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: keko24@hotmail.com

Study: International Economics and Business Economics (IBEB)

Thesis: Bachelor (FEB13100X)

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Table of Contents

Abstract........................................................................................................................... 2

Chapter 1: Introduction to the research...........................................................................2

1.1 The intent for the research................................................................................2

1.2 The scientific and social relevance of the subject...................................................2

1.3 Nature of the research...........................................................................................2

1.4 The research process, structure and methodology.................................................2

1.5 The theoretical framework.....................................................................................2

1.6 The problem statement and research questions....................................................2

Chapter 2: Background information................................................................................2

2.1 Consumer trends....................................................................................................2

2.2 New media.............................................................................................................2

2.3 Advertising expenditure.........................................................................................2

Chapter 3: Benefits of personalized advertising...............................................................2

Chapter 4: Types of personalized advertising mediums...................................................2

4.1 Internet.................................................................................................................. 2

4.2 Digital television.....................................................................................................2

4.3 Mobile phones........................................................................................................2

4.4 Further innovative ideas.........................................................................................2

Chapter 5: Collection and data usage..............................................................................2

5.1 Considerations.......................................................................................................2

5.2 Internet.................................................................................................................. 2

5.3 Digital television.....................................................................................................2

5.4 Mobile phones........................................................................................................2

5.5 Real time bidding...................................................................................................2

Chapter 6: Issues and disadvantages...............................................................................2

6.1 Privacy and security concerns.................................................................................2

6.2 Targeting the consumer appropriately...................................................................2

6.3 Additional disadvantages.......................................................................................2

6.4 Limitations of the literature....................................................................................2

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Chapter 7: Consumer research.........................................................................................2

7.1 Explanation of research..........................................................................................2

7.2 Presentation of the general data............................................................................2

7.3 Detailed analysis of results.....................................................................................2

7.4 Significance and correlation of results....................................................................2

7.5 Limitations of the research.....................................................................................2

Chapter 8: Conclusion......................................................................................................2

Suggestions for further research......................................................................................2

References....................................................................................................................... 2

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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-for-media-and-marketing-brands/, (accessed 6 June 2010)

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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

2008

($ millions)

2009

($ millions)

2010

($ millions)

2011

($ millions)

2012

($ millions)

Television 185,813

(37.8%)

173,399

(38.8%)

180,952

(39.3%)

189,614

(39.3%)

199,730

(39.1%)

Internet 50,947

(10.4%)

55,433

(12.4%)

62,592

(13.6%)

71,974

(14.9%)

83,896

(16.4%)

Mobile 4,586

(0.9%)

7,375

(1.6%)

11,179

(2.4%)

15,250

(3.2%)

19,149

(3.8%)

Newspapers 122,282

(24.9%)

101,514

(22.7%)

97,685

(21.2%)

96,264

(19.9%)

95,429

(18.7%)

Magazines 56,342

(11.5%)

45,272

(10.1%)

43,279

(9.4%)

42,476

(8.8%)

42,284

(8.3%)

Radio 37,614

(7.6%)

33,718

(7.5%)

33,548

(7.3%)

34,331

(7.1%)

35,896

(7.0%)

Cinema 2,328

(0.5%)

2,183

(0.5%)

2,250

(0.5%)

2,359

(0.5%)

2,469

(0.5%)

Outdoor 32,116

(6.5%)

28,532

(6.4%)

29,023

(6.3%)

30,286

(6.3%)

31,708

(6.2%)

Total 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

4 ZenithOptmedia, Press Release (2010), Global ad market continues to improve, heralding healthy growth in 2011 and 2012 5

Digital Intelligence Consulting (2009), Digital intelligence: online advertising Available:http://www.digitalstrategyconsulting.com/intelligence/digital_intelligence_US_worldwide_advertising.htm, (accessed 11 June 2010)

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invested in the older forms of communication, in which personalized advertising will

not easily be able to penetrate.

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:

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“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

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

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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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.

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.

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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

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

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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.

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

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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.

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

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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

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

20

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.

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

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

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

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 multi-

functioning 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.

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

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.

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

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

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.

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

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

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

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).

25

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.

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

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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.

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.

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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

personalization

1

Attitude toward concept Does it lead to improvements and is it a

good idea

2 and 4

Type of advertising preferred Current, personalizes, or combination 3

Attitude toward inclusion of

personal information

Whether and which personal

information is appealing

5, 6, and 7

Release of information

Q8: Which info would they release

Q10: Largest concern of privacy or

security

8, 9 and 10

Difference between mediums

Q11/Q12: Trust of mobile and TV

provider

11, 12, and 3

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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.

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

29

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.

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 is still not widely recognized, and

30

furthermore 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

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.

31

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 7 th question which gathers data on the particular

aspects that would appeal to the consumer.

