‘It’s my virtual space’: The effect of personalized advertising within social media

In this research, we investigate consumer responses to personalized advertising on social media by employing the theory of psychological ownership. We conducted two online experiments on Instagram and Facebook with MTurk and samples from college students, respectively. Study 1 reveals the adverse effects of personalization on activating the perception of psychological ownership, the perception of advertising relevance, positive attitudes toward advertising, and behavioral intention. The negative impacts of personalization on attitude toward advertising and behavioral intention are mediated by the sequential perception of psychological ownership and advertising relevance and further moderated by consumers’ privacy concerns. Additionally, we identified three motivational drivers that underlie the personalization effect on psychological ownership. Study 2 demonstrates advertising type as another moderator, reporting the negative effects of personalization arising only for banner ads, not native ads, through the mediation of perceived advertising relevance. Our findings suggest that while personalization in social media advertising can diminish consumer feelings of psychological ownership, leading to less favorable advertising outcomes, these effects can be mitigated with strategic approaches addressing consumer concerns over privacy and by considering advertising type.