sufficient. People must be able to also avoid implicit persuasion in order to not be manipulated by advertisements (Nairn, 2008). When brands create a positive reputation through ethical and non-manipulative marketing practices, they reap the benefits of loyal, happy customers. One main concern consumers have with mobile advertisements are privacy concerns as many consider privacy to be a fundamental human need (Mpinganjira & Maduku, 2019). Research on technology acceptance is also important to bring up here. The widely cited Technology Acceptance Model (TAM), explains what factors contribute to someone accepting new technology and praises ease of use (Limpf, 2015). When a new technology emerges, people are more likely to actually use it if it’s easy to use and access. This is a “benefit” of using the technology, rather than a “risk” like privacy concerns or manipulation.
People’s ideas about privacy and what they actually do to prevent privacy risks do not always add up, showing how complicated a risk-benefit analysis followed by an action can be. Research on privacy perceptions in mobile marketing focuses on privacy literacy, the privacy paradox and privacy protective measures. Privacy literacy includes the knowledge of privacy risks and perhaps past experiences with negative consequences due to lack of privacy precautions (Baruh, 2017). The privacy paradox states that people’s concerns about privacy do not always line up with their actions to prevent information disclosure and their knowledge about privacy (privacy literacy). This paradox can be in part explained by Privacy Calculus Theory as the benefit of an app or mobile coupon, for example, may outway the privacy risk concerns someone may have (Gutierrez, 2019). Privacy protective measures are the actions people take to keep their information safe. For example, one might put a passcode on their phone or use a Virtual Private Network (VPN) to keep information safer. Some people feel like they do not need to monitor their privacy more closely because it’s a waste of time (CHI Conference Corporate Author, & Jones, n.d.). Because of increased internet access and social media use, it has become harder to keep personal information private. For example, even if you create a private Instagram account, your friend could post anything about you on her public one. Because it is hard to hide on the internet, people have come up with alternate mechanisms to maintain privacy in these “networked” situations (Marwick, 2014). For example, teens know who will see the content they are posting so they purposefully do not share vulnerable content online. Some create alternate Instagram accounts or use code words or “inside jokes” so that messages will be misunderstood or ignored by the wrong recipient.
In order to make an effective mobile ad, marketers need to strike a balance between personalization and obtaining information from their customers. While making these ads more personalized makes them more enticing and more likely to be opened, it is important to keep things ethical and make intentions more transparent with the consumer regarding data sharing. In addition to evaluating the privacy concerns consumers may have, marketers should also consider the demographics and culture of the consumer to send out a timely, geographically relevant message. Since the beginning of the closures due to COVID-19, many have lost their jobs and brick and mortar storefronts have shut down due to the virus. This presents an opportunity for businesses to focus their attention on online and delivery sales. This is especially relevant to the food and retail industries as they cannot operate normally and must adapt their marketing tactics to focus on the services they can provide during the pandemic. Research on the topic of mobile advertising can be continued by exploring how this pandemic is changing and increasing online advertising. There are also many online ads and ways to gain content, suggesting that marketers may have issues getting a message to consumers through all the “noise”. There is also lots of related research possible about crisis communications during this time and how companies can brand themselves through public writing about COVID-19. It is unclear now how this situation will play out, but it is already drastically affecting the economy and will change how people interact.
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