Ads That Don't Overstep: How to Make Sure You Don't Take Personalization Too Far

Leslie  John; Tami  Kim; Kate  Barasz

Article | Harvard Business Review | January–February 2018

Ads That Don't Overstep: How to Make Sure You Don't Take Personalization Too Far

by Leslie John, Tami Kim and Kate Barasz

Abstract

Data gathered on the web has vastly enhanced the capabilities of marketers. With people regularly sharing personal details online and internet cookies tracking every click, companies can now gain unprecedented insight into individual consumers and target them with tailored ads. But when this practice feels invasive to people, it can prompt a strong backlash. Marketers today need to understand where to the draw the line. The good news is that psychologists already know a lot about what triggers privacy concerns off-line. These norms—and the authors’ research—strongly suggest that firms steer clear of two ad-targeting techniques generally disliked by consumers: using information obtained on a third-party site rather than on the site on which an ad appears, which is akin to talking behind someone’s back; and deducing information about people (such as a pregnancy) from analytics when they haven’t declared it themselves. If marketers avoid those tactics, use data judiciously, focus on increasing trust and transparency, and offer people control over their personal data, their ads are much more likely to be accepted by consumers and help raise interest in engaging with a company and its products.

Keywords: Online Advertising; Customization and Personalization; Information; Customers; Attitudes;

Format: Print

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Citation:

John, Leslie, Tami Kim, and Kate Barasz. "Ads That Don't Overstep: How to Make Sure You Don't Take Personalization Too Far." Harvard Business Review 96, no. 1 (January–February 2018): 62–69.

The case describes a program that CVS Health recently implemented to improve medication adherence, an important problem from a societal, public policy, and firm perspective. A test of the program, costing hundreds of thousands of dollars to implement, increased the proportion of adherent customers by 1.4 percentage points. Students are asked to quantify the system-wide economic benefit of this improvement and draw upon insights from behavioral science to examine approaches for boosting medication adherence.

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By the time Dan Doctoroff, CEO of Sidewalk Labs, began hosting a Reddit “Ask Me Anything” session in January 2018, he had only nine months remaining to convince the people of Toronto, their government representatives, and presumably his parent company Alphabet, Inc., that Sidewalk Labs’ plan to construct “the first truly 21st-century city” on the Canadian city’s waterfront was a sound one. Along with much excitement and optimism, strains of concern had emerged since Doctoroff and partners first announced their intentions for a city “built from the internet up” in Toronto’s Quayside district. As Doctoroff prepared for yet another milestone in a year of planning and community engagement, it was almost certain that of the many questions headed his way, digital privacy would be among them.

In their commentary, Wilson & Stolarz-Fantino argue that specific design features of our research mean that it cannot have policy implications and that researchers “need to consider profit maximization in menu design or studies are likely to suggest ill-informed implementations.” In this reply, we respond to the specific critiques of our work with empirical data and conceptual arguments. We agree with Wilson and Stolarz-Fantino that researchers seeking to understand a policy’s influence on consumers should test predictions about which strategies firms will likely use when implementing a policy. Research, however, that demonstrates the effectiveness (or lack thereof) of an intervention even without perfectly predicting a firm’s response still has enormous value for setting policy.

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Ads That Don't Overstep: How to Make Sure You Don't Take Personalization Too Far

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