"Current-State" Preferences

This PreferenceCentral study is the first that asked consumers to state their preferences for tailored online advertising in the context of real-world trade-off options. And with their value-for-value preference decisions, we found that a majority of consumers prefer relevant targeted online ads as a trade-off for access to free content.

In prior studies when consumers are asked simply, "Do you want websites you visit to show you ads tailored to your interests?", and provided with only a "Yes or No" option, it's not surprising that past researchers concluded that most consumers have negative attitudes toward behavioral targeting. In fact, after our first trade-off preference question, we asked this same question, and we got this same result.

However, this simple, singe-option scenario is not realistic for assessing consumers' preferences for tailored online advertising. In the real world, the trade-off consumers take for access to free content across the Web is targeted advertising, and our study found that, when presented in this trade-off context, the majority of respondents preferred relevant targeted advertising in exchange for continued access to free content.

Behavioral Targeting

Further, in our study, we also asked consumers, "Why?" And our results show that the primary stated reason for their negative responses is that they don't want to see advertising because they find it annoying. Privacy concerns came in a distant second with only 10 percent of the responses.

This being said, when educated that tailored ads are based on following their online behavior, 29 percent of respondents became less comfortable with the trade-off of free content for targeted ads.

However, when subsequently informed that behavioral targeting information is anonymous, non-personally identifiable, 35 percent of these Internet users became more comfortable. This indicates a real need for consumer education on this topic.

Consumer Control Solution

When subsequently presented with the option of a solution that would give them more control over their exposure to targeted ads and transparency into the audience data used by advertisers, 70 percent of Internet users expressed interest in using such a control solution, with 33 percent stating they are very to extremely interested.

Their primary reasons for interest deal with their desire to control the online ads that they see or don't see, while reasons based on concerns about how behavioral information is collected and used by advertisers were secondary.

Further, 41 percent of consumers became more comfortable with behavioral targeting in general and were 27 percent more willing to receive targeted, relevant ads in exchange for free content when they were given a control solution.

This tells us that educating consumers is not enough, and in fact, could be a step backwards for the online advertising industry. If we want to truly strengthen consumer trust, it is going to be essential to put the power in their hands – give them control over how they are targeted, what types of ads they want to see and what types they don't, control over how their data is used, etc.

By stating their preferences and controlling which brands and products they want to interact with, consumers are going to feel a lot more comfortable sharing their anonymous data in exchange for access to free content (and hopefully they will find the ads a little less annoying!). These consumers are also going to be a lot more valuable to advertisers and publishers.

On this fact, the Network Advertising Initiative (NAI) recently released their own research that shows behaviorally targeted ads are more than twice as valuable in terms of prices advertisers pay, and more than twice as effective in converting consumers who click on ads into buyers than normal run-of-network ads.

Further, based on our research study, within the context of making a trade-off, only 12 percent of consumers opt out of all targeted advertising. It's important to note that if they opt-out of targeted advertising, they will increase their exposure to random, untargeted ads, and thereby increase the "annoyance factor" of the ads they see, as our study also reveals that almost 60 percent of consumers are more annoyed by online ads that are not relevant to their interests.

Additionally, if more and more publishers begin to offer multiple content-access models based on the audience data consumers are willing to share, then the consumers who opted-out of targeted advertising might find that they suddenly have more limited access to the content they previously enjoyed for free.

Lastly, our survey found that across all trade-off scenarios, only about 10 percent of consumers expressed a preference for paying for content with no advertising. Another reason publishers need to offer multiple content-access models to optimize appeal and monetization.

Summary Implications

This study clearly demonstrates that all future research on consumers' preferences regarding relevant targeted online advertising needs to ask these consumers to express their preferences within the context of real-world, value-for-value trade-off options.

And the key takeaways for the advertising industry are that it's not enough to just educate consumers on targeted advertising; we must also provide meaningful choice and control over their online ad experience. For online publishers, these results mean that they should be offering multiple content-access models to optimize appeal and monetization.

Continued message relevance, consumer engagement, and the viability of the ad-supported model will depend on the industry doing a combination of the following:

• Reinforcing the trade-off reality and consumer benefits of free, quality content
• Educating consumers on data anonymity
• Providing a consumer-control solution
• Complying with consumers' preferences
• Offering multiple content-access models