Is This How You See Me? When Personalized Ads Reduce Self-Esteem and Brand Attitude

Personalized advertising is frequently used by marketers to increase ad effectiveness, but it also implicitly communicates the identity the brand thinks consumers have. We test the hypothesis that when this implied identity is undesirable, consumers will feel more offended by a personalized (vs. non-personalized) ad, leading to more negative views about both the self and the brand, with downstream consequences for brand engagement. Five studies demonstrate that personalized (vs. non-personalized) ads implying undesirable identities such as an opposing political identity (study 1), low creditworthiness (studies 2, 4, and 5), and excess weight (study 3) decrease self-esteem and brand attitudes. Using moderation (studies 1 and 5) and mediation (studies 2, 3, and 4) approaches, we show that the effects of ad personalization on both self-esteem and brand attitude are mediated by perceived ad offensiveness. The effects hold regardless of the accuracy of personalization (studies 1 and 3), the blaming tone of the ad message (study 4), the nature of the firm (for-profit and non-profit; study 4), and whether the personalization is attributed to algorithms or human marketers (study 5). Finally, we identify a boundary condition: the effects attenuate when ad personalization is not salient (study 5).