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

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release, and shows whether their consent will be provided.

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

33

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.

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 VariablesIndependent: Gender (Q16)

F -test Significance level

Attitude toward conceptDependent: Improved info (Q2) 1,205 0,275

Dep.: Categorization of concept (Q4) 0,025 0,875

Attitude toward inclusion of personal info

Dep.: Appeal of personal info (Q5) 0,786 0,377Dep.: Continued appeal (Q6) 0,627 0,432Dep.: Particular info: Gender and age specific products* (Q7) 5,625 0,020

34

Release of information

Dep.: Particular info: Interests andbrowsing history* (Q8)

6,1566,765

0,0150,011

Dep.: Exceptions(Q9) 3,634 0,059Dep.: Largest concern (Q10) 0,056 0,814

*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

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 VariablesIndependent: Age (Q16)

F -test Significance level

Attitude toward inclusion of personal info

Dep.: Particular info: Reason for particular advertisement* (Q7)

2,780 0,015

Release of informationDep.: Particular info: Name* (Q8) 1,997 0,073Dep.: Dep.: Exceptions(Q9) 2,727 0,017

*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

35

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 18-

25 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

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 VariablesIndependent: Nationality (Q16)

F -test Significance level

Release of informationDep.: Particular info: Address* (Q8)

1,890 0,027

Dep.: Dep.: Largest concern (Q10) 1,949 0,022*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,

36

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.

Fig 17. Analyses of differences between the responses of distinct nationalities

Model B Significance Level(constant) 4,006 0,000Q1 (previous knowledge of personalized advertising) -0,372 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.

37

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

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

38

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.

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.

39

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

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

40

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.

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.

41

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.

References

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[2] Bozios T., Lekakos G., Skoularidou V. and Chorianopoulos K. (2001), Advanced Techniques for Personalized Advertising in a Digital TV Environment: The iMedia System

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42

[8] Jun Y., Ning L., Gang W., Wen Z., Yun J. and Zheng C. (2009), How much can Behavioral Targeting Help Online Advertising?, pages 261-270

[9] Lekakos G. and Giaglis G. (2002), Delivering personalized advertisements in digital television: A methodology and empirical evaluation

[10] Lekakos, G. and Giaglis G. (2004), A lifestyle-based approach for delivering personalized advertisements in digital interactive television

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[16] Yan J., Liu N., Wang G., Zhang W., Jiang Y. and Chen Z. (2009), How much can behavioral targeting help online advertising?

[17] Zary, B. M., Fontoura, F. and Josifovski, V. (2009), Methods of dynamically creating personalized internet advertisements based on advertiser input

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43

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[31] Internet Business Law Services, Arias M. L. (2009), Internet law – Behavioral advertising in the United States , Available: http://www.ibls.com/internet_law_news_portal_view.aspx?s=latestnews&id=2237, (accessed 14 June 2010)

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[37] 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-for-media-and-marketing-brands/, (accessed 6 June 2010)

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Available: www.apple.com/quicktime/qtv/wwdc10/index.html

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 ormore 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

2. Do you believe that personalization will improve the information you receive through advertising?

  Yes  No

3. What type of advertising would you rather have?   Current advertising concept   Personalized advertising

45

1 1244413

1 1244414

Combination of the two

4. How would you categorize personalized advertising? (From 1 being a terrible idea to 5 being a great idea)

  1   2   3   4   5

5. Would you be more intrigued by an advertisement with some of your personal information included?

  Yes   No

6. If yes, do you believe this attitude will continue if this becomes common practice?   Yes   No

7. 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 5Name  Interests  Previous purchases Gender and age specific products  Reason why this advertisement is directed to you 

46

1 1244415

1 1244416

1 1244417

1 1244418

991481

991482

991483

991484

991485

7 5 1244419

1 1244420

8. Would you be comfortable disclosing this information to a website or advertiser?   Neve

r Almost never

Sometimes

Almost always

Always

Name  Last Name  Age  Weight Gender Address Interests  Websites visited/Browsing History Purchase History Income Information on family 

9. Are there certain websites that you trust in disclosing the information that you previously answered with never or almost never?

  Yes  No

10. What is your largest concern when releasing information?  Privacy  Security

11. Would you be more or less comfortable disclosing information to your TV provider?   More comfortable   The same   Less comfortable

12. Would you be more or less comfortable disclosing information to your Mobile provider?   More comfortable

47

991465

991466

991467

991468

991469

991470

991471

991472

991473

991474

991475

7 11 1244421

1 1244422

1 1244423

1 1244424

  The same   Less comfortable

13. Where would you rather have personalized advertising?   TV   Internet   Mobile   Other (please specify)

14. Nationality

   

15. Age

   

16. Gender   M  F

48

1 1244425

158829

2 1 1244426

158830

2 1 1244427