Social Networks, Personalized Advertising, and Privacy Controls

This paper investigates how internet users' perception of control overtheir personal information affects how likely they are to click ononline advertising. The paper uses data from a randomized fieldexperiment that examined the relative effectiveness of personalizing adcopy to mesh with existing personal information on a social networkingwebsite. The website gave users more control over their personallyidentifiable information in the middle of the field test. The websitedid not change how advertisers used anonymous data to target ads. Afterthis policy change, users were twice as likely to click on personalizedads. There was no comparable change in the effectiveness of ads that didnot signal that they used private information when targeting. Theincrease in effectiveness was larger for ads that used less commonlyavailable private information to personalize their message. Thissuggests that giving users the perception of more control over theirprivate information can be an effective strategy foradvertising-supported websites.