This paper aims to tests a conceptual model capturing the influence of personalized advertising on customer perceptions of brands in social media and identifies three market segments based on customers’ reactions to personalized ads.
Two studies are developed to test the model using partial least squares structural equation modeling (PLS-SEM). Additionally, cluster analysis, multi-group analysis (MGA) and serial mediation tests are also conducted to provide better insights into the results.
The results of the two studies show that all nine hypotheses are supported except for H4 in Study 1. Three market segments (ad lovers, ad adjusters and ad haters) are identified. Each segment has a typical attitude toward personalized advertisements.
Built on self-congruence literature, the current research posits that consumer-brand self-congruence can be established when a customer sees a brand advertised on Facebook after searching for that brand online. Consistently, this paper finds that through self-congruence, personalized advertising has a positive impact on brand-related outcomes.
Three segments identified – “ad lovers,” “ad adjusters” and “ad haters” are important for marketers. Companies should develop an appropriate advertising campaign for each segment, especially once the general data protection regulation is in place. Companies will be subject to a noncompliance penalty if an advertisement is posted on a user s account without approval. Identifying this segment promptly will not only enable companies to save resources but also help avoid legal complications associated with privacy concerns.
This research sheds light on the effects of personalized advertising on customer perceptions of brands in social commerce.
