Increasing consumers’ intention to use location-based advertising
| Pages | 661-669 |
| Date | 17 September 2018 |
| Published date | 17 September 2018 |
| DOI | https://doi.org/10.1108/JPBM-06-2017-1498 |
| Author | Michael Schade,Rico Piehler,Claudius Warwitz,Christoph Burmann |
| Subject Matter | Marketing,Product management,Brand management/equity |
Increasing consumers’intention to use
location-based advertising
Michael Schade, Rico Piehler, Claudius Warwitz and Christoph Burmann
Chair of Innovative Brand Management, University of Bremen, Bremen, Germany
Abstract
Purpose –This study aims to investigate the influence of advertising value and privacy concerns on consumers’intention to use locatio n-based
advertising. It also explores if brand trust toward location-based advertising providers and consumers’privacy self-efficacy reduce privacy concerns.
Design/methodology/approach –Based on the privacy calculus and expectancy theory, a conceptual model is developed and empirically tested
through structural equation modeling using cross-sectional data of 1,121 actual smartphone users from Germany.
Findings –Advertising value positively and privacy concerns negatively affect consumers’intention to use location-based advertising. As expected,
brand trust and consumers’privacy self-efficacy can reduce consumers’privacy concerns.
Research limitations/implications –Further research should test and validate the proposed framework in other cultures to gain insights into the
culturally specific relevance of privacy concerns and their antecedents. The current study includes sociodemographics as potential moderators;
additional studies could investigate other potential moderators (e.g. personality, values).
Practical implications –To reduce consumers’privacy concerns, location-based advertising providers should make their offers transparent and give
consumers control, to increase their privacy self-efficacy. They also should work to strengthen their brand, monitor brand trust trends and avoid any
trust-damaging behavior.
Originality/value –This study introduces brand trust toward location-based advertising providers and privacy self-efficacy as factors to reduce
consumers’privacy concerns. It also encompasses a broader, general sample of consumers, which increases the generalizability and practical
relevance of the results and supports an initial investigation of sociodemographic factors as potential moderators in this context.
Keywords Privacy concerns, Brand trust, Advertising value, Location-based advertising, Privacy self-efficacy
Paper type Research paper
Introduction
The expanding diffusion of GPS-enabled smartphones and
increasing capacities to collect and handle big data (McAfee
and Brynjolfsson, 2012) in real time providepractitioners with
an innovative advertising channel: location-based advertising
(LBA) (Richard and Meuli, 2013;Xu et al.,2009,2011),
defined as “targeted advertisinginitiatives delivered to a mobile
device from an identified sponsor thatis specific to the location
of the consumer”(Unni and Harmon, 2007,p. 28). Location-
targeted mobile advertising revenues in the USA are expected
to grow from US$6.7bn in 2015 to US$18.2bn in 2019 (BIA/
Kelsey, 2015).
Whereas traditional forms of advertising (e.g. television
commercials) and early internet advertising(e.g. online banner
ads) represent channels for mass communication (Xu et al.,
2009), personalized, one-to-one communication promises a
more efficient approach (Nowak and Phelps, 1997;Xu et al.,
2009). For example, LBA enables advertising companies to
deliver advertisements, promotions and coupons that are
personalized to reflect consumers’preferences, geographical
locations and the time of day (Kenny and Marshall, 2000;
Unni and Harmon, 2007;Xu et al.,2009). Because LBA
provides consumers with location-based information and
offers, it enables advertising companiesto interact individually
with those potentialcustomers (Zhou, 2013).
Three key stakeholders have to be distinguished in an LBA
context:
LBA providers (e.g. Google, Facebook, Telefonica,
Vodafone);
advertising companies (e.g. McDonald’s, Starbucks); and
consumers that use LBA (i.e. LBA users).
To receive LBA offers from advertising companies,consumers
must subscribe to LBA providers’services first. Only then,
LBA providers are allowed to send messages from advertising
companies to consumers. Therefore, consumers’initial
subscription to LBA providers’services represents a
prerequisite for consumers’LBAusage. Consequently, two key
challenges for companies arise. The first involves the initial
subscriptionof consumersto LBA providers’services, such that
the key question revolves around which factors affect
consumers’intention to initially subscribe to LBA providers’
services. The second challengepertains to consumers’reaction
to specific LBA messages. The central question in this case is
how to design advertisements that increase consumers’
intention to use the advertised offer. Substantial research
addresses this second question (Banerjee and Dholakia, 2008;
Barwise and Strong, 2001;Lee et al.,2015;Okazaki et al.,
2012). Relatively fewer studies investigate the critical first
question of how to increase consumers’intention to subscribe
to LBA providers’services (Lee and Hill, 2013;Limpf and
The current issue and full text archive of this journal is available on
Emerald Insight at: www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
27/6 (2018) 661–669
© Emerald Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-06-2017-1498]
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