The Effect of Exchanged Benefits and Information Collection Method in Social Media Advertisements

Abstract

In the digital realm such as social networking sites, businesses are gathering more data from consumers to deliver targeted advertisements using covert data collection methods. Many consumers perceive such initiatives as intrusive and even “creepy”, feeling a loss of privacy rights. However, there is evidence that many still opt-in to tracking and choose to provide their information. Yet, current research offers limited insight into what motivates consumers to disclose their information to retailers and companies, especially in the context of social media advertising. Therefore, this study aims to investigate how exchanged benefits (e.g., monetary rewards and personalized product recommendations) and information collection approaches (e.g., overt vs. covert) influence consumers’ attitudes towards social media advertisements concerning information disclosure, within the framework of privacy calculus theory. A scenario-based survey was conducted with 200 U.S. participants. The results showed that exchanged benefits led to a higher willingness to disclose information through a trade-off between benefit and risk, which in turn led to higher click-through and purchase intentions. While monetary rewards significantly increased the willingness to disclose personal information by enhancing perceived benefits and reducing perceived risks, personalized product recommendations increased the perceived benefits of information disclosure but did not mitigate the perceived risks. Moreover, the proposed moderating role of the information collection method was not found to be significant. This study advances the literature on social media advertising by exploring the impact mechanisms between exchanged benefits and consumers’ disclosure behavior. Additionally, it offers valuable insights for practitioners, which can be utilized to foster positive consumer attitudes in social media advertising.