Advertisements targeted based on an individual's online behavior are effective, but the perception of why they were targeted may have a much stronger impact on sales.
Findings from Ohio State University research, published in the Journal of Consumer Research, analyzed the reaction to a Groupon restaurant deal presented to 188 students who were given time to browse the Web before being served the ad.
The students participating in the study were told the ad targeted consumers based on demographic age and gender data, as well as their behavior when browsing the Web. The ad identified the restaurant as "sophisticated."
Participants who believed the ad had been targeted based on their behavior, rated at an average of 4.18 on a scale of 1-7, were more likely to make a purchase than those who thought demographics the most important at 3.39, or non-targeted groups at 3.56.
The ads targeted to all groups were identical and any difference in response was based solely on the way each group perceived the reasons for being targeted, rather than the relevance of the advertisement.
This could blow Google's relevance theory clear out of the water. Google defines "ad relevance" as how well the messages match the keywords, though the Ohio State University research findings suggests perception of why consumers received an ad plays a major role in the sale.
While the results from the first part of the study provides support "for the hypothesis that behaviorally targeted advertisements can act as implied social labels," the second part of the research analyzed why this awareness matters by serving an ad for a Movado watch. While again presented as "sophisticated," those among the group of 197 participants who believes the ad had been targeted to them based on their sophistication were more likely to buy.
Participants who believe the ad had been individually targeted to them were more likely to answer that they saw themselves as sophisticated, rated at an average of 5.15, compared with those who believed it wasn't targeted, at 4.36. The group thinking they were more sophisticated before being shown the ad, rated at an average of 4.54. From these results the findings suggests an ad can affect people’s understanding of their own identities, according to the study.
A write-up by the authors of the study in the Harvard Business Review details all three parts of the study, in which the third part suggests the effect applies to behaviors beyond just purchase intention.